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5 Signs You Need to Revamp Your Inventory Management

By: Cris Burnam

 

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Your business is only as good as the service you provided for your last customer.

It’s true, and while delivering exceptional service was easy when you were starting out, as you (and your customer base) grew, so did your inventory. Soon, you’re sitting on an unorganized, unusable mountain of inventory.

“How did I get to this point?” you wonder atop your peak.

The answer: poor inventory management.

Inadequate inventory management can lead to delays or damaged products, leaving your customers dissatisfied and your opportunities for new business slim. And while this is a harmful situation for businesses of all sizes, it’s especially detrimental for small companies.

Organizing your inventory might be low on your priority list as you grow your small business, but the fact is that it’s the underpinning of any successful company. Here are five signs that indicate you need to adjust your inventory management:

1. You Lost Items

Even if an item is still in your store, it can be lost.

Last year, Best Buy had issues with inventory management concerning orders placed near Thanksgiving. Then, only days before Christmas, the company dropped a bomb on its customers, revealing that their orders had to be canceled due to “overwhelming demand.”

If you’re misplacing items, it may be time to start shopping for a bigger warehouse—or if you can’t afford a warehouse space, a self-storage unit. Self-storage facilities often allow entrepreneurs 24-hour access and special considerations. Just be careful not to carry too much inventory.

2. Your Inventory Is Outdated

Remember that mountain of useless inventory? Well, it’s the last place you want to be.

Good inventory management keeps your business lean and profitable and your products from becoming dust collectors.

Ask fellow entrepreneurs what they use for inventory management. By gathering a variety of opinions, you can implement a solution tailored to your business’s specific needs. However, be aware that it may take a quarter or longer for new inventory management procedures to show results.

3. You Found Items

When you have more supply than demand, it’s easy to become overwhelmed by your inventory. In these cases, the supply room and offices often become cluttered, and things aren’t properly stored. As a result, you might find items that aren’t listed on your inventory.

Make organization a top priority in your company, and hold employees accountable. Every employee should explicitly know his part in the company’s success or failure, as well as his responsibility in terms of inventory management.

4. Your Process Is Too Complicated

If your inventory management solution is so much of a hassle that nobody uses it, your business could be suffering from over-complication.

Compile a list of pros and cons about your existing system, and stick to your needs. While shopping around for a solution, don’t get distracted by all the bells and whistles—you’ll only end up with an even more complicated system.

Search for a free trial of inventory management software, and compare it to your current software. This will give you an opportunity to find the solution that’s most efficient for your needs.

5. Your Databases Are Decentralized

Many multi-level marketing companies like Amway and Herbalife struggle with inventory management because they don’t have a centralized inventory management system. This can often leave marketers maintaining a garage full of useless inventory.

Stop using spreadsheets and other individual tracking methods that make it difficult to track changes or undo saved actions. Instead, create centralized databases that allow multiple users to access your inventory at any given moment.

Inventory management is a vital part of any small business’s success. You can’t sell inventory you don’t have (or can’t find). So optimize your business for supply and demand by honestly assessing your inventory management and finding the solution that works best for you.

What signs have you seen in your company that indicate it’s time to revamp your inventory management?

Published: September 4, 2014
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Cris Burnam

Cris Burnam has been working in the self-storage industry since 1987. He has served as president of StorageMart since founding the company with his brother Mike Burnam in 1999. Cris grew StorageMart from a single self-storage facility into the world’s largest privately owned self-storage company with 149 locations across the U.S. and Canada. Cris was named a 2014 EY Entrepreneur of the Year in the Services/Real Estate category for the Central Midwest region — one of the highest honors an American entrepreneur can receive.

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