Best Inventory Management Software of June 2023

how to keep track of inventory for small business

Dropshipping means your suppliers ship their goods directly to your customers, bypassing the need for any inventory management in the first place. They’re unpredictable, expensive, and time consuming systems to set up, and a single delay in your supply chain can shut the whole thing down. Products in the first category need more of your attention than the the latter, because getting inventory wrong for them has a bigger impact on your business.

But as small businesses grow, optimizing space becomes increasingly important. Making popular items more accessible and creating faster pick flows are two big examples of a well-oiled warehouse. A barcode system assists any business, small or large, in managing its inventory. Barcoding saves a lot of time, money and also improves accuracy when managing inventory. Labels mark the date of receipt, batch details, and exact storage location. All of these details are required to properly trace and manage warehoused items.

Resources for Your Growing Business

Sortly has most of the basic inventory management software features like warehouse management, inventory management control, barcode scanning abilities, and basic inventory reports. Spreadsheets aren’t an effective inventory management tool because they have to be updated manually, which is time consuming and means the data is almost always out of date. Also, spreadsheets can’t scale with your business, can’t communicate with your POS, and don’t show you how your products are selling.

  • A perpetual inventory system calculates your COGS after each sale, as opposed to periodically.
  • Organize the information related to your stock, supplier, and shipping details into an accessible system.
  • Maybe you’ve overestimated how much inventory you should carry or spent hours manually counting inventory after a big delivery.
  • Anything that involves your products, from timely ordering to proper receiving, tracking and storage, is part of inventory management.
  • Apart from the product-oriented information, it is vital to track all the information of the vendor or supplier.
  • These counts give you an overall picture of how much inventory you have on hand at the close of your year.

Most small businesses purchase inventory by simply calling up their supplier, sending them a payment, and waiting for their inventory to arrive. But as your business grows in size and complexity, you’ll need an organized system that makes sure purchases are ordered, budgeted for, and fulfilled properly. If you have lots of different products, spot-checking and setting PAR levels can seem like a daunting task. But they become a whole lot easier when you separate low-priority stock from high-priority stock and decide which products need your attention the most. Most POS systems also come with a card scanner that lets you accept card payments, send invoices and purchase orders, and offer advanced sales analytics tools.

About Physical Inventory and Cycle Counting

As the name indicates, sales forecasting refers to predetermining how many sales small businesses are likely to make in a given timeframe. This can be done using multiple methods, including looking at past data and moving averages for trend-based predictions. After verifying the physical stock counts and expected inventory levels, the next step is determining the difference between the physical stock count and the records. After finding discrepancies, it’s time for some detective work to discover what went wrong. Many inventory management challenges can be overcome with a simple barcoding system. It also helps capture additional information such as inbound and outbound traceability, stock transfers, total time spent in storage, and shelf life.

How often should a small business do inventory?

Periodic counts might be once every two months or every three weeks, depending on warehouse size and company needs. This will create better visibility than yearly or seasonal options but it also requires more time and manpower. Workers must ensure they are performing inventory consistently between each count.

We suggest a POS system to help eliminate errors in your inventory management and make your business more efficient. From there, you’ll need to create inventory count sheets to record your physical counts and begin counting. So, you might decide to count shirts every other Wednesday and jeans every two months. As a best practice, you would cycle count all of your products daily to keep bookkeeping for startups a good grasp on their levels. Schedule your cycle counts based on the speed with which you move through your inventory, with items that sell faster getting more frequent counts. Once you have chosen an inventory management method, you can implement it by programming an ordering cadence, automations, and alerts on your inventory management software or point-of-sale (POS) system.

Inventory management for small businesses

If you’re an Excel wizard, it’s certainly possible to create similar reports with spreadsheet software and custom formulas. However, you’ll have a much easier time of it if you get a POS system and let it do the number crunching for you. Plus, this frees you up to focus on tasks to grow your business, like interpreting your reports and making better decisions based on your findings. Upload the data to the POS system
The POS provider may have support for this process, or information may be available in the POS manual. Alternatively, it’s possible to enter the data into the POS software manually, but it’s not advisable. Manually entering the data is inefficient and also prone to human error.

how to keep track of inventory for small business

Read our guide to learn more about the best POS inventory systems for your business. In a just-in-time system, your supplier is only allowed to produce exactly the amount of stock needed to fill your customer’s orders, and no more. By submitting this form, you agree to the processing of personal data according to our Privacy Policy.

Key benefits of barcoding for small businesses

You can do this with most accounting software, a spreadsheet, or even a physical notebook. Various methods of inventory valuation applicable to both manufacturing and merchandising inventories. Methods of stock inventory management include specific identification method, average cost method, First In First Out (FIFO) method, and Last in First Out (LIFO) method. These methods help you to value inventory and hence divide the cost of goods available for sale between the cost of goods sold and ending inventory. A thorough, filled-out small business inventory template provides management and inventory personnel with item-by-item stock details and their current — and collective — value.

how to keep track of inventory for small business

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