In order to run a successful business, all its operations must run smoothly. Successful entrepreneurs know they need to take care of all aspects of a business for making a good amount of sales. The production levels need to be controlled, sales volumes need to be forecasted, marketing budget needs to be set, and finances must be allocated accordingly. Neglecting any of these areas of a business might turn things upside down for a company.
Inventory management is one such area of a business that impacts all its other operations. It is, unfortunately, not given as much attention as it deserves, especially in the small-scale businesses. The consequence is that these businesses cannot scale up, because their inventory systems are not efficient enough to handle the business growth.
Are you running a small scale business and want to learn more about inventory management techniques? If yes, you have come to the right place.
What is Inventory Management?
Inventory management is keeping your stock at just the right levels at all times. It means you manage your production and sales levels in such a way that you neither ever go out of stock nor end up with excessive stock.
Effective stock inventory management involves forecasting your sales before they actually happen and keeping track of your orders efficiently. Order management is part of inventory tracking, as it helps in keeping your stock levels in line with your expected sales.
Why is Inventory Management Important?
If you do not have proper inventory management in your business, everything is going to be chaotic. You won’t be able to cater to your orders efficiently, which might frustrate your customers. You will also be probably lagging in the competition. If your competitors have better inventory management techniques in place, they might be successful in stealing your customers by providing them with better customer service.
Inventory management is not only important for the sales department. All your business operations are interrelated, and all get affected by the way you implement stock inventory management in your firm.
Companies that take proper responsibility for keeping their stock levels under control invest in inventory management systems, which automate the process of inventory tracking to a great extent. Businesses that run online also use in-built inventory systems on their ecommerce website.
If you are running your business via a brick-and-mortar outlet, you would need to have proper retail inventory management in place. When you are in a retail business, controlling your stock levels is even more important. If you are out of stock, your customers can clearly see. The racks and shelves in your outlet will look empty. As a result, your customers might stop visiting your retail outlet if they are repeatedly told that the item they are looking for is out of stock. This reflects negatively on your brand image.
On the flip side, if you normally have too much stock in your retail outlet, it shows that you cannot make enough sales, which means your inventory management is not effective. You are probably producing or buying more stock than is required. This also does not create a good impression in the eyes of your customers. If your customers notice you are facing a dip in your sales, they would assume that the quality of products is probably not up to the mark. They might also assume that you are not using competitive pricing strategies. Either way, you might lose on your sales if you do not take care of your inventory order.
What are the Benefits of Effective Inventory Management?
There are many benefits of applying good inventory management techniques to your business. Some of them are discussed below.
1. It Helps You to Avoid Excess Inventory
When you forecast your sales properly, and manufacture or purchase goods, your inventory tracking can be well in place. You won’t be manufacturing or purchasing more than you need, which will help you avoid the problems that arise from excessive inventory.
Excess inventory is harmful for your business because it keeps your resources tied up and stuck. Your stock only has value if you can sell it and cash it out. If your products keep lying on the racks and shelves in your store, and you cannot make money out of them, then they are just wasting your resources. Excess inventory occupies space that could otherwise be used for goods that are more in demand.
When a business is failing at its inventory management and holding excess stock, it often needs to sell it off at lower profit margins. On the flip side of this, a business that implements effective inventory management techniques can maintain good profit margins on its sales.
2. It Enables You to Deliver Your Orders on Time
Tracking orders is crucial for being able to deliver them on time. If you have good inventory management in place and are free from the tension of running out of stock, you can put more focus on order management.
Good order management helps you keep your customers happy by keeping them informed on the status of their order and delivering the product or service to them on time. If you track your orders properly, you can also get time to maintain good relationships with your customers. Your customers complain less and are more willing to engage with your brand.
If you build a website on Strikingly, we enable you to manage your orders effectively, by using our order management feature in the Strikingly editor. You can view the order number, order status, customer’s name, total price, and the date when the order was placed for each order.
Image taken from Strikingly
Another feature in Strikingly that helps you deliver your orders on time is its availability of various types of payment methods. When you give your customers a variety of options for making their payment, there are more chances that they will pay instantly by choosing one option, instead of getting fed up with the process and backing out from the purchase.
Image taken from Strikingly
3. It Keeps Your Customers Happy
Good inventory management means you always have stock available for items that your customers want to buy. It requires businesses to keep a constant check on changing market demand and trending products for achieving this.
When you always have stock for what your customers want to buy, your customers get happy and satisfied every time they come to buy from you. This enhances their brand loyalty, resulting in repeat purchases and higher average sales volumes.
If your customers can trust you on your inventory systems, you get an edge over your competitors. They will always come to you to buy because they know you will not disappoint them. Conducting a competitor analysis can keep you well informed on the products and levels of stock your competitors are keeping. Applying better inventory management techniques than your competitors is key to keeping your existing customer base.
4. It Allows You to Stay Ahead of Competition
As mentioned earlier, effective inventory management allows you to stay ahead of your competition. Customers don’t enjoy wasting time going into outlets and stores where they always find their favorite items out of stock. Regularly being out of stock for products that are high in demand shows a lack of efficiency in your inventory management.
Image taken from Strikingly user’s website
A business that does not keep up with its inventory tracking the way it needs to is susceptible to losing a chunk of its customers to its competitors. It is, therefore, important to take corrective measures if you are facing this situation. Forecast your sales for each of your products ahead of time. Don’t give your competitors a chance to beat you in your stock inventory management. Make sure you always have stock available for the goods that your customers want to buy.
5. Helps You in Making Successful Product Line Extensions
If you are handling the sales of your existing product lines successfully, you can consider making product line extensions. Product line extensions help you keep up with the changing market trends, and also to penetrate new markets. They open up an additional stream of revenue for your business, and even open opportunities for making international sales.
But if your business is poor at inventory management, you won’t be able to implement a product line extension successfully. Your existing products will end up getting even more neglected and your orders might get chaotic. This can really turn into a mess if you do not apply good inventory management techniques to control your stock levels for each product line.
For instance, a company offering interior decoration services for bedrooms might decide to extend its services to design living rooms and dining rooms as well. It can successfully implement this product line extension only if it’s using effective inventory management for the materials required to deliver these services.
Image taken from Strikingly user’s website
If you are looking to build a website that allows you to use effective inventory management techniques by providing good order tracking features, try out our platform, Strikingly. Strikingly is a feature-rich website building platform, where you can build your site all by yourself without having to write a single line of code. We love to see our users’ businesses thrive and are here to support you on every step of the way.
Inventory management is even more critical when you are running your business online. With Strikingly, you can build an online store and sell your products at the convenience of your home.