3 Key Inventory Tactics for Success

Inventory Tactics for Success

It is easy to get lost in the minutiae of running a business, but inventory tracking is one big aspect of supply chain management, and therefore, business success. A poorly planned inventory system can interfere with company accounting and tax records, powerful threats to longevity that no company should experience. An efficient inventory system should be simple, highly customized to business needs (What do my employees stock everyday? What do they see?) and tailored to growth. There are 3 key pillars to quick-starting an inventory system that will stand the test of time.

1. Consistent Naming Convention

All organized storage areas must come complete with a clear and concise storage location system. Think of location chaining as a scientific nomenclature. Just as a genus comes before a species, a larger inventory space should precede a smaller one. The best practice is unique and consistent inventory nomenclature that prevents stocking in the wrong areas. Even a few mistakes can lead business down a slow and slippery path to disorganization and messy accounting. For example, if an item is stored within Warehouse B, Lot 6, Shelf 2a, Section 1, the components of this naming system can be broken down to Warehouse, Lot, Shelf, and Section. If an employee who starts entering items only by their Shelf and Section out of error, could start placing items in the wrong warehouse altogether eventually.

2. Think Visual

Many people are visual learners, so using this trait to keep up with inventory is only natural. After coming up with a system by which to organize inventory, think of label design and system optimization. Letters on labels should be large and printed in an easy to read font such as Arial. Another visual tactic that will keep inventory organized is the use of color-coding. Its been proven that color-coding helps individuals associate concepts that are closely related more easily. Try color-coding lots or certain sections within an area to match the labeling on each product. Also keep numerical identification easy on the eyes. Verification of a 15 digit SKU is time-consuming. Stick to 5 or 6 numbers at the most when labeling. Creation of a more visually distinct inventory system can be done easily with software designed specifically for inventory tracking system optimization.

3. Software

This is the big one. A great business means great inventory tracking software. Even small mom and pops are going to need software in order to grow. Spreadsheets, pen and paper, and outdated software undermine all efforts at consistency and accuracy. There are a few considerations for choosing quality software that works. The basic guidelines for identifying good software go above and beyond tracking inventory; it will also allow many employees to access it, possibly from different locations. It will also offer inventory specs and number, while providing accurate historical data that can be used to predict future sales spikes and sale trends. Just as industries differ, it is difficult to pinhole one reigning inventory software company. However, it is critical to identify software development companies that know the inventory needs of a particular industry. After identifying specialists in your industry, you can then discuss the ins-and-outs of supply chain management objectives.

Always keep an inventory up to date. This not only helps tax efforts and accountability, it saves time and money that would be spent on re-constructing an inefficient system. It will also keep management stress to a minimum, as accounting and tax professionals can accurately record and analyze expenses using this information. For more information about better business organization tactics that could help your business. As inventory affect so many aspects of a business, it is important to get it right the first time.

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