Keeping track of your inventory is easier said than done. As a business owner, it’s essential to know what you have, where everything is stored, and how often stock moves in and out.
Keeping track of your inventory is easy with a system like TradeGecko.
By implementing inventory tracking best practices, you’ll be able to reduce inventory headaches and streamline your business for success. Let’s take a look at inventory tracking best practices for small businesses.
Why is inventory tracking important?
Simply put: Inventory is money. A company’s inventory can be potential income, but also potential lost income if you don’t manage to sell things. That’s why you need good inventory management techniques to help you manage your stock.
Here’s how proper inventory tracking can help you save time and money:
Overstocking (having too many of certain items) may lead to loss of profits if perishable stock spoils, or if unsold products go out of style or become obsolete.
With perishable goods, you’ll need to pay special attention to things like expiry and sell-by dates. You’ll also need to keep track of where your stock is, so you can deal with things promptly and effectively in the event of a product recall.
Stockouts are situations where items are out of stock. These are terrible for businesses - costing you in missed sales and the possibility of losing customers permanently when they take their business elsewhere to satisfy their needs. Maintaining safety stock is important for all commerce businesses to prevent lost sales due to inventory stock outs.
Track growth metrics and data
Inventory tracking allows your company to assess its current assets, balance accounts and provide financial reporting. Keeping track of your sales reports and growth metrics is essential for the growth of your company, as this provides crucial data on profits, needs and sales, allowing you to optimize your inventory and stock management.
Inventory tracking best practices and tips
There are many different ways for businesses to manage inventory, and it’s up to you to determine which inventory tracking best practices would work best for your organization.
- Categorize your inventory
By splitting your stock items into categories, it’ll be easier for you to track them and ensure you have enough on hand. Depending on your business, it may also be necessary for you to track data on individual products, like sales performance or the frequency and volume of sales.
TradeGecko’s inventory tracking platform can help you to add tags/filters to your products or sales orders, allowing you to effectively categorize your items and conveniently sort and search for things in your inventory.
- Manage costs with intelligence reports
Regular inventory intelligence reports can be essential to the efficiency and profitability of your business. These reports can help provide you with an accurate, up-to-date picture of stock levels for each product so that you’ll always have sufficient stock to meet customer demand, allowing you to avoid overstocking and stockouts. This in turn helps you reduce waste and unnecessary additional storage costs, and prevents you from losing money with missed sales.
You can use TradeGecko to get accurate, real-time insights into your inventory through business intelligence reports. This way, you’ll easily be able to track things like stock movement and the cost of goods sold.
- FIFO (First-In-First-Out)
FIFO is the best practice for businesses dealing with perishable stock. It allows you to get the oldest products out the door first, preventing waste due to spoilage.
To implement this system, it’s important to have an organized inventory management system to help you track things in your warehouse. Stay in control of your expiring stock with TradeGecko’s batch and expiry tracking features, so you’ll know exactly where individual batches of your products are, and when they’ll expire.
- Prioritize with ABC analysis
ABC analysis allows you to focus time and resources on the items that are most profitable, by sorting them from the most to least valuable (by dollar value).
A - high value items with low stock volume
B - moderate value products with moderate stock volume
C - low value products with high stock volume
The idea is to manage each category separately, and as needed. For instance, A-items should be tightly controlled and monitored, and frequently reordered to avoid stockouts. Conversely, C-items which are lower in value require minimal attention and reorders, while B-items are somewhere in between. If you’d like to learn more about ABC analysis and other inventory tracking best practices, please read this article on inventory management techniques for more inspiration.
Inventory management is a critical business process, but it doesn’t have to consume a ton of your time or resources. These inventory tracking best practices will enable you to gain control over your inventory, so you can maximize profits, reduce costs and optimize inventory management.
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