One of the most valuable assets in business is the inventory stock used to generate profits and revenue. However, in today’s business environment quality data is now becoming equally valuable. Quality data is the foundation of operations, inventory control and in taking vital business decisions. Maintaining accurate, complete and consistent data is important for business success and sustainability.
Most SMEs rely on Excel sheets for inventory management. Although it is a great tool to capture and analyse data the bigger the data is the more error prone it becomes. Yes, using Excel is relatively easy, convenient, and cost effective in the beginning. However, as your business grows, you will quickly leave those benefits behind. Continuing to use Excel to manage your growing business will cost more money than investing in an inventory management solution.
Having accurate inventory management is an important investment for any company. This can help with efficiency and in turn create greater customer satisfaction, which is beneficial to your business. Here are 10 reasons why you should have accurate inventory management system.
1. Fewer missed sales
When you don’t keep an accurate inventory report, it’s easy to run out of products—and miss out on sales. Instead of relying on your memory or a visit to the warehouse to decide what to reorder, use an up-to-date stock report to:
- Quickly see what products are low in stock
- Compare your stock level with what’s been selling well
- Place reorders before you run out
Depending on what inventory software you use, you also might be able to set minimum and maximum stock levels for each item. Then you can view the list of products that are below that level and place and send new purchase orders quickly.
2. Better-invested cash
To be successful in retail, you need to invest your cash wisely by buying the right quantity of each product. It should be enough to keep sales going and prevent stock-outs, but not so many that some just sit on the shelf or become dead stock. Keeping accurate inventory reports helps. You can quickly identify slow-moving products, so you can mark them down and clear them out—to free up cash to invest in new raw material, marketing, and more.
3. More accurate reports.
Accurate stock reports produce accurate stock cost values. They are essential to the precision of several financial reports if you use Cost of Sale accounting. This method associates a cost, which comes directly from the product’s asset value, with each sale. That makes correct cost values critical to your Balance Sheet as well as your Cost of Sales and Profit and Loss reports.
4. Early problem-detection.
If you’re keeping an eagle eye on your inventory levels, you’ll spot problems right away, instead of months later during annual stock takes. Maybe a step in your warehouse process is being missed or one of your salespeople is making mistakes on sales orders. You need to know now! The best way? By constantly reconciling sales and purchases through a tightly maintained inventory system.
5. Happier customers.
Exact inventory reports also help you provide better customer service. When customers say they haven’t received one of the products they ordered, you need to be able to check your report and confirm that you have one extra in the warehouse. Likewise, if you regularly keep on top of inventory levels, you can identify incorrect shipments sooner. And if your stock system is up to date with purchase orders, you’ll be able to sell customers the products they want because you’ll know more are just about to arrive. This kind of communication encourages your customers to trust you, which in these competitive times, is a valuable asset.
6. Efficient reordering.
Reordering will be fast and easy if your reports tell you what’s in stock. You can work methodically through your product set, making informed buying decisions instead of physically checking your warehouse shelves to write a purchase order. If your reports come from an advanced inventory management system, you also can tell if you already have products on order with a supplier and if your supplier has long lead times or irregular deliveries. This information is a must if you want to keep reordering under control.
7. Theft and loss reduction.
From theft to loss to damage, stock can be lost in many ways. But if you manage accurate stock levels, you can identify it quickly. And while no one wants to think that their staff may steal from them, it pays to be vigilant. Showing your staff that you keep an accurate inventory is a great theft deterrent.
8. Trusted information systems.
Running an efficient and profitable business is all about sharing and using accurate information, usually through an integrated software system. If your staff knows that the stock levels in your system are always up to date, they’ll trust the software and use it more for all of their tasks. You’ll end up with better data for better reporting, collaboration, and efficiency across the team.
9. Reduced warehouse costs.
When your inventory report tells you what you have in stock, the pick-pack-ship process runs more efficiently. Your warehouse staff doesn’t need to run around looking for the last product because they’ll know exactly when it sold and shipped. This enables you to process more orders in the same amount of time with the same staff—or balance your resources differently.
10. Stock take and end-of-year efficiency.
When all your inventory levels are up to date all the time, periodic stock takes are faster and more efficient. You’re just confirming data that’s already in your system instead of doing a lot of time-consuming data entry.
The best way to achieve high data quality with technology is to integrate the different phases of the data quality cycle into operational processes and match these with independent roles. Gather all of the data into a single integrated system to achieve greater control over the integrity of data flow.
Much of the technology available to businesses today is aligned with the data quality cycle to provide in-depth functionality that supports multiple users in their individual processes.
Software tools assist in different ways by providing data profiling functions that cleanse, standardise, match and manage hierarchy. It also provides user-specific interfaces to support workflow and integrates with other applications to cleanse and enrich. TranZact is one such tool specifically designed for SMEs to to optimize their business processes from customer inquiry to dispatch. It uses centralized data to auto update information in modules when changes are made in one modules thus making the whole system efficient and error free. What’s best is that the basic version of the product is free forever, so that SME owners don’t have to worry about finances before taking the first step towords their digital transformation. Sign up today to know more.