5 Inventory Management Strategies for SMEs

Feb 10, 2022 in Management

4 MIN READ

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Everyone nowadays talks about starting their own business, seeing the glamor that comes along with the grand lifestyles and luxurious living. But what people don’t see is the backend work that goes into running smooth business operations, such as accounting, systems management, and even inventory management.

For any business with a product or service, inventory management plays a crucial role. If you’re looking to succeed in business, you’ll have to have good inventory management practices. Thankfully, taking care of stocks isn’t as difficult as it once was as technology has greatly improved how we store and manage product inventories. In this article, we talk about the advantages of inventory management systems and how they replace old practices.

There are some old inventory processes that are now problematic with new inventory management strategies in place. What are these old practices and how do we overcome them? Here, you’ll learn five common old processes we need to stop if we want to improve inventory management strategies.

1. Manual stock tallying

Managing stock and inventory is the backbone of any inventory operation. Once upon a time, people had to tally stocks manually, counting each unit one at a time. This practice doesn’t only eat up time, energy, and resources. It also leaves a lot of room for human error. What companies and business managers should start to look into is using an inventory management system to tally stocks.

Inventory management softwares have various ways of tallying stock. But the most common way is to integrate these systems for retail stores and end distributors with POS systems and e-commerce sites so that your business tools will automatically update existing stocks as they go out. These systems also serve as an official record of stock replenishment so that companies have a more detailed breakdown of stock movement.

2. Lack of Automations

We’re moving into a day and age where automations are starting to take over repetitive tasks. In 2021, robots ran 7% of warehouse operations. There has also been an increase in using automatic guided vehicles or AGV to run floor operations in warehouses. We’re far from the time that these robots take over jobs. And these automations and artificial intelligence-based innovations are here to help inventory teams be more efficient, not threaten their livelihood.

Robots aren’t the only automations for inventory management. There are modules of inventory management systems that take care of repetitive tasks like e-invoicing templating, notifications, stock re-ordering, stock computation, and so on.

3. Paper-based Reporting

Some of the best inventory management software solutions are cloud-based software, meaning anyone can access it anywhere as long as they have access to an internet connection. This improvement has reduced or even eliminated for some the need for paper-based reporting.

Most inventory management software features occur in a softcopy format and don’t require printing to complete. For instance, inventory managers can fill out stock replenishment requests via an online system and send them to stakeholders to approve the order. With less paper, companies are able to save on printing and record storage costs. It’s also a more sustainable option as it lowers paper usage significantly.

4. Hunch-based Decision-making

In line with reporting, another old system for inventory management that is impeding a company’s progress is hunch-based decision making. When deciding which products to promote, some businesses might just go with personal opinions on which work best. But now that inventory management systems provide real-time analytics on stock movement, we should now start making more data-driven decisions.

Around 36% of decision-makers deploy inventory management systems so they can optimize inventory supply and demand. So using inventory management software to track stock data should now be the norm. Some data you should look at with your inventory management system include product volume movement, deadweight loss, cost of storage, and other analytics.

5. Old stock management

Most companies, especially businesses with expiring goods such as food products, would like to follow a first-in, first-out system. But doing so with an old and manual system can be very difficult to determine. Of course, you could hire more people to manually check expiration dates regularly, but that’s no longer the most efficient way.

Now your business can use an inventory management system

Now your business can use an inventory management system to keep track of expiration dates so you know which old stocks need to go first. Some inventory softwares provides all information on products with spoilage needed to spot stocks that need to go out as soon as possible. Some of the data provided include best-before dates, expiry dates, and a number of days till expiry, to name a few. Your inventory and stocking team or employee can even set up automated alerts on products that are nearing expiry.

We’re Never Going Back to the Normal We Once Knew

If there’s one thing that the COVID-19 pandemic taught us, it is that we will never go back to the normal we once knew. And that’s nothing new as times have always changed business practices. So, if you haven’t automated inventory management with software, it’s time you started doing so to stay efficient in this hyper digitized world we now live in.


TraZact

TranZact is a team of IIT & IIM graduates who have developed a GST compliant, cloud-based, inventory management software for SME manufacturers. It digitizes your entire business operations, right from customer inquiry to dispatch. This also streamlines your Inventory, Purchase, Sales & Quotation management processes in a hassle-free user-friendly manner. The software is free to signup and gets implemented within a week.