Understanding the importance of employees in the process of managing inventory is crucial. It does not matter what software the business owner has, what technology or what system they have in place. If employees are not trained and monitored inventory will not be accurate and can become a liability instead of an asset.
Business owners need to understand that in order to be successful they must have control of their products at all times.
The following are tips to make inventory management easier:
- Correct on hand quantities are needed to ensure correct amounts are ordered.
- Products need to be scanned in or added correctly to prevent wrong items being ordered.
- Products must match the invoice so on hand inventories are updated correctly.
- When ringing products on a register, they must be scanned individually. Do not use the quantity key. Scanning two similar products as one will skew inventory of both items. One item will have too many and the other item will not have enough and over the time this can build up and inventory will get continually worse and worse if not accurate.
- Have a bigger buffer on fast moving items.
- Periodically spot check to ensure inventory numbers are correct.
- Investigate reasons for out of stock or too much stock conditions. Business owners must find out why it is happening and get it fixed.
- Rotate stock. Use FIFO (First in First Out).
- Make sure your insurance is substantial enough to cover inventory: What will happen in case of a disaster? How quickly will you recover and what will your insurance company ask you?
- Have constant communication with your accountant providing the value of your inventory at the end of each fiscal year.
- Anticipate demand, especially if it is a seasonal business.
- Location, location location. Know where the most valuable items are, and know where the most accessible items are.
- Take an active interest in your employees, communicating clearly how important it is to avoid inventory mistakes for the company. Educating them in how mistakes will affect the business in a negative way is crucial for a small business.
As you can see employees play a principal role in inventory management and it is up to the business owner to train them accordingly in order to avoid mistakes or face the following consequences:
- Inflated storage costs. Too much inventory on a product not needed becomes a liability.
- Outdated merchandise that will lead to a possible loss of a product.
- Loss of sales and profit from not having in stock conditions.
- Customer satisfaction and lack of customer loyalty.
- Shipping and delivering delays