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3 Simple Steps to Painless Inventory Tracking

Create an organized and dedicated inventory tracking plan for your small business by following these simple and effective steps.   The heart of any small business is its warehouse. Products and data flow through it day and night. Profitability and overall customer satisfaction depend on the efficiency of inventory tracking within its four walls. But if the heart of a business isn’t functioning effectively, it could mean painful repercussions. In fact, poor inventory control has been reported as one of the primary reasons for business failure. Yet inventory control is often pushed aside for seemingly more important challenges that come up in day-to-day operations.  Nearly half of all small businesses in the United States haven’t adopted more technologically advanced systems. They still use pen and paper or Excel spreadsheets to manage inventory, or they don’t track it at all,  according to recent survey of small businesses.  This is a huge mistake since most businesses could potentially decrease their inventory costs by as much as 35% by using inventory tracking software. If you believe your company is doing just fine with these manual processes, think of this: Even the most skilled typist will make one error in every 300 keystrokes. Over time, when mistakes aren’t caught or removed from record, human error becomes very costly. It can devastate a company’s supply chain management, in turn ruining profits and damaging its reputation. Here are three steps to help painlessly keep your business moving forward through efficient inventory tracking:

1.Stop using spreadsheets

Michael Wohlwend, vice president of SAP Americas, told Materials Handling that the use of Excel for inventory tracking is now considered outdated. Old technology can cause potential problems that limit your business’ capacity to grow for several reasons, including:

"I no longer have to guess inventory usage and spend hours a day updating spreadsheets."

• Inability to efficiently track large quantities of inventory: When using a spreadsheet, workers can spend hours to track down a single item or to manually key in inventory data. When using an inventory management system, these things are just a scan away.
• Lack of real-time data: Bryan Harej, Inventory Analyst at TopGolf, previously used manual spreadsheets to manage a large inventory at multiple sites. He said they never truly had a handle on inventory, and trying to run at full capacity was nothing less than stressful. After adding dedicated Inventory Control software, Harej shared, “I was immediately able to see reports to determine the usage at each site.  From there I can see what we have in stock and what we need to order.  I no longer have to guess inventory usage and spend hours a day updating spreadsheets."
• Limited historical data analysis: Forecasting inventory is an integral part of business, preventing you from purchasing too much or too little during a given season. Restricted accessibility to this information can tie up money with excess inventory or lose sales when items aren’t available. Customer demand is always met when you have this valuable data at your fingertips.

Wohlend added that forward thinking businesses desire powerful tools and unified data in order to gather real-time and highly accurate supply and demand, supply chain and financial data.

Related Article: Inventory Management 101

2. Implement Inventory Tracking Software and 2D Barcodes

Implement inventory tracking software. You’ll need software and a barcode scanner or mobile computer.  Add 2D barcode labels to warehouse inventory, and the status of those items will be known with a simple scan, rather than having to manually key in a long SKU number.  With one scan, 2D barcodes can instantly share how many of each item is in stock, what items need ordered and even what items there are too many of.  They can hold up to 4,000 characters of text so even more information on each inventory item can be added if needed. Having barcoded items, and a powerful system behind them, will help your company reap a number of benefits like vendor management, mobility, quick audits and cycle counts, accurate reporting and more.  All to get your business back on the road to profitability. Just ask Lee from Precision Drilling. Prior to adopting an inventory barcode system, they were using Excel and hand-checking items in their warehouse. It was no less than a nightmare. “We were duplicating a lot of items and not getting the proper inventory checks done,” he said. He added that once the inventory tracking system was implemented, it easily paid for itself within six months.

3. Manage Inventory

Especially during certain peak seasons, you might tend to buy too much inventory. By using an efficient inventory tracking system, data will be available in real time to see how much of each item is still in stock. These products that sit around on shelves may depreciate, get damaged or just go out of style, not to mention take up precious shelf space. Paul Huppertz, supply chain expert with The Progress Group, told Entrepreneur you don’t have many choices when these mistakes are made, saying “You may end up marking it down, selling to discounters, or shipping it to overseas liquidators.”  This ultimately takes away from your bottom line.  Having to write down or write off inventory will cost a great deal of money and possibly effect your relationship with customers who will have a late or canceled order.  This can cost more than just what it costs to do the write off or write down. Too many businesses start shopping for inventory management software after a major inventory disaster has happened.  Don't let losing thousands or even millions of dollars in lost, stolen or damaged inventory be the driving force behind making this a priority.  By being proactive and taking care of your investment now, you are creating a more secure future for yourself, the employees that count on you as well as the business itself. How would implementing dedicated inventory management software help you manage your warehouse more accurately?