When small to medium sized businesses want to scale and remain competitive, efficient inventory and order management is a key area to use good systems, processes and apps.
It makes sense if you are considering your systems and processes as you regularly review your business and grow that you should take a look at what we do and who we work with.
You may be wondering why we work with Cin7 for inventory management. SMB Consultants are proudly platform agnostic. We like to be an independent voice that works with each client so we can ensure and give each client a recommendation and support for implementation that we believe is the best possible one for them with their best interests at the core of our recommendations. In saying this, we do have partners we work with regularly due to the fact we specialise in working with businesses only in the verticals of retail, wholesale and manufacturing.
Cin7 is one of our partners we regularly recommend for inventory management.
Why Focus On Inventory Management?
Inventory management is much more than doing an annual stocktake.
Inventory Management is a system that tracks the entire process of stock; from the raw materials, components, through to the finished products to ensure enough supplies are on hand.
Good inventory management is the process of maintaining sufficient stock levels to ensure business continuity. It includes, ordering, storing, using, and selling business inventory.
A key measure of business health is maintaining adequate inventory turnover. Ensuring your business does not have more products than sells – or excess inventory.
Poor inventory turnover leads to deadstock or unsold stock/product.
Consistent poor inventory management can lead to poor cashflow and business strain.
To maintain healthy stock turnover, products need to be sold.
5 Ways To Sell Products And Maintain Healthy Inventory
Thanks to technology and the trends of how many people are living their daily life, there are a growing number of ways to sell products including:
Offline. Where sales happen ‘face to face’ using a physical location typically known as a ‘brick-and-mortar’ location to sell products.
Online. Also known as ‘eCommerce’ where sales occur over the internet using a website or online marketplace.
Multichannel. This is increasingly the most common way for sales to occur. It utilises multiple ways to sell to customers including but not limited to a combination of an online store or marketplace or a physical location. Increasingly, companies also use social media sites to sell products.With multichannel selling, each channel operates independently of each other.
Omnichannel. This way of selling creates a unified, integrated experience for customers across all offline and online channels. Where multichannel selling operates independently, omnichannel is focused on a seamless experience for the customer.Omnichannel is customer centred but often creates headaches for companies that don’t have an integrated inventory management system.
Wholesale distributors sell products to other businesses rather than individual consumers. This form of selling is referred to as business-to-business (B2B) or B2B ecommerce. B2B selling can include any of the above methods.
Regardless of how you choose to sell products, inventory must be managed. However, inventory management is different depending on the constraints of how products are sold.
The Positive Impact Of Good Inventory Management
Good inventory management is an essential for a successful business. The benefits include; seamless customer experience, maximising profits, and improved cash flow. All of which enable a business to be sustainable.
Without an effective inventory management system in place, businesses risk running out of products during peak demands from their customers.
An inventory management system should optimise fulfilment and avoid shrinkage and waste.
Good inventory management includes the following:
Enterprise resource planning (ERP). ERP software manages key business operations including human resources, accounting, procurement, warehousing, production, marketing, and sales. ERP systems optimised for inventory management help maintain optimal levels of stock by combining the inventory needs of staff, customers, and suppliers.
Proper warehouse management. The barcode system, first-in-first-out (FIFO), and last-in-first-out (LIFO) techniques offer a clear picture of present and past inventory available with the company and optimise warehouse functions.
Managed sales operations. Sales is a continuous process that depends on manufacturers for goods or services. Efficient inventory management minimises the risks of unavailability of raw materials needed in manufacturing.
Customer experience. Understanding the customer buying journey mitigates risks associated with insufficient stock to fulfil orders.
Shrinkage avoidance. Shrinkage results in inventory loss attributed to employee and customer theft, administrative or cashier error, vendor fraud, damage, and spoiling.
Cash flow. Inventory levels are key to maintaining a good cash flow that ensures all aspects of the business run smoothly. Excess inventory ties up cash in products that could rather be spent on operations including salaries and other fixed costs.
Fulfilment. Product availability is essential for fulfilling orders quickly. A good inventory system delineates where products are along the supply chain.
Identify actual stock on hand and the inventory requirements for the goods sold to determine if gaps exist between demand and supply, and reasons for those gaps.
2. Analyse spending patterns and consumer demand
Market demand forecasting helps organisations estimate production quantity to determine what is needed to maintain adequate inventory.
3. Evaluate the cost involved
Cost of goods sold includes different expenses like warehousing, maintenance, bulk discounts, transport, and supply chain costs. Each of these needs to be well analysed.
4. Identify the extent of process automation
It is not possible for each organisation to completely automate the inventory management process. However, it’s important to identify those particular areas where automation is possible.
5. Inspect supplier’s performance and practices
The supply chain is critical for maintaining adequate inventory. Identifying any holes in the supply chain or supplier’s performance is necessary. And, if needed, identify additional or alternative suppliers.
6. Classify inventories into various categories
Products must be segregated into categories based on the product type, maintenance cost, customer class, or profit margin.
7. Set objectives for all inventory categories
Set benchmark objectives and goals to efficiently track and manage the performance of all inventory categories. This can identify any issues within each of the categories.
8. Prioritise the areas of improvement
Analysing goals and objectives allows companies to prioritise improvement needs. Improvement prioritisation should be based on the impact of problems identified. Implement a hierarchy to address those areas.
9. Take advice from experts
Designing a proper inventory management system cannot be overemphasised. Employing consultants or experts will ensure the inventory management system meets the company’s needs and stays within their desired budget.
10. Frame suitable inventory management policy
The final step in implementing a good inventory management strategy is consistent and timely evaluation to determine what changes and improvements are necessary to add value and create an improved customer experience. These changes can be based on a number of factors, most notably supply and demand.
Choosing an inventory management system
Choosing the right inventory management system for your circumstances for your business as always depends on a number of factors.
There are indicators you have outgrown a standard inventory system. Running out of stock or excessive ordering leading to too much admin time rather than sales and growth tasks, it is likely time to automate your inventory process.
Features and Benefits
What are your “must-haves” for your inventory management system? Do you ship orders or use digital packing? Does your company process both wholesale and retail orders? Are you manufacturing your products? All of these affect which type of inventory management system is best for your company.
Adequate Staff Resourcing
Customer support is essential for set-up as well as troubleshooting should things go wrong. Support includes phone, chat, and/or email contact. Consider support hours –is the support team available when you need support?
Determine the technical prowess of your staff. Will the inventory management system meet those needs and ability levels? The system you choose needs to be easy to use as well as transferable between departments.
Create a list of required integrations, e.g., ecommerce platform, accounting, shipping, marketplace, POS, 3PL, etc. It’s essential that the new inventory system integrates directly without requiring additional applications, middleware providers, or software managed by third parties. Unnecessary integrations have the potential to increase headaches and software malfunctions that can increase admin time rather than reduce it.
Your inventory management system will manage a critical part of your business. Finding innovation-driven software using the latest technology is vital.
Cin7’s inventory management solution for multichannel selling
Cin7 was built with modern businesses in mind. They consistently dedicate time to building and evolving their platform to stay ahead of technology trends enabling future proofing for businesses that use their platform.
Its inventory and order management software offers acloud-based solution that integrates all your sales channels into a single platform. Cin7 provides advanced automation processes to create seamless transactions centred around a positive customer experience.
It’s based on this that we often choose Cin7 for clients.
Is Inventory Management The Only Thing To Consider For Business Sustainability?
The short answer is no. Whilst inventory management is very important for growing inventory based businesses, it’s important to assess all processes of the business, identify gaps, assess resources and utilise technology to enable efficiencies for long term business success.
SMB Consultants have a 5 Step Process where we focus on deeply understanding your business. We dedicate ourselves to using our knowledge, experience and business contacts to not just add an app to your business, but to instead work through our proven 5 step process andensure the right processes and product fit is achieved for your business therefore achieving business efficiency, and ultimately saving you time and money.
Book a complementary Discovery call to see how best we can work together to achieve your business growth goals.