However, if you store goods externally in fulfillment centers or supplier warehouses, or if you use dropship suppliers, you need to tie inventory processes and data tools to their systems. If you stock all products in your own facility, your inventory controls and processes are handled internally. How you source and store the various products you sell determines how you manage your inventory. Define Product Sourcing and Storage Methods Here’s a seven-step approach to creating an inventory management plan with procedures, controls and tools tailored to your business’s unique needs. Once you have good processes and procedures in place, you’ll soon find more time for business-building activities. Good inventory management is more than increasing stock accuracy, it makes your day more efficient. If you find that inventory-related tasks take up a major portion of each day, it’s probably time for a review and reboot. Luckily, you can avoid these roadblocks by incorporating simple inventory management procedures and tools into your operating plan.
Too much unsold inventory on hand at the end of the year equals higher business property tax and income tax bills. Over time, inventory overages also lead to bottom-line losses due to expired, outdated and otherwise unsellable stock.Īnd let’s not forget business taxes. It’s very easy to order excess inventory when you don’t closely track stock, which leaves you cash-strapped in the short term. However, stock shortages are just the first stumbling block caused by bad-or no-inventory management. If you don’t have goods in stock to sell, or if you can’t find items to fill orders, you have no income.
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Why It’s Vital To Learn How To Manage InventoryĪny business that sells products must manage goods properly to survive. However, it’s important to know the distinctions as you grow and begin delegating supply chain and inventory tasks to staff or outside contractors.
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Inventory management deals with receiving, tracking and storing the products you hold, plus provides data for informed purchasing.įor a small business or solopreneur, supply chain and inventory management procedures easily meld together. Supply chain management oversees the flow of products from raw goods and production sourcing through final distribution. Inventory management is a key element of supply chain management, but the terms aren’t interchangeable. Inventory management is the umbrella term for the procedures and processes that affect ordering, receiving, storing, tracking and accounting for all of the goods a business sells.
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