If you lose track of your stock, you’re on the track to business failure. Good stock management is critical but it’s easy to get caught out.
Perhaps you enjoyed huge demand for a particular product a few months ago. You ordered – possibly over-ordered – and when the hype wore off, you got stuck with piles of merchandise gathering dust.
Now your customers want a different product, but you lack the time, funds and warehouse space to import what you need. Worse, your competitors are only too ready to step in and take your customers off your hands…permanently.
Poor stock management is the bane of any business.
Too much stock means you’re stuck with surplus, out-dated stock that you can’t even move at a fire sale. Spending too much on your inventory also chews up your working capital, increases your warehousing costs, and erodes your profit. Too little stock means you can’t fill customer orders promptly (if at all) meaning they’ll likely go elsewhere.
What you really need, is a clear idea of how much supply you’ll need going forward, and when you’ll need it. Your past customer data is the best way to make these kind of projections. If demand is steadily increasing, you can estimate how much you’ll need in a specific future month. Are there seasonal influences or market influences that may also increase or reduce demand, such as Christmas or EOFY?
Next you need to be able to track what you actually have and how well it’s selling, so you can adjust your own orders up or down as required. It’s all too easy to miscount or underestimate loss, such as damaged stock. And how can you even carry out a stock count if you don’t have a clear idea of how much there is meant to be?
You may have kept various records, from paper sales receipts and invoices to spread sheets. But these are far from fool proof and they’re a lot of work to aggregate and sort through. It’s easy to lose or accidentally delete a spread sheet, or fail to save changes. You may also have issues with multiple people working on the same spread sheets failing to synchronise them properly, or overwriting one another’s data.
Accounting software is a great way to help track past sales and generate future sales predictions. It can record orders and sales as they take place, relieving you of a lot of the data entry burden.
When it comes to taking stock, instead of having to delve through old invoices and spread sheets, the accounting software puts everything together in one single, simple interface. You’re finally back in the driving seat with a detailed overview of sales, stock management and customer tracking. And it will keep reliable back ups so you don’t lose precious information.
Research suggests that analytical tools help businesses improve inventory levels by between 20% and 50%, resulting in savings for years.
Improving your processes for better stock management also helps you educate yourself on your market and customer trends. Having that control centre overview, and being able to use your own data for future planning, will greatly help your competitive edge.
This is your “Big Data”. Instead of paying huge amounts of money to research the market and determine future product demand or direction, you’ve got all the insight you need already. What are your customers buying more of, and what are they less interested in? Consider slashing prices to move that stock more quickly if you can.
Being on top of your stock data can really help you pick future trends, hone your marketing strategy and communications, and develop new products that the market is hungry for.
You need to know exactly what you’ve got, where, at any time. You also need to know what your customers are likely to want going forward.
Finally, it will save you a huge amount of time, effort and even money when it comes to doing your financial reports. Knowing what you have, and how much you need to depreciate, and how much you need to budget for next year is critical to the smooth future running of your business and continued profitability.