It is nearly impossible to run a business (small, home-based or otherwise) without effective inventory management. In the final quarter of 2011, Apple overtook Samsung as the leading retailer of smartphones for the year. Many experts chalked this up to Apple’s extremely effective inventory management system. Having the products that your customers want on-hand is crucial to maximizing your profits.
First, you need to make sure that your view of inventory management is healthy. Sure, you can manufacture X number of widgets each day, but if Y, the number you’re able to sell, is significantly smaller, you have a problem. Hanging on to inventory is one of the best ways to eat into your bottom line. It costs space and electricity to store inventory, so it is in your best interest to get it out the door as fast as possible.
Next, you need to examine the current inventory management system you have in place. Most businesses operate with a mostly digitized inventory management system. You’ll want software that integrates seamlessly with your shopping cart software, so that when a customer makes an order through the web site, the warehouse is alerted immediately that it needs to have that item on hand, ready to ship.
Drop shipping has gained popularity in the past few years, especially with the proliferation of eBay sellers. Drop shipping is the act of allowing warehouses around the country to store your goods. When an order is received, you alert the warehouse and they ship it for you. This dramatically cuts down on your costs for warehousing, but some companies get skittish when faced with the prospect of allowing others to handle their order fulfillment. If you receive a wide array of orders from around the country, drop shipping might be the perfect solution to cut down on your shipping and warehousing costs.
The ideal inventory management system strikes a balance between the hyper-efficient software that is widely available and the analytical skills of our brains. Be sure and maintain regular communication with warehouse managers. Figure out what products are driving orders and maintain a big stock of them. Figure out what’s working and what’s failing and adjust accordingly.
About the Author:
Carolyn from Ordoro.com is a guest blogger who writes about small businesses and the small business tactics.