3 Inventory Management Mistakes You Need to Avoid for Maximum Profitability

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Many small businesses rely on the uninterrupted flow of goods to keep revenue coming and, by extension, continue growing. For this reason, it can be argued that efficient inventory control is the be-all and end-all of business success — or at the very least, contributes greatly to it.


It’s safe to surmise that many small businesses can’t afford to deal with inventory management mishaps, especially if it can put a halt on operations. These include (but are not limited to) data entry problems, stale or obsolete inventory, and even wrong fulfillment of customer orders. Thankfully, these can be avoided — or at the very least, fixed — by addressing the most common mistakes that inventory-based businesses often fall prey to.


Your Systems Are Inefficient


Again, inventory management is the very core of your inventory-based small business. It goes without saying that an inefficient system will not do your operations any favors and may even hold it back. So, yes, if you’re tracking your inventory on an Excel spreadsheet or by hand, it’s high time that you step up and explore more structured and streamlined ways to do so.


Consider investing in a good inventory management system. Looking beyond the initial investment, you can actually anticipate more savings for the long term. This is because such software will cut down errors (which are often human in nature) significantly. Moreover, automation is also made possible, so it saves time, as well.


As an alternative to ready-made systems that may not fit your specific operational needs, you can consider engaging the services of a freelance developer and an e-commerce specialist to create your own inventory management system or web dashboard. You can easily find freelancers on Upwork and other online job boards for this purpose, as well as to perform tasks ranging from admin support to marketing.


Your Employees Are Unqualified


It’s very important to note that the flow of your inventory is best entrusted to people who are adequately trained in the task. Human error is very real, after all—not to mention, quite common. Indeed, there’s really no better way to avoid it than by hiring people who know what they’re doing, or are, at the very least, trainable. In your search, look out for backgrounds in inventory handling. You can also put a premium on those who have undergone inventory training. You’ll want to ensure that they have core soft skills, too, such as communication, organization, leadership, multitasking, etc.


Your Forecasting and Audit Efforts Are Inadequate.


Now, there’s no other way to say this, but much of your inventory management improvements will be moot when you fail to forecast demand. After all, this will dictate the amount of inventory that you need to acquire or produce and have on hand, as well as the frequency with which you need to replenish them. Equally as important are regular audits, which can help you stay on top of your inventory and maybe even uncover issues before they occur. Sadly, many small businesses underestimate the need for either task, which can prove to be problematic.


So, it’s good practice to put in place accurate forecasting measures. This will enable you to meet market demands so much more strategically. Moreover, you must also have a way to measure performance as this will be the gold standard with which you can run your business, improving customer service along the way and avoiding efficiency challenges.


Meanwhile, frequent, smaller audits will prove to be a lot more productive and labor-saving, as opposed to irregular ones. This is because you won’t have to shut down large parts of your operations. Instead, parcel it out into manageable audits, so there’s no need to interrupt revenue-making activities.


Indeed, the profit potential of an inventory-based business can be very compelling, but only if you manage to avoid mistakes that disrupt the all-important flow. Make it a point to anticipate possible mishaps before they even get the chance to form, and save yourself the headache and heartache of lost profits. As your inventory continues to move without a hitch, you’ll know for certain that you’re doing it right.

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