Few SMBs can afford to use the same resources as a large business. This can mean they struggle to effectively perform basic actions, like inventory management. Good inventory management reduces costs and waste while ensuring you always have an adequate range of inventory that meets your company’s needs.
Of course, the way we manage and process inventory is continually evolving as we battle supply chain issues and changing customer needs. Even the most organised warehouse can face challenges, especially when using traditional inventory management methods.
So, what kinds of inventory management challenges will small businesses face? And more importantly, how do you solve them?
6 common inventory challenges facing small businesses (and how to solve them!)
Problem: Inconsistent tracking
Tracking a product throughout the fulfilment process is essential to both the business and the customer. Customer satisfaction is much higher when they can see exactly where their purchase is in the fulfilment process. Businesses benefit from a reduction in inventory loss and can use analytics to identify ways to improve.
Using manual inventory management processes can hamper the tracking process. All it takes is one person in the fulfilment chain to forget to update a spreadsheet, and the whole process can fall apart.
Solution: Automated tracking
A good inventory management platform like Workhorse will offer automated tracking that’s as easy as scanning a barcode.
At each stage of the fulfilment process, employees can scan a product barcode while software does the rest. This provides an easy way to track products throughout the fulfilment process. The software can also automate notifications for the customer, so they know what’s happening with their order in real-time.
Problem: Lack of performance metrics
Manual inventory management offers little in the way of usable and reliable data. Sure, you could gather a few basic insights from your spreadsheet, but you’re missing crucial information that could improve your processes.
Solution: In-depth and reliable data from an inventory management system
As your team works hard, your inventory management system works harder. Every scanned product, process, and order update is compiled into reliable data that you can use to measure performance.
With a good IMS, you can easily track:
- Sales KPIs
- Receiving KPIs
- Operational KPIs
- Employee KPIs
Using these KPIs can quickly identify any bottlenecks or anomalies and understand exactly why they happened.
The biggest eCommerce players all offer order tracking, and with good reason. Customers expect at least some form of order tracking when buying from any company. Customers prefer to be kept in the loop regarding their order status, and keeping them in the dark almost guarantees they won’t return with their business.
Solution: Automated tracking
That’s right, it’s another point for automated tracking! Offering order tracking can make your customer feel more confident in their purchasing decision and more likely to buy from your company again.
Inventory management software can automatically update your customers when your workers scan product barcodes. This gives them the same information as you receive, increasing transparency between the company and the customer.
Automated tracking is especially useful in the event of an unexpected delay. The increased transparency helps you keep customers in the loop.
Problem: Poor processes
Inventory management is more than just checking how much stock you have in the warehouse. It involves a wide range of activities including, but not limited to:
- Ordering stock
- Storage and space management
- Stock level management
- Order fulfilment
Many of the processes involved in inventory management require real-time updates and regular monitoring. This isn’t possible with manual processes because the warehouse is constantly operating, and things can quickly change while you wait for an update.
Solution: Ditch the spreadsheets!
Using spreadsheets to track your inventory is incredibly time-consuming. Often you will find that manual, spreadsheet-based inventory management gets in the way of your processes, and any updates get left for the end of the day. You could forget something or incorrectly mark something down during that time, leading to discrepancies in your records.
Automated inventory management systems update everything in real-time, removing the chance for error!
Problem: Changing customer demand
As we mentioned, the way we work and customer needs are constantly changing. It can be a tough task for small businesses trying to keep up with changing trends. Budgets are tight, and staffing levels are often just enough to get by with the processes already in place.
This can lead to big problems down the line, like ending up with too much stock of poor performing items. Overstocks like this take up valuable warehouse space and result in monetary losses, as the stock needs to be sold at a reduced price to help shift inventory.
Solution: Use analytics to predict demand
Even the most basic data can help guide your stock level strategies. Automated inventory tracking will help you identify products that are performing poorly. This means you won’t be reordering inventory that you will struggle to sell.
Problem: Out of stocks
One of the most damaging problems for a brand is when a customer attempts to purchase something and goes through the entire checkout process, only to get a message hours later to say the order cannot be fulfilled due to lack of stock.
Inaccurate stock levels on your website are a major inconvenience for your customers. Customers who have a bad experience are more likely to tell their friends and family about the experience and warn them away from the company you’ve spent so long trying to build up.
Solution: Automated stock levels
Inventory management software can perform multiple key tasks at once. The software can update the customer’s order status and update stock levels. This means that your advertised stock levels are always up-to-date, and there is no chance of a customer trying to purchase stock you do not have.