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How To Manage Inventory for Your Small Online Business
August 13, 2020
Business
While your online business is small, it’s probably pretty easy to keep track of your inventory. Maybe you can just glance over and count your items that are ready to sell, or maybe you just make them for each individual order. To prepare yourself and your business for future growth, though, you should set up a method for tracking your inventory.
Even though you may not need a complicated system right now, growth can happen quickly, and you won’t want to take time from selling to create a process when that happens. Here are some things you need to know as you set up your logistic system.
1. Invest in a System
Even if your sales are small enough right now that you can manually track your inventory, there will come a day when your business has expanded too much to make it worth your time to record them manually. It’s too easy to lose items or let recordkeeping fall by the wayside as you become busier with other tasks.
Investing in an online business inventory management system will bring returns in the future as you save time and money by keeping orders accurate and on time. If you have or will eventually hire additional employees, having a system in place will help you keep everything consistent across the board.
2. Decide Your Inventory Cost Method
As you restock your products, you’ll need to create a system for which items you’re going to ship first. This will help with your accounting, as well as with tracking your online business inventory.
First In, First Out is a common method where the items you stocked earliest are the first to ship out. This keeps them from sitting on the shelf for too long.
If you’re selling food products, this is a necessity to keep the food from going bad while it’s waiting to be sold. But for other business types, there are a few additional approaches, such as the Last In, First Out or Just In Time methods, so make sure you do your research or talk to your accountant about which would be the best for you.
3. Set a Par Level
A major part of tracking your online business inventory is making sure you don’t run out of products for your customers. Setting a standard number of items to keep in stock, called a par level, to signal when you need to order or make more will help with that. This will make sure you keep enough products coming in to meet orders without keeping too many on the shelves.
After all, while items on the shelves mean future profit, they also mean that you haven’t gotten that money yet, so keeping them at the minimum reduces the risk of losing your investment in that inventory. Just make sure you leave yourself with enough leeway for shipping and manufacturing time as you restock.
4. Check and Recheck Your Online Business Inventory
No matter how good your system is, you’re going to have to set aside regular times to audit your inventory.
Physically count each item and inspect it to make sure that it’s still sellable, and then make sure your records reflect those numbers. It’s too easy to lose track of items as they’re damaged, incorrectly shipped or returned along the way.
If you have additional employees or locations where your products are made, stored or shipped, these checks are especially important. The more touch points your inventory items have, the more easily they can be lost, damaged or mixed up.
Whether you’re an online business of one or you have a few employees, setting a system in place for inventory management is vital. Even if you’re keeping track of it all well now, in the future it will become more difficult to be accurate and efficient as your inventory expands. Taking the time now to research and create the best strategy for your online business and your inventory will pay off. Set yourself up for success by laying a foundation that you can quickly build on in the future.
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