Small Business Emergency Readiness Series: Inventory
Updated: Jul 5, 2022
Consultant Proficiency Resources resume its Small Business Emergency Preparedness series with the spotlight on maintaining an inventory. Depending on your business and the industry, inventory may look differently. In addition, if you are operating from a brick and mortar, your inventory may be of more excellent stock.
A small business inventory is a process your small business must go through to know about your stock of products or services. Through this process, you will determine other accounting factors, such as how many sales you have made and how many products are still left to be sold. If you do not have an inventory system, you need to establish a policy and implement a system such as the most standard is the Just in Time Inventory system. For a service-oriented business, your inventory begins with your client list, deadlines, billing cycle, etc. While it is customary to focus solely on products when addressing inventory, the pandemic taught us that every facet of your business needs to be accounted for.
Small net recommended the following steps to create a Small Business Inventory:
1. Organize the Vendor Data You need to set up your stock first to have an inventory. Make an easy-to-reach system for the supplier’s data. You can use a manual monitoring technique like using spreadsheets. But you can have the better choice of having a point-of-sale (POS) system. The POS can have the direct data of the vendor. It can provide you with pages where you can search for your products. You can pick from a variety of POS systems. Research how each performs and select the best one that suits your taste. Then, you should organize your products. Record the data about each item. Compile the data on the product page. The information that you need is the selling price, the standard retail price, the wholesale price, the category of the product, the description of the product, the Universal Product Code (UPC), the SKU (stock-keeping unit), the quantity of product, the product name, the image of the product, the shipping data like dispatch time and size, the quantity of reorders, the name of the manufacturer, the color of the product, and the size of the product. Aside from the log of the products, you should include the vendor’s data. The needed data are the showroom contact, the payment terms, the vendor's website, the billing data, the email or phone number of the vendor, and the vendor’s name.
2. Submit Right Purchase Orders You need POs (Purchase Orders) to document the sale of your products. This is the best way to manage your purchases. You can monitor your stock purchase effectively. From the time you have made an order up to the shipment, you will have a record of everything. POs are financial receipts that can record your transactions. It would help if you had them so that you could analyze your cash flow. You will have a forecast of your needs in the inventory. Through POs, you can monitor your purchases from your suppliers. You can have a cross-reference with your deliveries. You can have the correct inventory count through this. For example, if you order 500 shirts from a supplier, you can use the PO to record the transaction. The PO will have the products' total price, descriptions, and quantities. When they are delivered to you, you can check the PO if the products you have received are what you have ordered accurately. POs are done through email or other means. If the seller does not have a PO form, you can have a PO template from the internet and send it to the vendor. POs are essential, so you must not forget them every purchase.
3. Get the Right Inventory Orders Once you have made a PO, you should ascertain that you can get the stock accurately. Some suppliers may commit some errors. So, if you want your inventory to be accurate, you should check the products you have received. Be diligent so that you will not have an overcount or underestimate in your inventory. To ensure your purchase, count each box and check all the items. You may never know if some of the products are damaged. So, you have to check them one by one. Check if what you have received is what is written in the PO. You can also do that by checking the packing slips that the suppliers give. The packing slip should match your PO. If there are no discrepancies, then you have received the items accurately.
4. Do the Inventory Using Tags When you have the products on hand, you should label each product. The label should state two things: the price and the product label. The price will be the selling price of the products. Before they can reach customers, you need to state a price for them so that customers will know if they can buy them. The product label is the labeling system of your business that can make you monitor your products. You can use a barcode system to make the process easier. Making Tags is necessary for the receipt process. So, you should know how you can label your products correctly. You can ascertain that the products will not be unlabeled on the shelves through tags. The labels can help you to sell your products. If the manufacturer already has a barcode, you can use this by utilizing them through your POS. You have to give a label on products.
5. Organize Your Warehouse It would help if you organized your warehouse to make inventory more accessible for you and your staff. You can even stock as much merchandise if you organize your stockroom. Have tall shelves and hanging racks where you can maximize the space. Just be sure that the products will be accessible in all of these. You can also have storage bins to use the floor for storage. Ascertain that you will have the proper storing devices. Use these materials so that you can have a well-organized inventory.
6. Monitor Your Inventory Monitor your inventory in real-time. This is the key to storing products in the right quantities. So, you should have excellent inventory management. Whether you have the inventory by hand or a POS, you should have a detailed record of every sale. This is how you can adjust the inventory levels of your business. To ensure accuracy, you must use good Inventory Management Software. Spreadsheets can be good, but POS systems are more advisable. POS systems can make you have a good count for every sale. You will have order alarms and instant PO generation.
7. Have Inventory Counts Doing inventory for your products one by one may be tedious. But physical counting can erase inventory problems. You have to know that you need to have a complete inventory count. So, you must ensure that you can do a proper inventory for all your products. Whether you have a manual or automated counting, you should ascertain that you will have a regular inventory count.
8. CPR's recommendation included an emergency supply inventory that must be monitored. Note the previous two postings.
The above steps may be considered for a service-oriented or virtual small business. If you have a service business, review an exclude or include accordingly. In addition, it is essential to underscore that this must be conducted before a real emergency. This may be categorized as a quality check. Can you think of any other items worth adding? Please leave in the comment section.
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