If your business deals with any kind of physical product, then inventory is going to be one of the most important things you’ll ever have to manage. When those products change hands by being bought or sold, it maintains the cash flow needed to keep your company above water. While inventory may seem pretty simple on the surface, it can be very complex. Here are a few common mistakes new entrepreneurs make when it comes to inventory management.
Lacking Performance Measurement
You may already be somewhat aware of the performance issues which are holding back the smooth management of your business’s inventory. However, you can’t expect to fix those issues when you don’t have any firm standards in place – measurement of customer service, warehouse efficiency, inventory turns and so on. To make sure you’re cracking down on performance issues as and when they come up, it’s essential to integrate tools for measuring the most important metrics. At the very least, you should make sure your managers are keeping close tabs on your fill rate and inventory turns for every single product. Whatever your other priorities, your managers should always be tracking these and trying to improve them.
Neglecting to Outsource When You Need To
Obviously, I understand the want to keep all the different processes at your business under your direct control. However, every business has certain things that they should outsource to relieve some of the strain on their resources, particularly start-ups. If you try to struggle on managing your inventory in a clumsy, haphazard way, then you’re only going to pile on stress for your warehousing team, and irritate your customers and distributors by screwing up your shipment cycle. It’s also important to foresee the need to expand your available space, and avoid any major strain on your available resources. There are many flexible warehousing options out there, such as the services offered by the Guardian Business Center. You may need it in a week and you may never need it, but it’s essential to keep the possibility in mind.
Leaving it to Underqualified Employees
Obviously, you don’t have the wiggling room to suddenly halt your operations, and this is especially true for your training. However, if you want to have accurate and effective inventory management, you need staff on the job who can be trusted to do the job well. This all starts with a good hiring process. Many business owners think that they can afford to be a little blasé about hiring their warehouse staff. This is wrong. You’re going to have a pretty significant amount of capital tied up in your inventory. In order to protect that capital, you need to be hiring people who have a solid background working with inventory in the first place. Make sure your managers can be trusted, that they’re well aware of the business’s strategic goals, and their responsibilities to help fulfill them. It’s also very important to have comprehensive training going on from the employee’s first day on the job.