Many small businesses either don’t track inventory or rely on manual (sometimes inefficient) systems, including spreadsheets, to manage their inventory. If you’re among those businesses and are looking for a new way to track inventory or to simply make your inventory tracking process more efficient, modern inventory management software is a common solution.
How can you make inventory more efficient?
You can make your inventory management process more efficient by consistently tracking your inventory using inventory management software that offers time-saving automation features. For best results, choose an inventory management system that’s collaborative and intuitive and can easily reveal what items you have in stock, where they are, and how many of them you have on hand.
While spreadsheets are one way to manage your inventory, they are not the most efficient solution for various reasons. For example, they are hard to read, prone to human error during data entry, and cannot correctly display images or fully sync with barcodes and QR codes.
Inventory management software is more accurate and visual, and thanks to automation features like barcode scanning and low stock alerts, it slashes the risk of human error and costly stockouts.
Here are five ways you can improve efficiency with inventory software:
1. Track everything
One mistake many businesses make is tracking only a portion of the inventory—liked finished products—instead of accounting for everything. This can leave your inventory data in flux and your accounting department working overtime.
For example, if you manufacture leather accessories, counting finished belts, wallets, and messenger bags isn’t enough. You should also include raw materials, supplies, parts, and work-in-process inventory.
This will help your business maintain a holistic, accurate handle on inventory . . . and create efficiencies for every team, from receiving to accounting to sales.
This easy, comprehensive guide will help you:
Free Ebook: Getting Started With Inventory Tracking
2. Focus on forecasting
Forecasting inventory is the best way to ensure you have enough stock on hand to meet demand. Plus, when your business has everything it requires, operations run better and are more profitable and efficient.
When you record inventory data in software, you’ll automatically create records that can inform your future forecasts. Combine that data with market trends, consumer research, and insights from trusted suppliers for the best results.
3. Implement the 80/20 inventory rule
The 80/20 rule, or the Pareto principle, helps small businesses prioritize inventory management by identifying their most crucial stock items and focusing their best inventory control efforts on those items. The rule of thumb is that 80% of business profits usually come from 20% of your inventory.
To implement the 80/20 rule, start by identifying your most profitable items. Then, adjust your inventory strategy and ordering processes to ensure you never run out of them. Use your inventory software to set low-stock alerts, warranty end notifications, and expiration date reminders for extra efficiency.
4. Implement inventory formulas and ratios
With inventory formulas and ratios, you can monitor business performance and growth more efficiently than ever. Your inventory software can help you rapidly gather accurate data for calculating these formulas and ratios. Six efficiency-boosting formulas and ratios include:
- Inventory turnover ratio – Determines how many times you sell and replace a product within a specific timeframe
- Cost of goods sold formula – Calculates all expenses and costs associated with the merchandise you sold
- Average inventory – Estimates the value of your company’s inventory within a specific time
- Sale-through rate – Measures the units sold against the units received from a manufacturer
- Day’s sale – Indicates the average number of days it takes to turn inventory into sales
- Ending inventory – Identifies the value of goods you have in stock and available to sell at the end of a specific period
5. Speed up your inventory audits using barcodes and QR codes
With QR code or barcode scanning, you can quickly update inventory counts, check items in and out, or pull up tons of information about a given product . . all using your smartphone or tablet, even if you’re miles away from the office or warehouse.
If you have unlabeled stock, you can use an app like Sortly to create and print custom barcode QR codes so you can implement automation techniques across all inventory.
About Sortly
Sortly is an inventory management solution that helps you track, manage, and organize your inventory from any device, in any location. We’re an easy-to-use inventory software that’s perfect for large or small companies. Sortly builds inventory tracking seamlessly into your workday so you can save time and money and satisfy your customers.
With Sortly, you can track inventory, supplies, parts, tools, assets, and anything else that matters to your business. It comes equipped with smart features like barcoding & QR coding, low stock alerts, customizable folders, data-rich reporting, and much more. Best of all, you can update inventory right from your smartphone, whether you’re on the job, in the warehouse, or on the go.
Whether you’re just getting started with inventory management or you’re an expert looking for a more efficient solution, we can transform how your company manages inventory—so you can focus on your next build. That’s why over 15,000 businesses globally trust us as their inventory management solution.
Start your two-week free trial of Sortly today.
