Cash flows is crucial for startups, but poor inventory management can lead to wasted expenses. The average business spends 25 to 35 percent of its operational budget on inventory management, according to inventory management system provider Scanco. In most cases, this is spending too much. Most companies could save 35 percent of these costs by taking a more proactive approach to inventory management, Microsoft’s Midsize Business Center estimates. Unfortunately, 43 percent of companies don’t have an efficient inventory tracking process that uses current technology. Chances are, your startup is making inventory management mistakes that are wasting money. Here are eight of the most common inventory mistakes startups should correct in order to avoid unnecessary expenses.
Not Designing a Business Flowchart for Inventory Management
One of the most fundamental inventory mistakes many companies make is simply not having an inventory system. Nearly one in ten companies don’t bother tracking inventory at all, Wasp Barcode’s survey found. This oversight can set companies up for problems such as product shortages, shipping delays, customer dissatisfaction, storage space congestion, pricing mix-ups, excessive year-end write-offs, cash-flow issues and unnoticed shrinkage loss. Designing a business flowchart that includes inventory is a basic step toward avoiding these types of problems. Map out how your inventory procedures interact with related business functions such as supply chain management, sales, bookkeeping updates and order fulfillment. Document your procedures so that you and your employees have clear step-by-step instructions to follow.
Not Organizing Your Storage System
If your employees have to go to the other side of the store or maneuver around obstacles to get at products, you’re wasting time and money. Make sure your physical storage system is <a >organized for optimal efficiency recommends automated inventory provider ShelfPlus. To implement this, store the items your employees need to retrieve most often in accessible locations, devoting special areas to the most-needed items. Store frequently-needed items at a convenient height between the shoulders and hips so employees don’t need to bend over or reach up more often than necessary. Keep fast-moving items in bins and slow-moving items in cartons or on pallets. Label items with a consistent system organized by section, row, rack and shelf. If you can’t afford this thing then consider getting a loan.