Four Steps to Get Your Inventory Under Control

The old saying, “You don’t know what you’ve got until it’s gone,” is never more accurate than when you’re dealing with huge discrepancies between your inventory on the shelves, and what you have in the books. Getting your inventory under control needs to be a priority no matter what size business you are, since that inventory represents piles of your cash.

Getting Ready for Take-Off

You want to implement a better system for tracking your inventory and sales, but maybe not everyone’s on board with that. Just as in other areas, the “We’ve Always Done It This Way” mentality and “Change Is Expensive” mentality is a real stumbling block to growth and progress. With a better information system, and a POS with barcoding equipment is an information system, not just an uppity cash wrap, the Houston Chronicle points out that you will fatten up your bottom line without necessarily increasing sales. The price tag is a soft hit, with entry level systems costing between $500-$1500, either from your local office supply or from eCommerce vendors such as Shopify whose clients want to integrate their existing web store with their brick and mortar locations. As your business grows, you will be able to scale your system, or even transfer your data to a new one with no problems when you decide to upgrade.

You may want to close down in order to have no distractions and to be able to concentrate fully on the inventory. Merchants typically do close for inventory, as it can mean serious disruptions to the business. However, if that is not an option, set aside enough goods to get you through several days of business, make a master list of the items, and inventory them first before releasing them for sale.

To-Do List

  1. Master list time! Make a list of everything, whether it’s stock or raw materials, in every location. This means in your warehouse or stockroom, showroom, and other locations; check everywhere. You might want to do this old-school with index cards, or by entering the information into a spreadsheet. You’ll need to enter the item number or SKU, a brief description, vendor and vendor’s MOQ (minimum order quantity), cost, unit of measure, and minimum stocking level, and how many you have on hand.
  2. You will need a barcode label for every item you have. Most merchandise comes from the manufacturer with a barcode already affixed, but for other items you will have to generate and print out your own labels. You may want to print your own barcodes in any case, if you are dealing with stock in multiple locations such as “Store 2: Stockroom” or “Store 1: Showroom.” By generating barcodes with location information, you will know what items should be where, and when they have been incorrectly moved. If you have a large operation with lots of items, you may also want to code them by location in your warehouse or stockroom for faster and more accurate order pulls. So a location barcode for your warehouse, aisle 3 north, shelf 4, bin 7 could read, “WHA3NS4B7.”
  3. Once you have everything barcoded, you have the biggest part of the work behind you. Now all that remains is counting. You’ll need to get with your staff and work out a plan of attack. Make sure you have enough scanners and tablets or laptops to go around and assign everyone to their own area. Have them scan each item, and then put a colored sticker or Post-It with their initials on it on the section they’ve just completed. That way, you’ll know the section has been counted, who counted it, and it won’t be counted again.
  4. This part can be a little rough. Reconciling your new inventory with the inventory you had on the books could show you some discrepancies. Sometimes they are going to be very big ones. Others may show shrinkage that you never suspected, or user errors gone undetected. This is expected. You’re righting the ship so to speak, and it’s going to be a lot like reconciling a register tape to the day’s receipts.

After you have your verified live inventory up and running, you’re going to notice that you and your staff suddenly have more time on your hands. According to Microsoft, all those repetitive zombie tasks that you were performing every day were eating up time and energy that you can now devote to interacting with your customers. Customer service isn’t just fixing things that go wrong, but giving the customer a value-rich experience that they’re going to remember. Even better, the time you’ve previously spent trying to figure out what to order can be spent on efficient inventory control. You’ll find that your costs associated with servicing inventory will go down, as well. Logistics Management estimates that the costs of servicing, warehousing, and maintaining your inventory are a far bigger expense than you might think.