Can accuracy in inventory management ever be bypassed? Chelsea Sutherland examines the pros and cons of keeping recorded and actual business assets up to date.
Your inventory is one of your biggest assets and can impact both cash flow and profitability. Even if you aren't a retail business who carries stock inventory for customer sale, you still need to have a reliable and accurate way to track what you have in your warehouse or storeroom to help you fulfill client projects and requests. Below you'll find three key reasons why inventory accuracy is so important.
When it comes to fulfilling client requests, you need to be able to quickly - and accurately - calculate what you will need. Miscalculating or underestimating your stock on hand can lead to costly mistakes if there have been price fluctuations since your last order or there are delays on your supplier's end that blowout estimated project completion times.
Your inventory is worth money. While sometimes you will lose inventory for situations out of your control - for example, a construction company will have to make allowances for loss of materials stored in the elements in bad weather - having accurate and reliable data to refer to will help you minimize losses or quickly identify if something sinister is occurring. You can work with suppliers to stagger delivery or reduce ordering amounts when you know how much you lost in last years' wet season. And if there are any potential theft or other issues you need to address you can easily and accurately account for what you should have on hand.
Consumer demand, what you pay for an item and how long it takes to get your stock are some of the biggest factors that impact how much stock you can and should order - but you need to make sure that you have set these standards and adhere to them. Make sure you keep an eye on smaller items too - obviously large, bulky items in your warehouse need to move quickly but there can be a lot of money tied up in little things like boxes of labels or screws if you're carrying far more than you can shift in a 45 or 90 day period.
One of the best ways to maintain inventory accuracy is to have robust work practices and systems in place to help with your stock management. If your business is still running inventory off spreadsheets and manual processes you may not have the precision, efficiency accuracy you need in your reports to be able to use your data to help you make decisions that will affect your bottom line.