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3 Profit Problems Solved with Good Inventory Software

3 Profit Problems Solved with Good Inventory Software

good_inventory_software.jpgNobody wants to lose money.  Good inventory software helps increase your profits

As ERP consultants, we work with distribution clients who struggle to make profits.  In our experience, there are 3 common oversights of inventory control. Here’s how we can help:

1. Inventory Imbalance

Overstocking is a common problem for many businesses.  What are the reasons why businesses would end up overstocking certain items?  Maybe in the past, backorders or rush shipments resulted in profit loss, and to counter that from happening, more stock was ordered than necessary.  Ordering extra inventory in order to prevent shortages, however, costs you money because inventory is only profitable when it’s moving. Otherwise, you paid to purchase it, you’re paying to store it, you’re paying taxes on the value of it and its value could decrease from obsolescence or deterioration.

Too little inventory can be just as damaging. If you’re scrambling to fulfill customer orders and can’t, your customers may find another supplier instead of having wait longer than usual due to backordered items. If you are short on inventory, you may also find yourself in desperation of keeping existing customers, in a position to rush to fulfill customerorders in a way that incurs extra expense. For example, expedited shipping fees and the cost of warehouse and labor.  Not wanting to pass along the additional charges to customers that are already waiting for backorders doesn’t set you up for a future of profitable returns.

Luckily, these issues are easily prevented with a good inventory software.  Keeping a close eye on sales history can help you decide how much to order. Holidays, promotions, and new releases can all cause spikes in demand, whereas you might see drops in demand during other times of the year. Your sales history can also show which items are your most popular over the long-term, letting you know to keep a higher quantity in stock. Following your sales trends will prevent both overages and shortages as well as save you money.

2. Inventory Tracking System Issues

Tracking sales trends and forecasts aren’t going to ensure profits without an effective and accurate inventory tracking system.  There are some mistakes which are unavoidable, such as those from poor data entry, shrinkage, etc.  Mistakes like these can cause your system to reflect inaccurate numbers.

Another case might be that your inventory system is overly complex and therefore isn’t being used correctly by your employees.  Incorrect system use may cause inventory items to be placed in or moved to incorrect locations or for them to be labeled incorrectly. (Read our blog article about intuitive inventory systems here.)

Three things you can do to avoid these problems include frequent inventory counts, keep your software current and provide training for all employees. (Read our blog about the best way to manage inventory with an inventory tracking system here.)

3. Lack of Prioritization and Compliance

One likelihood is the inefficiency of having thousands of items in your inventory supply, and attempting to keep track of every individual item.  This will waste valuable resources.  There may be another way to sort your inventory, for example, organize what products you have into groups based on how well particular items sell. Fast moving items should be grouped together and receive the most attention, whereas the inventory that generates the fewest sales should be lower on the priority list.

Has the inconsistency in operating standards and procedures surrounding shipping, receiving, and storing inventory resulted in miscommunications?  If so, consider rewriting these standards and ensure that not only has the procedure been clearly developed, but that it is effectively communicated to all of your staff. If any employees fail to comply with the standards and procedures, even a good inventory tracking system won’t be effective.  If their mistake is because of your oversight, the burden clearly lies in the hands of management.

A business that manages the movement and supply of physical goods cannot be successful without proper inventory management. Too much stock can result in products that depreciate over time and must be sold at a discounted rate. Too little stock can hurt a company's relationship with customers and cause lost revenue. Not prioritizing your inventory items can mean incorrect inventory counts. The best way to avoid employee errors is to simplify the inventory control system, train employees, and implement a standardized procedure with clear and simple standards.

Arguably, the best way to control inventory is with good inventory control software. Contact Southeast Computer Solutions today with questions or to get an inventory control system of your own.

If you have questions about how to improve your inventory management, Southeast Computer Solutions will help you evaluate your options. CONTACT US ONLINE or by phone at 305-556-4697.

Since 1985, Southeast Computer Solutions has been a top Sage Authorized Business Partner helping small to medium sized businesses get the right software to run their operations. With over 600 Sage software installations and implementations across the United States and in Latin America, Southeast Computer Solutions is the largest Sage business partner in south Florida. We pride ourselves on technical expertise, real-world business experience and spirit of true partnership with our clients. Headquartered in Miami, Florida, Southeast Computer Solutions serves the small to medium sized businesses in a wide range of industries from West Palm Beach, Pompano Beach, Coral Springs, Sunrise, Fort Lauderdale, Hollywood, Pembroke Pines, Hialeah, Miami, Doral, Coral Gables and other locations. We also serve the international community including Mexico, Caribbean Islands, Central America and South America.

Original post by Elizabeth Gonzalez -

Photo courtesy of by Vichaya Kiatying-Angsulee

Topics: southeast computer solutions, forecasting, inventory tracking, inventory, inventory management, inventory control, profit, shortage, overstock

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