4 Keys to Managing Your New Business's Inventory

Anthony Christensen

December 05, 2018

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You’re just starting your business, and you need to develop sound procedures for acquiring, storing, shipping, and counting your inventory. Your products are your lifeline, so you need to be sure you follow best inventory management practices so you don’t squander opportunities, or enrage customers and hurt your reputation. Here are four crucial factors for managing your new business’s inventory.

Getting Your Products

How you acquire your products will depend on what products you plan to sell. If you are selling physical products, you can buy your goods wholesale from a distributor and then store them in your home, business storefront, or perhaps even a storage unit.

If you are working with high quantities of items, you will want to find a transportation company in your area that offers the right type of transport for your particular products. For example, if you ship in lots of frozen foods, you will want to pick a refrigerated carrier like C.R. England to ensure your food doesn’t spoil.

Some people even choose to partner with companies who offer dropshipping, an arrangement where the business owner never even comes into contact with the products. They simply order the goods from their distributor partners and then ship directly to the customers. This approach means less overhead, since your company doesn’t have to pay for storage space.

Safely Storing Your Goods

Be acutely aware of the ideal environmental conditions for each of your products. Heat, cold, moisture, and physical damage might ruin your products. Depending on what industry you serve, your products may even pose dangers to people and the environment if not properly stored.

Also, if you’re just starting out a home business, you may be tempted to rent out a storage unit for your products, but you need to understand the storage unit company’s policies and what should or shouldn’t be kept there. Things like flammable materials, medical supplies, and perishable foods are likely a no-go. Be thoughtful about how you approach your product storage so you don’t have to scramble later.

Managing Your Inventory

When managing your inventory, technology is your friend. There is really not a good reason to not use an inventory management system. The best ones will provide the basic necessary functions, such as tracking inventory in real-time and then go above-and-beyond by forecasting future demand, preventing overstocking, offering barcode scanning tech, and organizing inventory across multiple locations.

Another crucial procedure is to use FIFO (first-in first-out) product rotation. This means that the earlier batches of products you get should be the first you send to customers. This approach makes a world of sense for perishable goods like food, but it’s important even for non-perishable goods. Your older products are more likely to get damaged over time, or become outdated and unsellable.

Shipping Like a Pro

Getting your products to customers quickly and accurately is one of the most critical factors in succeeding in the digital marketplace. People have developed high expectations for online retailers. They want it fast, they want it cheap, and they don’t want mistakes in the shipping process. Failure to meet these expectations will kill your reputation.

Businesses like Amazon set the standard for price and shipping speed, and small businesses have to at least match Amazon to have a chance at competing. Furthermore, don’t assume that using just one carrier is the best way to go. A creative mix-and-match of carrier choices can sometimes yield cheaper/faster shipping. Also, you may want to consider listing your goods on sites like Amazon as well, since they get so much traffic.

Be precise and thoughtful about your inventory processes, or your new business could quickly go astray. Use technology to improve your product management, research the best shipping methods for all of your products, and don’t lose money on broken, lost, or forgotten products. Follow these best practices and maximize your profits!