4 Inventory Management Tips for Small Businesses

     


Avoiding inventory wastage with Microsoft Business Central

If you’re the owner of a light industrial business, your employees probably spend a fair amount of time on inventory management.

Maintaining inventory at the right levels isn’t just challenging. It can be time and resource intensive. And it might be a drag on your business’s productivity.

Perhaps you want to get started on inventory control optimisation. But overhauling a core work process can be daunting.

To help you get started, we’ll share four actionable tips to help you better manage your inventory.

 

Inventory Control Best Practice

 

1.      Accurately forecast demand

 Some businesses continue to rely on guesswork to plan their inventory. In our experience, it’s because the warehouse, finance, and sales teams work in silos.

It’s a good idea to start sharing that data across departments, so your warehouse team won’t have to rely on gut feelings.

 

2. Track your items from beginning to end

Nobody likes recalls, but they happen. And to avoid further damage to your brand, you’ve got to act decisively.

This is where an item tracking tool can come in, to help you identify faults quickly and decisively. That way, you can be assured your business is on top of things.

An item tracking tool should include end-to-end tracing capability, so you can accurately identify faulty components and notify affected customers.

 

3. Automate document generation

If your sales and purchasing documents are manually created, it may be time to consider digitalising your paper trail. It can help reduce the risk of costly mistakes.

More importantly, it can help boost your business’s productivity. By saving the time spent on administrative details, your employees are now free to focus on growing your business.

 

4. Inventory costing management

You can optimise your stocking practices with inventory costing. Figuring out what isn’t profitable can help you decide how you can best use your storage space.

Let’s use a simple scenario. Suppose you manufacture several models of tables.

After taking into consideration costs like labour and logistics fees, you find that model A’s profit margin is lower than expected.

With the insights, you can now implement profitability-increasing measures.

 

Better inventory management with Microsoft Dynamics 365 Business Central

 

‘These tips are all very well and good, but how do I start implementing them?’ you might ask.

You could begin with a Cloud-based ERP system like Microsoft Dynamics 365 Business Central.

New to the concept of ERP? ERP systems like Business Central centralise all your work processes into a single platform.

With integrated work processes, you get greater end-to-end visibility and fully reconciled data. That can help reduce the risk of costly mistakes.

More importantly, you also get built-in analytics that present you a holistic overview of your business. With these insights, you can make more informed decisions.

Without further ado, here are four ways you can implement inventory management best practice with Business Central.

 

1.      Advanced analytics

Business Central includes data analytics tools from the get-go. It’s fully integrated with Cortana Intelligence, Microsoft’s Cloud-based set of advanced analytics, big data, and business intelligence (BI) tools.

Cortana Intelligence can calculate inventory and sales forecasts, based on historical trends. A simple chart shows you when exactly your stock will be depleted. Or the expected number of units that’ll be sold three months down the road.

If you need to have an item in stock by a certain date, Business Central can also calculate when exactly you should order it to ensure you get it on time.

Maintaining the right amount of stock on hand is now easier, because Cortana Intelligence does the number crunching for you. And you won’t have to rely on guesswork for essential decisions.

 

2.      End-to-end item tracking

Business Central includes a comprehensive item tracker, empowering you to offer improved quality assurance and customer service.

It’s capable of end-to-end tracing, down to batches with specific lot and serial numbers.

Users also get a view of availability data by lot and serial number, reducing the risk of double allocations.

If you work with perishables, you can assign expiry dates and rules, lot by lot and item by item. In the same vein, you can also assign warranties to specific lot and serial numbers.

Let’s illustrate this with a scenario. In the event of a recall, a faulty component can be traced back to a specific lot.

You can also trace instances of recalled items in open sales orders, to avoid shipping the defected product out.

 

3.      Automated recurring Purchase Order (PO) generation

 You can fill in the details of recurring purchase orders with the click of a mouse. Simply define these details, such as order quantity, model number, and so on. So, the next time a purchase is made, the PO will be ready to go almost immediately.

 

4.      Inventory costing management

 Business Central collates all your business data in one place. So, you can compare sales and inventory costing data side-by-side to get the full picture.

Let’s go back to the scenario we described above. You notice that sales of model A are below expectations. With costing data on hand, you realise you should reduce output to avoid holding dead stock.

 

Microsoft Dynamics 365 Business Central: the right tools for the job

 

In this article, you’ll have gotten a practical overview of improved inventory management with Business Central.

You’ve read about the powerful built-in analytics tool that empowers you to make more informed decisions.

About end-to-end visibility, so you can get a complete overview of your business’s performance.

And the automation of manual work processes, to boost employee productivity.

Want to understand how these improvements can apply to your own business? Drop us a note here and a technical consultant will be in touch shortly.

 

About The Author

Paul Hong is the Digital Content Creator at AFON, where his remit covers content marketing and copywriting.