When I was a kid, I had a Physical Education teacher who tried to teach me how to shoot a basketball the right way. I thought the way I was doing it was fine because that was the way I had always done it, and it seemed to work just fine.
But he told me that I had just gotten good at shooting the wrong way, and I needed to break my old habits if I wanted to compete with other kids. He turned out to be right.
Similarly, small and midsize businesses can get really good at managing their inventory the wrong way, but it won’t be good for them in the long run. It can actually hold them back from being more competitive. Unfortunately, habits die hard, and the longer you wait to uproot these old ways, the harder it gets.
The Wrong Ways
Here are some creative ways companies try to make outdated inventory management systems work:
Pen and Paper
Some companies develop extremely complex and detailed shorthand notes to keep track of their inventory by hand in notebooks.
The problem is that those notebooks can be lost, destroyed, or stolen with no backup system to restore lost data. Plus, if an inventory specialist leaves their company without training someone on their shorthand code, all of the data they’ve written down can be difficult to decipher.
Excel wizards can devise elaborate spreadsheets that help them calculate costs, keep track of vendors, and get updated with cycle counts.
The trouble is that Excel isn’t designed exclusively for managing inventory, nor can it automatically complete calculations and other processes. That means whenever you order or sell products, you have to manually enter those new values into Excel. Plus, data mining is long and tedious when you have to pull individual pieces from a giant spreadsheet.
Personally Designed Inventory Program
Writing your own inventory management software might seem like an attractive option to avoid having to purchase software.
This presents a host of problems that are ironically similar to using a pen and paper. The person who writes this program isn’t likely to write a comprehensive guide on how they set it up, so if they ever leave, you’re back to square one trying to find someone who can figure out how the program works. That’s not even counting how much time and resources have to go into the creation of this program from scratch.
A Better Way
Small businesses can certainly get good at managing their warehouses, supply chains, and other aspects of their inventory with these methods, but they could be much more efficient if they mastered a better system.
Inventory management software solves all of the problems the above systems have:
- Files are much harder to lose when they’re digitally recorded, instead of on paper.
- Inventory management solutions come with extensive training materials so anyone can learn how to use them, instead of just a select few.
- You can set automatic reorder points on products and do other things to automate processes.
- Inventory counts are instantly updated when products are ordered, bought, and sold.
- It’s easier to generate reports and analyze data to discover trends.
If you learn how to manage inventory the right way, you can compete on a higher level and really score.