How to Know You’re Managing Inventory the Wrong Way

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.

To win the game, you have to learn how to make baskets, Fishbowl BlogBut 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Here are some creative ways companies try to make outdated inventory management systems work: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 Spreadsheets

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.

Advertisements

About Robert Lockard

Robert Lockard is a copywriter with Fishbowl. He writes for several blogs about inventory management, manufacturing, QuickBooks and small business. Fishbowl Inventory is the #1-requested inventory management software for QuickBooks users. Robert enjoys running, reading, writing, spending time with his wife and children, and watching movies. His favorite movies include Mr. Smith Goes to Washington, Fiddler on the Roof, Back to the Future and Lawrence of Arabia.
This entry was posted in inventory management, inventory management software and tagged , , , , . Bookmark the permalink.

One Response to How to Know You’re Managing Inventory the Wrong Way

  1. Betty_Smith says:

    I second that! I think for any business, be it small or large, the importance of having inventory management software is vital because it ensures a certain level of professionalism and safety of resources. Thanks for sharing this insight post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s