In the current challenging business climate, every dollar counts. The money small businesses spend on advertising, promotion, management and process improvement must be carefully weighed against the value these activities bring into the business.
Strategies to improve business profitability can broadly be divided into two main categories – (1) ways to increase sales/income or (2) ways to reduce expenditure. So, while the most obvious way to make improvements to the bottom line of a business is by boosting sales figures, there are other strategies that can help a business to become more profitable.
Let’s consider a key way to reduce expenditure – by improving the efficiency of your inventory.
That brings us to the subject of our article – computerised stock control systems. The purpose of these systems is to accurately track the movement of items within your venue’s inventory.
But can they help you improve profitability? Are they worth the money and time spent to set them up and maintain them?
One point worth mentioning at the outset is that some businesses lend themselves toward needing stock control, while others do not. For instance, a retailer that buys stock from various suppliers and then on-sells it, such as a convenience store or bottleshop, would particularly benefit from proper inventory control. But in any case, it is worthwhile for all small businesses to consider the case for implementing a stock control system, and then weighing up the benefits versus the cost.
What are the advantages of implementing a stock control system?
First let’s list some of the key benefits of accurately keeping track of your stock:
- When a customer comes in wanting something specific, you have a better chance of knowing what you have available to meet their needs
- You know the value of your stock-on-hand at any given time
- You can analyse usage with the purpose of stocking the correct volume of each item (too little stock means you could be missing out on potential sales, too much of a slow moving item equals money tied up in stock that could be better used elsewhere)
- In addition to the previous point, your available shelf space is utilised more efficiently (and businesses with stock control systems are also typically more organised – they have a better idea of where their available stock is stored)
- Computerised stock systems typically allow the use of portable data terminals for stocktaking, saving hours in manual data collection and entry
- You have a better chance of tracing anomalies – such as shop lifting, staffing issues, point of sale errors, incorrect supplier orders
- Most stock control systems include some form of semi-automated stock ordering assistance which, when set up properly, can save time and improve efficiency
It may be difficult to put a dollar value on the advantages of optimising inventory efficiency, but remember, the more data you have at your disposal, the better you can analyse your operation to find opportunities for improvement.
But does it take too much effort to manage your inventory?
It is true that there is time and commitment involved in maintaining a stock control system – supplier invoices need to be entered, stock wastage needs to be recorded etc. Additionally, the old adage is true – ‘garbage in, garbage out!’ – so the more accurate the information that is entered into your system, the more comprehensive the data you can analyse. Conversely, a poorly maintained stock database is almost as good as useless. However this extra time and effort taken to keep your stock control system up to date needs to be seen as an investment – a cost that will reap greater dividends.
Bear in mind too that much of the extra effort required occurs when the database is initially set up. Your software supplier would likely be involved in assisting you in getting your stock system up and running and can advise you on best practice principles, so that you get the most out of your investment.
Once your system is in place and you have some standard operating procedures, you’ll find that it’s simply a matter of sticking to a good routine of inventory maintenance. It may mean setting aside a certain amount of time each day (or even once or twice a week) and entering or importing invoices, adding new items that have come into the system and recording other stock movement.
Recently, there has been a push toward automated reporting, allowing end-users of stock control software to send a pre-configured series of reports automatically via email or a cloud drive to key staff or management. This is another effort to make using these systems less time consuming.
Many small businesses are finding that a well maintained stock control system is not only beneficial, but essential to the efficient running of their business.
So don’t underestimate the benefits of a well implemented stock control system in your business. The investment is definitely worth it, because the effort you put into it will often reap the rewards of increased efficiency and profitability!