- Reid Hanson
What is Inventory Control?
In a service driven world, not every business has inventory. However, in the integration space, where we deal with products and equipment, most do. Inventory control is much easier for those who are only selling a few products. For those with a larger number of items to sell, manual inventory is simply out of question. Before we delve deeper into that topic, let’s consider why a good inventory control system is absolutely vital. Here are just a few key reasons:
Financial management. Managing inventory will allow you to track where your money is going and what the ROI is. What’s the point of continuing a business without knowing the status and value of your stock?
Product tracking. A well-managed inventory will allow you to track specific products and help you to weed out items that are not moving off the shelves.
Customer service. Proper inventory management also means that you will never run out of stock and will be able to locate items more readily through the tracking of your products. This also includes being able to locate any out-of-stock items, their manufacturers and prices which allows you to provide the products your customer needs, when they need them.
Theft control. A good inventory tracking system will help you discover and eventually prevent any inventory theft and loss, allowing you to deal with it quickly and accurately.
Inventory Control allows you track orders, know your stock, and evaluate your profits. The straightforward way to determine your inventory value is called the “Retail Method.” It is easy to calculate. Here are the basics:
Beginning inventory + Cost of purchases divided by Retail selling price of your beginning inventory + Purchases + Any mark-ups or markdowns = inventory value
According to the new IRS rules, you cannot adjust the denominator in the ratio for any temporary mark-ups/markdowns. In addition, you cannot reduce the numerator by vendor allowances that will just reduce the cost of goods sold. However, there is an exception here. You can reduce the numerator by any margin for any amount that you have received as protection payments, if that is meant to compensate for a cutback in your inventory’s selling price.
Excel Inventory Control
If you think using Excel is sufficient for inventory control, you need to take a second look. Excel is ineffective and inefficient in managing big inventory, although it has the advantage of being easy and convenient to use when your company is just beginning. Once your company outgrows Excel, you will need to use proper inventory management software that can automate your entire system from stock to shipping. Advantages to using this type of software are numerous, including:
A system that is intuitive, easy to use and accurate
A process that saves time, requires less human effort and increases productivity
An ability to detect discrepancies that helps you to get to the root of any issues
Automatic inventory tracking that will allow you to improve your ability to anticipate your customers’ needs and demands
Automatic reports on the total cost of inventory, profit margin, customer purchase patterns, cost of items sold over time, and more.
A highly efficient inventory management system through your POS system.
As a company that has worked for a long time with high priced electronics, TRXio realizes that even a small number of miscalculations can greatly affect the bottom line. This is why it is so important for companies that have retail or installation crews to be extremely steadfast and create solid practices for managing their inventory. In conclusion, if your business has inventory, you need to ask yourself what you are doing to make sure it is safe, secure, and well run allowing you to yield greater profits and have better business operations.
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