Wednesday, November 19, 2008

Your Small Business: Software for Inventory Management

Inventory and cash flow walk hand-in-hand through your business. But if you don't know what there doing they might just run away. A good software system can streamline the process of inventory control, but without the right processes it can wreak havoc.

In an article by Business Week Stephen Carroll, owner of Walking Equipment Co. in Largo, Fla., describes how engaging a Stone Edge technology software enabled him to automatically inventory his stock. When an order was pulled from the shelf the software produces, Shipping tags and pick lists automatically. Thus, keeping him up-to-date on supplies and assisting in cash flow management.

Software doesn't have to be expensive. The Stone Edge system runs from $1,000 to $6,000. But many SBOs make due by pushing the limits of Quicken Pro. A small retailer that I know on the coast of Oregon developed a customized program in Excel that works well for her 4-employee yarn shop.

The goal is to be able to predict when and what to order in the future and to match that with cash flow control. Cash flow is all about inventory and vice versa.

And speaking of employees...They are really the key to successful inventory control. Without the right processes software is just a computer program. Before implementing inventory software it's important to review all aspects of your business such as: sales trends, supplier delivery time, invoicing, and customer needs. You must use a diligent eye to review the business and decide what procedures could work. Be prepared for a bit of trial, error and training. Your employees who work directly with shipping may also have good ideas. And for a system to work you must have their buy-in.

Once you decide to go with a software system you'll need to determine if decide if you want to host it own servers or outsource it. Newer systems are moving toward Internet hosting. This saves you money in the long run as you'll be able to keep up with upgrades without paying for development.

Any inventory management system must support your accounting method, whether you operate on "first in first out" or "last in first out" (FIFO or LIFO) basis. Your system should keep track of goods as they are received and shipped, giving you a view of everything in your warehouse. You want results in as close to real time as possible, and the information should be available to your sales force, preferably online, so no one is making mistakes at order entry time.

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