Welcome to this week’s edition of Let’s Talk.
As a small business owner, managing your inventory effectively is one of the biggest challenges you might face. Inventory management can result in lost sales, overstocking, increased carrying costs, and reduced profitability. Effective inventory management can be a game-changer for small businesses, enabling them to optimise their supply chain, reduce waste, and improve their bottom line.
In this edition, our expert will share insights on the best ways for small businesses to manage their inventory effectively. Through their expertise and experience, they discuss practical advice and solutions that can help you streamline your inventory control, minimise costs, and maximise profits.
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Shaun Broughton, Managing Director, APAC and Japan, Shopify
“few things are more disheartening for consumers than wanting to make a purchase and seeing their desired item is out of stock. Your business loses out on a sale and may even lose brand loyalty in the process. So for business owners, knowing what you have on hand, what’s selling, and when to reorder a product are critical aspects of a well-oiled operation.
“Whether you’re a new business or opening yet another retail store location, you should strive to remove human error with inventory management software. And, if you run your business with Shopify, it’s already built in to help you:
- Improve accuracy. Eliminates manual recordkeeping, which improves accuracy, and allows businesses to more easily keep records and streamline operations.
- Improve integration. Integrates inventory data with other systems, like accounting, to cut down on input errors—by eliminating duplicate data entry and minimising manual data entry—and centralising important information.
- Improve efficiency. Makes orders only when stock is low to eliminate the issue of dead stock—excess inventory that may expire or go unsold—and lower the risk of stockouts or overstocking.
- Save time and money. Helps you only buy stock you’re fairly certain you can sell and allows business owners to efficiently re-allocate employee resources previously spent on manual processing.
“Remember that with a proper inventory management system in place you can help reduce holding costs, improve your bottom line, analyse sales patterns and predict future sales, and prepare for the unexpected. With proper inventory management, your business has a better chance of profitability and survival.”
Lindsay Brown, VP of APJ, GoTo
“During covid, mass adoption of a range of applications and solutions took place to stay afloat, and now SMBs are left with challenge of continuing to maintain their dispersed inventory, while facing mounting economic pressures.
“Moving forward, consolidation of an SMBs inventory will provide a cost effective, and productive solution. GoTo’s 2023 IT Priorities Report found 82% of Australian SMBs consider consolidation of communication, collaboration, and IT management and support tools an important initiative of the year, with 92% of organisations having planned, completed or currently the process of their consolidating efforts.
“Consolidation helps SMB IT teams effectively manage their inventory as it allows for applications that are essential to the organisation to be run on one platform, such as IT support, unified connection and collaboration, and remote monitoring and management. In 2023, SMBs should look to seek out technology solutions that address these multiple needs to bring more ease of use for employees, reduce the burden on IT, and enhance productivity for the business, all with a smaller cost.”
Mark Reddy, Head of Growth of Spend Management at Portt, an Advanced company
“Moving away from paper-based systems and adopting a software program that provides visibility across the supply chain, is the best way for any business to manage inventory effectively. Whilst the actual inventory itself is an important element, being able to also track supplier progress is another essential part for a business to be able to efficiently manage costs across the organisation.
“The Portt Supplier Management platform significantly improves cost savings and helps to drive efficiencies. It captures critical data, allows users to categorise and report on suppliers based on a wide range of classifications and can be tailored to assess risks across industries, geographies and government regulations. In a world where supply chains are constantly disrupted, being able to keep track of assessments, approvals, variations and contracts online and in real time, helps a business to better manage or plan for potential disruptions.
“Investing in the right software shouldn’t be ignored. A supplier management platform makes supplier management easy, transparent and reduces risk. Additional benefits include streamlining cumbersome manual tasks and automating workflows, which leave more time for big-picture decision making and value-adding relationship building.”
Tony Heitmeyer, Managing Director, CIBIS International and XPECT
“Our best advice is to build in automation and digitised inventory control, ideally integrated with your accounting solution and customer records. Look for a platform that is designed to help SMEs accomplish operational efficiencies across the business.
“Imagine if you could have a real time snapshot of everything about your inventory: what is on backorder, what’s going to be delivered and when, what is in transit, what has been paid for, how many customers typically order a given product in a given period, plus what stock you have and where it is.
“The proper management of inventory, informed by combining data from across your business and tracking of sales, trends, and more will help you to identify what to order, when and why.
“If you have multiple staff managing orders, if you’re selling goods with barcoded price tags (or should be), and if you’re experiencing a good sales turnover on a lot of different items, then this kind of investment will yield efficiencies that will save time and money. If you have multiple outlets, warehouses or a mobile team of staff to supply with stock, you have more compelling reasons to modernise your inventory management in this way.”
David Carbines, Co-founder and CEO, Cogsflow
“As we tie a bow on Easter there’s barely time to catch your breath before thinking about the end of year – BFCM and Christmas / NY. Here’s three pointers for every business:
- Review sales forecasts and merchandise planning
After you close the March quarter, re-forecast total sales, category share splits, and SKU quantities required across your range. Amongst all the SaaS tools, Shopify, Dear / Cin7, and Inventory Planner are the most common with our clients. - Figure out your working capital requirements
From your payment terms to suppliers and credit terms to customers, you can estimate the amount of cash to make it run. Understanding this working capital requirement / ratio is different from profitability – Phil Knight’s Shoe Dog is a great example of a profitable business that still needed capital to grow. - Get close to your suppliers
Both to ensure supply security and explore more generous payment terms. Smaller orders tend to get bumped, so make sure you’re aligned about how to be fully stocked before November.
“We started Cogsflow to help small businesses act big. Cogsflow embeds the cost of
finance to inventory. Please let our team know if we can help.”
Paul Soong, Regional Director, ANZ, e2open
“To manage inventory effectively, it is important to understand and accurately forecast demand. Inventory managers will need to rely on data like record of historical sales and market trends for accuracy. Together with this data, inventory managers will need to consider external factors like weather conditions, the health of the economy and changes in demand so they are equipped with the necessary information to make optimal decisions backed by data.
“It is also crucial for inventory managers to audit stock levels regularly. Businesses can easily identify any errors and waste with the appropriate software. This can be done seamlessly and be embedded as a business practice. Alongside this, businesses will also need to implement quality control inspection to minimise potential waste and ensure the products are up to standards. This will require the businesses to accurately document critical elements like ordering and invoice matching. At the same time, small businesses will also need to anticipate potential disruptions and should therefore prepare a risk management strategy to secure supply and mitigate risks.
“With proper inventory management measures and practices, small businesses will be able to optimise costs and maximise sales opportunities.”
Julia Ewert, Negotiation and Sales Strategist, Julia Ewert
“Maintaining and growing a small business requires proper sales process. Before upselling, cross-selling or discounting, small businesses need to introduce a proper sales process.
“Upselling and cross-selling is best done when there is trust and a connection with the customer and discounting should be a last resort. Discounting can make a small business look desperate and is tantamount to cutting corners and the best small businesses grow and thrive on relationships and trust.
“The key mistake most small businesses make with their sales strategy is they don’t have a sales process and it should be part of their business model. Define your sales process so employees understand what your company does and how it does it. The sales manual should identify all the steps for staff to follow and include key stages in the sales cycle such as ideal customer and follow-up.
“Successful small businesses follow a sales process. If smaller businesses want to be able to better predict and forecast their revenue, they need to use a systematic sales process. The reality is small business won’t close a deal on their first phone call, meeting or approach. It takes an average five to 12 value-adding follow up phone calls after a proposal to close a deal.
“Every conversation with your potential customer should be an investment in the relationship. When starting a small business there are no quick fixes and it’s about genuinely investing in the relationship to ultimately win customers and contracts that will increase revenue.”
Taylor McPhail, Director of McPhails Furniture
“Count and remember, count and remember! As we grew our business from around $300k holding stock to over $5m holding stock we simply had to count and remember! We now have a reasonably basic system which keeps count for us but, in our game, I don’t think there is any easier way. We have invested over $200k in the past to find the best suited system but none of them have worked as well. I guess if you want to have your own successful business, it really comes down to living and breathing what you do which means knowing your stock. Knowing your stock and watching it daily will give you the best effective management of it.”
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