5 Inventory Planning Challenges Faced by Small Enterprises and How to Overcome Them
In many ways, small businesses are the lifeblood of the US economy, with small enterprises across the country generating almost 13 million new jobs in the last 25 years. While running a small business can be an incredibly rewarding undertaking, effectively managing, adapting and maintaining operations typically requires a great deal of hard work and determination.
Efficiently managing inventory often ranks among the biggest challenges faced by modern small business owners, so much so that 43% of small businesses don’t track their inventory levels at all, with this oversight causing almost 35% to accidentally sell unavailable products.
While developing inventory planning procedures might be an intimidating prospect for many small business owners, doing so can bring about a number of important benefits. To explore this idea in more detail, this post will uncover 5 inventory planning challenges faced by small enterprises, as well as discuss a few actionable solutions to help teams overcome them.
1. Tracking inconsistencies
The key to a well-organized and efficient inventory management system lies in the accurate and consistent monitoring of assets. This includes both the raw materials used in production activities and finalized stock intended for sale. If a team only accounts for these assets using siloed spreadsheets and manual tracking policies, inconsistencies can quickly lead to errors.
Thankfully, with support from modern inventory asset management software, small business owners can monitor all key assets in real-time, removing much of the guesswork associated with manual inventory management. Incoming materials and live production records can be automatically compared with current inventory levels to ensure stock data remains accurate.
2. Supply chain coordination
While in the past small business owners may have been limited to sourcing materials from local suppliers, the rise of the internet has enabled most modern supply chains to become international operations. Of course, this often contributes to significant savings in terms of operating costs, but poor coordination with global suppliers can derail entire production lines.
Avoiding the knock-on effects of poor supply chain coordination can be as simple as setting up reliable connections between suppliers and small business owners, typically in the form of smart inventory management tools. Such systems ensure changes made on either end of the supply chain are instantly communicated to both parties, helping staff adjust in real-time.
3. Overstocking / overselling
Overstocking and overselling are not uncommon issues faced by small enterprises, with both challenges rooted in poorly optimized inventory monitoring practices. Overstocking items can quickly lead to significant cash flow and inventory storage issues, while overselling products can damage client relationships and affect production efficiency, ultimately impacting profits.
Both of these issues can be effectively mitigated through careful planning, especially around peak and slow periods of the year. Monitoring average sales records from previous years (as well as expected levels of customer demand) can help business leaders to reliably forecast inventory requirements, with this process simplified via digital business management tools.
4. Lack of data accessibility
While many of the most pressing challenges related to inventory planning can be addressed with support from modern technology, these efforts may be ineffective if stakeholders cannot access key data insights when needed. With supply chains and global markets often subject to change at the drop of a hat, live data access quickly becomes vital to small businesses.
Configuring inventory management and production scheduling systems to operate within a cloud-based management solution acts to address these issues, enabling stakeholders to not only access data at all times but also receive live alerts when factors change. In addition, automated responses can be designed to instantly adjust operations as and when required.
5. Operational inefficiencies
For a small business to reasonably compete with much larger organizations, management teams must find a way to maximize core efficiencies. This includes production, inventory management and fulfillment processes, all of which need to be optimized and accurately monitored to ensure that one error doesn’t contribute to a larger issue further down the line.
In an effort to reduce operational efficiencies, many small businesses are exploring ways to automate key processes, with data suggesting almost 70% of enterprises currently utilize business process automation solutions to improve visibility across integrated operations. In terms of inventory planning, this means developing automated processes to adjust ordering, material allocation and fulfillment tasks in direct response to real-time commercial demands.
Summary
Optimizing inventory planning and stock management processes can be challenging for small business owners, with multiple interconnected elements each contributing to wider operations, ultimately creating a delicate ecosystem that can be damaged by the smallest of errors. However, modern inventory management solutions can help to address most issues.
By automating inventory tracking, material procurement, supply chain management and key production processes, businesses gain a holistic view of once-complicated operations. When coupled with real-time data insights made accessible via cloud-based management systems, these modern tools can help small businesses to overcome a variety of pressing challenges.