5 Ways to Step Up Your Inventory Management

Business.com
5 Ways to Step Up Your Inventory Management

Like most other retail leaders, I know that inventory management matters. I knew that even before I started my business or had any experience in the industry. It's just an obvious necessity for managing a retail business.

However, I didn't truly understand the supreme importance of the practice and the ramifications it could have across an organization (both positive and negative). I also didn't understand the delicate nuances of effective inventory management, nor how I could use it to boost my profits and retain my customers.

If you're as much in the dark as I was, or could simply use a refresher course on good inventory practices, read on for some tips to step up your game.

1. Understand the risks of poor management.

The first step to perfecting your inventory management system, whether you're running an e-commerce startup or a long-standing retail location, is to thoroughly understand why it matters. Too many organizations regard proper inventory management as a chore, or a nice-to-have, when it's arguably the single most important practice for a profitable retail business.

Stores and sites with lackluster inventory management systems often struggle to provide customers with the products they want when they want them, in addition to reporting high losses from employee and customer theft. Warehouse labor costs can also get out of hand for these businesses, because extra time is needed to sort through poorly organized and inaccurate inventory. Unhappy customers, unhappy employees and sinking profits – these are the repercussions of poor inventory management.

2. Don't wait to set up your system.

As my wife, Tori, and I started up our e-commerce fashion business, Pink Lily, we were overwhelmed by the number of things that had to get done. To us, the prospect of counting and monitoring our growing inventory of products was not as important as the many other tasks on our plates. And so we waited far too long to establish a system for inventory management. This delay had a damaging effect on our business, and we learned a valuable lesson. To my fellow entrepreneurs and startup founders out there, I offer this piece of advice: Do not wait to set up your inventory management system. Do not let this task fall to the back burner. Do it now. You'll thank me later.

3. Choose your process or partner carefully.

Some small, niche retail businesses can successfully manage the inventory management process with a traditional, manual process of diligent paperwork records. But for most retail businesses, both online and offline, a digital inventory management system is necessary to accurately track and monitor merchandise.

When choosing a digital system or tool to serve as your inventory management partner, it's critical that you properly vet, analyze, compare and test each option. At Pink Lily, we unfortunately had to go through two inventory management systems that failed miserably before landing upon our current tool, which is optimized for managing inventory for e-commerce businesses like ours. Learn from our struggle and do the work to investigate all options in advance, in an effort to find the best possible fit for your business.

4. Ensure lightning-fast data processing.

In this high-speed digital world, in which customers expect and demand immediate attention and gratification, it's vital to process orders – especially online orders – at the highest possible speed. For e-commerce and businesses with a strong digital presence, the data processing speed of your inventory management system will make or break your rate of customer satisfaction.

Let's say that a customer logs on to your store's website, makes a selection and successfully checks out. She's happy with her purchase and looks forward to receiving her order. What she doesn't realize is that her chosen product is actually out of stock. She doesn't know because your website didn't know, because your inventory management software has not yet finished processing the numerous orders that came through for that same product in the last few hours. This situation is going to end with an unhappy customer who will not be receiving her product, and this misstep will likely hurt or destroy any chance of repeat business with that customer. The stakes of every retail purchase are very high, and everything hangs on your system's ability to keep up in real time.

5. Set a recurring process for manual recounts.

Just as important as establishing a strong system for digital inventory management is your team's dedication to regularly and methodically counting merchandise to cross-check inventory numbers by hand. At Pink Lily, we schedule these manual recounts on a recurring basis, and we have a system to rotate through different sections of our warehouse (e.g., Week 1 – Row 5). Without this dogged attention to detail, we would not know where our inventory actually stands, nor would we be able to identify problems such as theft or inconsistencies in our digital system. Be sure that your business has a similar and oft-repeated process for checking that things are as they should be.

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More than just lightly toasted, your brain feels singed.

You’re burned out, and the cumulative stress makes it hard to decide what to eat for dinner, let alone come up with innovative ideas. But people are still expecting you to produce creative solutions despite your current mental state. What do you do?

If you find yourself in this situation, I can’t offer any guarantees that epiphanies will come to you. But I can offer ideas based on my experience as a time management coach and on the science of how our brains work that can give you the best possible odds of coming up with some decent new thoughts.

To start, you need to let go of trying to “make yourself” come up with something creative. If you’re already struggling with stress, threatening yourself can further trigger the fight-or-flight mode. This causes you to operate out of the primal, least creative part of your brain. So instead of saying to yourself, “I must be creative,” or “This has to happen now,” it’s better to tell yourself something like, “I’m going to see what happens,” “I’m going to explore this possibility,” or “I’m going to play around with some ideas.”

You want to create a sense of psychological safety so you don’t experience debilitating performance pressure.

Once you’ve created psychological safety, then experiment with activities that can trigger the “diffuse-thinking” state. This type of thinking is one in which your brain operates in a looser manner, searching to make connections between different parts of your brain versus operating in the established neuropaths followed in the “focused-thinking” state. Activities like walking, napping, eating, or taking other sorts of breaks naturally put you into the diffuse state and open your mind up to new possibilities.

To maximize the benefits of these in-between times, avoid multi-tasking and let your mind explore a particular idea. For example, you could feed your brain these kinds of prompts: What might be involved in making this promotion a success? Or what might happen if we approached our customers in a different way? An openness of mind and non-judgment toward the quality or quantity of your thoughts gives space for creativity to come forth.

In particular, I find that I am most creative when I not only am giving myself space from my computer but also positioning myself in a “happy place.” In the warmer months, that’s somewhere outside preferably along a lake. In the cooler months, it’s likely a coffee shop with a fireplace. Beautiful, peaceful surroundings lift my spirits and creative mental capacity. Some of my coaching clients have found their happy, creative spaces in historic libraries, art museums, or even browsing through boutique shops. Know which environments naturally give you pleasure and immerse yourself in them to allow positive thoughts to arise.

If you still feel stuck and just can’t come up with something new, then you may want to give your brain more material to work with. This could look like reading on the topic, taking a field trip to a place where you can see other people’s creative solutions to a similar problem, or talking to experts. Sometimes by seeing what other people have done, you can come up with new ways to approach your own situation.

And then to even further increase your opportunity for breakthrough moments, collaborate with others. Alternating between solo thinking and time in groups proves the most effective way to develop the most creative thoughts. Have a brainstorming meeting with colleagues, get together for coffee with a friend, or do problem solving with a consultant. Two or more brains can work better than one. The process of talking through ideas can stimulate new thoughts and challenge your thinking.

Finally, give yourself time. When your brain operates at full capacity, you may have the ability to come up with creative thoughts on the fly. But when you’re less than 100%, you’ll have a much better chance of success by giving your brain time to percolate on ideas for a few days.

When you’re mind feels blank and all you want to do is zone out, it’s more difficult but not impossible to experience your breakthrough. By putting yourself in the right mental state and environments, you can find your creativity.

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