6 Steps to Proper Inventory Management for Alarm Companies
At the end of each month, are you counting your extra cash or your extra product inventory? If it’s the latter, then you are overdue for implementing a strong inventory management system. Here are six steps to create an inventory management system that will minimize loss and increase profits.
1. Order the right type and amount of alarm products. Outside of tracking daily sales volume, keep a log of your best selling items. Take note of the time of year along with anything – such as a recent string of thefts in a neighborhood – that could impact sales.
Be sure to order what you have space for. Unlike larger companies with extra warehouse space, your business may not be able to store everything you plan to purchase. Buying what you need most – i.e. best sellers – should be the top priority.
2. Review the items in your shipment. Be sure the number of items identically matches the packing slip and your order receipt. Check to see if any items have been damaged and if so, contact the shipping company immediately.
3. Create a system to store and locate your products. Decide where your products will be placed – in a store, warehouse, etc. and map out where to locate each item. Keep it simple. The last thing you want is an over-complicated storage system that only you understand. All current and future employees need to know how to locate your products. Neglecting this important step in inventory management leads to lost items that need to be replaced, resulting in a poor ROI.
4. Minimize theft and clerical errors resulting in loss. You are a security company! Follow your own advice and make sure you install security cameras and alarms around your store, warehouse, etc. to prevent theft (burglary and employee theft). Closely monitoring orders placed and orders received will decrease the chance of lost profits.
5. Add “taking inventory” to your To-Do list. Schedule a day per month – or at least per quarter – to check how much and which products you have, as well as their age. This is necessary to determine which products are selling and which are not. It’s also a step towards good customer service; no customer wants an old, faulty alarm installed in their home or business.
6. Consider investing in inventory management software. Choose one that is designed for small businesses to help you monitor purchasing, create invoices, process orders, create receipts, and assist with inventory accounting tasks.
Inventory management is a make or break matter for small businesses. Getting a handle on your ordering will have a profound impact on your return on investment (ROI). Having too little product on hand is just as bad – if not worse – than having too much. Follow these steps to get your inventory under control and generate a positive cash flow each month. For more resources related to running your alarm business, visit Alarm Capital Alliance.