In smaller manufacturing businesses, where money and resources can be tight, keeping track of inventory often isn’t easy. Unlike big companies with ERP systems, many small manufacturers don’t use a perpetual inventory system. These systems help update inventory records all the time to show what’s in stock. Small manufacturers don’t always need a complex ERP System to help track inventory, but not having any regular process can cause big problems, especially when it comes to showing how much money the business is making.

 

Instead of keeping track of inventory all the time, small manufacturers often count only the most important items throughout the year, and then do a physical inventory once a year. But this way makes it hard to know exactly how much money the business is making each month.

 

Some small businesses might manage by cash on hand. But that doesn’t always tell the whole story. If they’re reducing their inventory, they might have more cash, but the work might not be as profitable as it seems. This can make financial reports look wrong from month to month and hide the true manufacturing costs.

 

To deal with these problems, small manufacturers need to focus on better ways to track their inventory on a regular basis (at least monthly). They can use simpler methods that still work well, like keeping good records and using physical tools to help. By doing this, they can make sure their financial reports are accurate and they know exactly how much money they’re making.

 

Below are some tips for small manufacturers to manage their inventory better. These work whether you use an ERP system or not.

 

Keeping it Simple: Accuracy First

When it comes to tracking inventory, it’s easy to think that computers will do all the work. But sometimes, trying to automate inventory transactions causes some of the largest discrepancies. Automation sounds like a great alternative, but there is a lot of effort in managing a system to ensure that automated transactions get the intended benefit. That’s why in small businesses I recommend inventory transactions be done manually. It is crucial to have real people reviewing things. This way, if something doesn’t seem right, we can fix it before it becomes a big problem. If it’s automated, it might be weeks or even months before the ongoing error is found, and with inventory errors timeliness is crucial. It’s a lot easier to fix the mistake from yesterday than fixing the mistake that has been going on the last 6 weeks.

 

Less People, More Focus

I like the saying ‘If everybody is responsible then nobody is” I believe this is especially true for keeping track of inventory. Involving too many people can lead to confusion and mistakes. So, it’s better to have a small, trusted team handling transactions. This way, everyone knows their role, and mistakes are less likely to happen.

 

When it comes to locations, keep it simple, stupid.

Think about organizing your room. If you have too many places to put things, it’s easy to forget where you’ve put them. The same goes for inventory. If you have too many categories and locations, it gets confusing fast. So, it’s best to keep it simple. This makes it easier for everyone to find what they need without making mistakes.

 

Add Physical Artifacts

When it comes to inventory control, I believe it’s always good to have physical artifacts backing up a transaction. This could be a barcode label, or a bin with a set quantity. Industry 4.0 is here and it is all about digital transformation, but we still live in a 3D world where we want to see and touch things.

 

 

Wrapping It Up

Managing inventory doesn’t have to be super complicated. By keeping things simple, involving the right people, using physical artifacts, and organizing locations sensibly, you can make sure your inventory accuracy is where you want it to be without spending hours and hours trying to get it right. Once you have timely and accurate inventory you now can be laser focused on your profitability. So, let’s keep it simple and make sure our inventory stays in check!

 

If you would like to discuss how to get your inventory under control send me a message.

derek@preciseprocess.co