Starting a Business Inventory Management System

Posted by Fitz Villafuerte under Business on January 17, 2011

An important part of a well-managed business is an efficient inventory management system.

However, not many start-up entrepreneurs know how to begin or properly handle this business task.

It often receives less attention than activities like marketing, customer relations or personnel management. In some cases, it’s altogether ignored.

Meanwhile, some managers who do understand it’s necessity would unfortunately settle for an offhand solution – making the business miss out on some of the benefits of having a fully optimized inventory management system.

The primary advantage of having an efficient inventory management system in place is that it helps increase your business cash flow – which occurs on top of these other benefits:

  • By tracking how fast each of your stocks move during specific business climates, you can now streamline your production volumes and procurement schedules to lessen your overhead costs.
  • An inventory system provides security over the movement of goods and supplies, which lessens or even eliminates tampering and theft by employees.
  • You will have a better view of where and how cash revolves around the business – valuable information you can use when negotiating terms with suppliers and clients.

If you want your sari-sari store to become a mini grocery someday, then you need to implement an inventory management system as early as possible. Here now are a few pointers you should remember.

Have a Committed Attitude
Establishing your beginning inventory, monitoring it and doing an analysis of your data requires time and patience. Managing inventory is a business-long process that requires commitment to be able to successfully implement.

Decide on a System

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While it is recommended that you use an inventory management system application or program, not all businesses can however afford it right away. Doing it through the use of a spreadsheet can initially suffice. It will be more tasking, but it’s better than having none.

Engage your Employees
Successful inventory management requires teamwork. You need NOT ONLY to train your employees how to do it properly but also, help them understand its benefits. When they know why it’s good for them and the business, they will likewise be committed to implementing the system.

Learn to Analyze your Data
An inventory management system will help your business in a lot of ways, but only if you know how to analyze the information produced. While most of these are easily deduced by just studying the raw data, some benefits can only be realized after further tabulations, such as doing an inventory-cost analysis.

I guess that’s it for now. Inventory management is a big subject to tackle in a single article and we can continue learning more about it in the future.

However, I do hope you were able to appreciate the importance of having an inventory management system in your business and found the few pointers above insightful.

Before I end, let me give you some free inventory spreadsheets which you can download below. These are just simple inventory spreadsheets but they are quite handy and useful.

FREE DOWNLOAD: Inventory Spreadsheets

Note: This is a ZIP file with three Microsoft Excel 2007 spreadsheets – Inventory List, Perpetual Inventory System and Inventory-Cost Analysis

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Photo credit: arabicdes


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2 Responses to “Starting a Business Inventory Management System”


  1. Fitz, this is a great article, and you are right its most of the time inventory management is neglected when starting business, by the time business have pick up, the inventory is a mess, you have loss a client because of delay finding the right inventory stock, or have lost money on man power spending time for correcting the mess. Before you know it, cash flow is also a mess. 5 star for this article sir!

  2. junji says:

    I agree with your Fitz. Here are few name of best of breed inventory management systems that I know of. Red Prairie, SAP EWM, Infor WM, Exceed (old version of Infor), 3M High Jump and many others. We used Exceed before then later implemented Infor in my previous job. The good thing with this systems is that it is designed to give your business also the best practice business process to follow. As you have said, this is a big subject but not to worry since you can find on the internet subjects relating to this. Just note that not all vendors have their office branch in Philipines.

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