According to the State of Small Business Report presented by Wasp Barcode Technologies, 43% of small businesses in the United States still use pen and paper or Excel spreadsheets to track their inventory. Out of the 1,100 small businesses surveyed, they found that some did not track inventory at all.
Inventory being some businesses’ greatest asset, it is important to manage your inventory to ensure customer satisfaction and to increase sales. Patients/clients become very disappointed if you have sold them foods that have a short shelf-life, or you have run out of products they are looking to purchase. In this article, we will examine some best practices for managing inventory manually.
Prioritize Your Inventory
Looking at your inventory through an analysis process helps you to determine which are fast-moving products and which are not. One process is to use the ABC analysis method. This method puts your products in a hierarchy of most valuable to least and helps you determine which are fast-moving products. Items in the A category are items that are your priority stock. Tight management of these items ensures you will never run out and these items usually have the largest value in your inventory because you purchase these foods in larger volumes. For example, HealthWise Caramel Crunch Bars would be an “A item.” B-items are those products that may move faster during the changing of seasons (i.e. hot chocolates in the winter, fruit drinks in the summer). Items in this category are also your products that move slower than A items. Items in the C category may move slower, but you have to keep larger quantities in stock as compared to their sales. Blender bottles are a good example of C items.
|Category||Value to your Business||Stock Volume for Cash Flow||Re-order Frequency||When to Review Current Inventory Levels||Examples of Products in this Category|
|A||High||Low||Weekly||Weekly||Caramel Crunch Bars, Chocolate Drinks, Protoccino Drinks, Dietary Supplements that are fast movers, etc.|
|B||Moderate||Moderate||Bi-Weekly or Monthly||Bi-Weekly or Monthly||Hot Chocolates, Fruit Drinks, Cappuccinos, Soups, Dietary Supplements that are moderate movers, etc.|
|C||Low||High||Bi-Monthly or Quarterly||Bi-Monthly or Quarterly||Blender Bottles, Sample Bags.|
*This table is viewable in the link below.
It is a good idea to group like categories in your store room together. Another way to set up your storeroom is by like products (i.e. all fruit drinks, all hot chocolates, etc.). However, you group your products and ensure your inventory room stays organized and neat.
Set Par Levels
It is crucial to set par levels on all your inventory so that you never run out of any products. Fast-moving items will want to have higher par levels than moderate and slow movers. Below is an example of a Par Level Worksheet.
|Inventory ID/Category||Name||Description||Unit Price||Qty in Stock||Reorder Level (Par)||Reorder Time in Days||Qty on Reorder||On Backorder or Discontinued|
|114 (B)||Dulce De Leche Pudding||36 boxes per case||$x.xx/box
|167 (B)||Variety Soup||36 boxes per case||$x.xx/box
|1||2||4 days to arrive||4 ordered on 12/14|
|208 (A)||Chocolate Drink||96 shake-shake bottles per case||$x.xx/bottle
|2||5||4 days to arrive||8 ordered on 12/14|
|404||Blender Bottles||16 oz. bottle; 24 bottles per case||$x.xx/each
|613 (A)||Chocolate Drink||12 canisters per case||$xx.xx/each
|0||3||4 days to arrive||4 ordered on 12/14||On backorder. ETA is 12/28|
*This table is viewable in the downloadable link below.
Checking inventory weekly helps you to manage your par levels and direct your ordering habits. It is a good practice to have just one or 2 people managing your inventory; preferably trained the same way so they manage the inventory similarly and can cover each other as needed during time off or away from the clinic/office.
Rotate Your Inventory
It is important that your inventory manager(s) know to rotate all stock. Using the FIFO (First In First Out) method for your foods. Using the FIFO method will ensure your older stock is sold before your newer stock. When your new stock arrives, have your inventory manager check it in (see Quality Check below for more information), and date all cases of products the day it was received. Use a large black magic marker (i.e. Sharpie®) and put the date in the same place on each case (upper right-hand corner, lower left-hand corner, etc.).
Once all the cases have been dated, place the newer cases behind any current stock in their correct inventory location. This ensures the older stock gets pulled first.
If your inventory manager sees that some foods are moving really slow, it is a good idea to check the BBD (Best By Date) on the product and if it is close (3 months out) it is a great time to have a sale! Buy one box, get the 2nd at half price, or run a BOGO sale (Buy one, get one free) are good examples.
Quality Check When Receiving A New Order
When new orders arrive, have your inventory manager(s) check the quality of the shipper cases. If you detect any damage, you can refuse the case at delivery time and the delivery service will usually ship it back. If you have checked the order in after the delivery service has left your premises, call the supplier to report any damaged goods. Ensure all your food product is stored in a dry, room-temperature area and is 6” off the floor. This is the proper way to store any food products to ensure they do not get damp or dirty sitting on the floor. As mentioned previously, your store room should be clean, organized, and free of any debris or trash. A weekly sweep or vacuuming is highly recommended as well.
Here is a list of the best inventory control software for small businesses:
Source: HealthWise Newsletter originally titled, “Best Practices for Managing Your Inventory.” – Repurposed for blog 2022.
State of Small Business Report/Wasp Barcode Technologies.