Managing Inventory In an Ever Changing Environment

“It is not the strongest of the species that survives, nor the most intelligent, but the one most adaptable to change.” Though the origin of this quote often attributed to Charles Darwin is debated, it certainly seems to apply to the current small business environment.  

Recent events have caused businesses to rethink the way they do things and to adapt to the ever-changing world. How a business manages this process could separate the winners from those left behind to struggle. In retail, inventory is the blood that keeps profits alive. Listed below are three things to consider as you work to manage and adjust your inventory levels:

Accurate inventory tracking

Spring is when many small businesses take their physical inventory count and adjust their numbers to reflect an actual count. Unfortunately, many of these inventory counts did not take place as scheduled due to our current situation.  As small businesses start to reopen and prepare for what comes next, one thing to consider is rescheduling this important process if it was not already completed. To be successful, you must be working with accurate information from the start.    

Supply chain management

Supply chain disruptions have caused small businesses to evaluate their strategy for maintaining sufficient stock levels. Disruptions typically stem from one of two issues. The first issue is suppliers that are shutdown or running below capacity, which can cause a significant shortage of inventory. The second issue relates to an increased demand for products. The current situation has caused a shift in the items consumers are looking for, and the demand for some of those items is outpacing inventory levels. Both issues can be managed but must be dealt with in very different ways. If your supplier is the cause, sourcing an alternative for the short term or long term may be your best bet. Since operating statuses of companies continue to fluctuate, you may want to consider replacing your single source with multiple local sources, so you have options if things change. Demands continue to change and having the ability to adapt quickly will help keep you at the front of the line. Staying connected is key.

Inventory forecasting

Your sales trends were likely disrupted by the current situation and some suppliers may not be delivering the same quantities in the same time frame. Most forecasting tools will struggle to properly adjust for these unusual circumstances. You should keep in mind that future adjustments may also be needed. It is important to ask yourself if current sales are being pushed down the road to a later date or are the sales lost and the customers have made their purchases elsewhere? Pushed sales may cause a larger-than-expected spike in future sales, and your business needs to be prepared for that. Businesses must rethink inventory forecasting and will need to continue to do so well into the foreseeable future.