Small Business Inventory Management

Sustaining the growth of your small business starts with managing your inventory. Being able to accurately track the sale of your products and meeting the demands of your consumers is essential. Properly managing inventory allows you to save money, avoid unsold assets, and maintain profitable sales margins.

When done properly, you’ve planned for inventory levels that meet the demand of your customers and their orders, allowing you to always move your products. There are quite a few basic inventory management techniques and important ideas to cover. The first step of inventory management starts with a  barcode sourced from GS1 US®. 

Retail success becomes nearly impossible without the humble barcode; without it, you'll be unable to track sales and inventory accurately. From the product to the warehouse, the barcode makes it possible to track your sales and products.

The right barcode not only ensures proper inventory management, it also means that your product is trusted domestically and globally. As your business grows, you can always be confident that your product and barcode will be accepted by larger retailers and global marketplaces.

Small business owner taking inventory with clipboard

What Is Inventory Management?

Simply put, inventory management means that you have a clear and accurate idea of what items you have on hand to sell. Tracking inventory is easy if you have multiple stores or warehouses in the same town, domestically, and even internationally. Inventory management means you are properly tracking orders to meet the demands of your retailer partners as well as customers, including more easily managing returns.

Inventory management makes it easy to see items in shipment, items in production, and even what raw materials are on hand to fulfill orders. To take it one step further, inventory management even involves measuring associated cost with things like storing products.

The Importance of Inventory Management

Making money is nearly impossible if you are unable to sell your product on time. A business with products out of stock often loses their business to another competitor that can meet the customer’s needs.

Just take a look at the supply chain issues plaguing many retailers and brands over the past few years—cash to run the business can easily become tied up in excess, unsold inventory if it’s not accurately matched with consumer demand. Poor cash flow makes it difficult to invest back into the business for future products and operational business needs. Unsold inventory usually results in liquidation efforts where you must choose between profits and keeping the company moving forward. 

Inventory management avoids waste, prevents overbuying, and ensures your products are delivered on time and to the right place. 

Along with properly barcoding your products to track online and in-store sales, you might also want to consider inventory management software. Most retail industry platforms use GS1 identification standards, including barcodes sourced from GS1®, to ensure full visibility of your products. Barcodes also play a part in warehouse inventory management when it comes time to move your product across the supply chain.

No matter what type of distribution you choose for your business, sticking to inventory management best practices can help you sell more products and expand. You may choose direct-to-consumer (D2C), selling to a wholesaler, working directly with a retailer, or selling to a distributor. Being aware of your product levels and location helps to ensure you can meet orders on time. Improving your distribution goes hand in hand with the proper management of your inventory. Understanding the delivery times of your products, such as expected landing dates, ensures that you’re able to distribute your products to business-to-business (B2B) and business-to-consumer (B2C) customers.

This has a ripple effect leading to long-term success and loyalty: Meeting the expectations of your customers, partners, and distributors ensures that customers downstream receive their product as expected. Effective and efficient distribution starts with having a clear understanding of what inventory is on hand, in production.

One of the many benefits of excelling at inventory management is that you’ll be able to save money and control costs, all while meeting your demand. All the topics we have discussed so far play a role in sales forecasting.

Having a clear and accurate idea of your available inventory allows you to understand your needs and those of your customers. The proper tracking of your products allows you to time promotions and sales; accordingly, you’ll be able to understand trends and seasonality that come with your industry. If you know the holidays usually result in bigger sales, for example, understanding how many items you have on hand to meet that demand will be extremely important.

Most importantly, inventory management ensures that you can keep your customers safe and that the quality of your product meets regulations and the public’s expectations.  When you prioritize inventory management, you can work effectively with retail partners to properly manage potentially unsafe or defective products. When you work with partners in the supply chain using a common standard, such as the UPC barcode, you can isolate affected products, properly manage recalls, keep your customers safe, and retain public trust. In fact, affected UPCs, along with expiration dates, are often cited specifically in notices about product recalls to help the industry and the consumer confirm what is safe and what is not. 

If your business revolves around food, inventory management is crucial to food safety.  Not only do we regularly hear about outbreaks of foodborne illnesses like E. coli, Salmonella, and listeria, but we also hear about regulations from the Food and Drug Administration (FDA) that are driving forward more proactive food traceability. GS1 barcodes and data standards are beneficial for businesses to meet the requirements of the Food Safety Modernization Act (FSMA). Signed into law in 2011 by the Obama Administration, FSMA is a food traceability rule for fresh food products. It aims to prevent food recalls before they happen by improving traceability. Barcoding and tracking your products keep your customers safe and can often protect your company from serious legal implications and loss of customer loyalty.

Locally bridges the online and instore shopping experience with GS1 Standards

Innovative shopping platform Locally says the UPC plays a critical role in surfacing inventory for the right shopper.

Learn More >

Let GS1 US Help Your Small Business

GS1 is the global authority for the unique identification of products and companies, which serve as the building blocks for barcodes. GS1 US provides an authentic way to represent your products and services in stores and through major online marketplaces.

Small business owner smiling in plant nursery