Losing control of inventory is a key challenge to businesses of any size. It can lead to unhappy customers waiting on their orders, failure to manage supply and demand, unnecessary cost, and ultimately, reduced profit.
One of the most common reasons for losing control of inventory is when you push your accounting program beyond its limits.
Some desktop accounting programs come with advanced inventory modules, whereas newer online accounting software connects to third-party inventory management apps.
However, both these approaches can fall short when a company reaches a certain size or level of complexity.
Knowing the point at which inventory control is in jeopardy, and when it’s time to move towards a new system, is one of the most critical decisions faced by a growing company. Yet, it’s a juncture that is frequently misjudged.
The symptoms can be obvious. You might be running out of stock or writing off obsolete products. Sometimes, the real impact is hidden. These could include reduced margins due to handling stock more than necessary or failing to respond in time to a fluctuation in demand.
Many companies count this as a cost of doing business and stick with their existing accounting software such as MYOB, Xero, or Quickbooks. They stay with what they know and what has worked in the past, thinking they would rather avoid the expense of new software.
Or, they may respond by augmenting their accounting software with additional systems and spreadsheets. But this can just create new problems for inventory control.
These actions suggest a business that is failing to understand the cost of poor inventory control. It also ignores the enormous potential of embedding inventory management into the systems that manage critical business processes.
Often the smartest approach is to invest in an ERP (Enterprise Resource Planning) platform that can turn the complexity of inventory into a foundation for growth in sales and on-time delivery.
Read our blog 'Six Signs your Inventory is Outgrowing your Accounting Software' to understand the breaking points that indicate it’s time to change.
