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Improve your inventory management

Rhys Roberts - Wednesday, January 21, 2015

Are you a retailer, wholesaler or manufacturer? Regardless of whether your customers are consumers or other businesses, and whether you’re selling online, offline or both, the difference between success and failure for businesses selling physical products often comes down to whether you’ve got the right inventory management systems in place. If managing your inventory is a cause of stress or inefficiency in your business, the New Year is a great time to decide to get on top of it once and for all. Read on to learn more about why inventory management is so important, and what you need to consider when choosing and implementing new systems.

Why is inventory management so important?

Inventory-based businesses tend to share a few characteristics that set them apart from businesses in other industry sectors, and implementing systems specifically designed to manage the many issues involved can have a significant impact on your bottom line. 

For example:

  • Most businesses selling stock tend to perform relatively high numbers of transactions (many hundreds or even thousands of transactions per year), each of which has a relatively low value (usually less than $1,000 per invoice, and sometimes less than $10). Minimising the cost of conducting these transactions is critical – even reducing the time it takes to create an invoice by just a few minutes can reduce your overall costs dramatically over the course of a year
  • You probably sell a range of items, each with different gross margins. Having clarity about the margin you’re making and how it differs across your products / product groups and customers / customer groups is crucial to making good decisions
  • Managing stock levels is critical to both profitability and cashflow, and the only way to effectively control inventory is on an item-by-item basis. (While your balance sheet can help you identify when you’re overstocked, it won’t help you address the situation. The only way to take effective action is by putting appropriate systems in place)
  • If your clients pay on invoice (i.e. after the sale has been made, rather than at the point of purchase), managing your debtors is also vital, and this is yet another process that must be systemised to run efficiently in order to optimise your cash flow.

Additional stock management issues for retailers

If you’re a retailer, you’ll also need to be able to complete sales quickly, capture basic information about your customers (so you can market to them), and in some instances, provide your staff with information that helps them know what discounts they can offer, and to whom. This is clearly difficult to manage, and impossible without proper systems.

Additional stock management issues for wholesalers

If you’re a wholesaler, you’ll also need to be able to manage orders from their initial receipt through to picking and delivering stock, invoicing customers and collecting payment – a process that in some instances may take weeks or even months to finalise. You may also need to be able to manage situations like having items on back-order or coping with partial deliveries. Robust systems are essential for all of these, because as your business grows, the day-to-day handling of such tasks will probably be performed by relatively junior staff, who usually won’t understand the business in its entirety and consequently need clear processes and guidelines to follow.

Additional stock management issues for e-commerce 

If you operate exclusively online or your business model is a hybrid of online and offline sales, having a system that syncs website sales directly with your stock control system and/or point-of-sale system is vital. This will help minimise the cost of conducting each transaction, ensure your stock records are accurate and minimise errors in your picking and delivery systems. 

Other complexities to consider

Among others, factors that may add further complexity to your business model include:
  • needing your systems to work across multiple stores and/or warehouses,
  • needing to manage manufacturing or assembly processes in addition to standard stock control and sales management, and 
  • needing the ability to invoice customers for items not currently in stock that are then delivered to them by your suppliers (drop shipping)

Solutions for Smaller Businesses

Cloud-based systems such as Vend for point-of-sale and Unleashed for inventory management have been specifically designed to help you manage the issues listed above and many more, and are packed with features that are invaluable to small- and medium-sized businesses selling physical stock. 

Being cloud-based, the implementation of these systems is generally very quick, and the ongoing maintenance is minimal. Both systems integrate seamlessly with Xero for your accounting processes, and Unleashed also integrates with Quickbooks Online (QBO). They can also be configured to integrate with popular e-commerce systems such as Shopify, OsCommerce and Magento to ensure that you always have accurate sales, gross margin and stock on hand information, regardless of where a sale takes place.

At Viridity, we’ve implemented Vend for a wide range of businesses, from cafes to clothing retailers, and our experience implementing Unleashed is similarly extensive, with clients including several importers of fashion items, a promotional supplies business, and a number of manufacturing businesses.


For many small businesses, the various MYOB products offer a really good tool for inventory management, especially when your data file is set up properly (if yours hasn’t been, please get in touchto find out if we can help). 

MYOB is available as both locally installed (desktop) and cloud-based versions. The fast response time of the locally installed versions are great for businesses that enter a large number of orders. Alternatively, if you’re looking for direct feeds from your e-commerce platform into your bookkeeping system, consider MYOB’s AccountRight Live. (If you’re not sure which option is most appropriate for you, please contact us to learn more).

Solutions for more complex businesses

Some larger businesses (and sometimes not so large ones) have more complex requirements, such as multiple warehouses, multiple bin locations, complex pricing, complex backordering requirements and so on. Triumph Accounting is one of the best solutions for these types of businesses, and is flexible and versatile enough to meet the needs of a wide range of industries. Triumph is available as a locally installed or hosted solution, and among many other features, includes a fully integrated POS, outstanding inventory control, and the ability for you and your team to access data from the office or via iPad whilst on site with clients.

If improving inventory management is high on your agenda for 2015 (and it really should be, because I can think of few other initiatives that will have such a major impact on your business in such a short space of time), we’re well equipped to guide you in determining whether these solutions are right for your business and then helping you implement them as necessary. 

Please get in touch with us for an obligation-free chat – as always, we’ll be happy to help.

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