Inventory Management: Keep It Clean

With the right inventory management system, your business can communicate honestly with customers and avoid bad first impressions.
Latest posts by Lynne Meredith Schreiber (see all)

One word keeps cropping up in conversations about inventory management: seamless.

Business owners agree that if you have to do double duty entering data in different systems, you’re bound to mess up and cost yourself money and time fixing the problem.

That’s where inventory management software comes in, taking over the tedious work of tracking merchandise, alerting you when stocks are low, and integrating with such other business systems as accounting and payroll.

Kevin Wales, president of Just Moulding in Gaithersburg, Md., uses an integrated QuickBooks program for all his business systems.

“When we first started, when I would get a job, I would go to the lumberyard and buy whatever materials I needed for that job,” says Wales, who makes custom crown molding, chair rails, baseboard and other wood trim. “I’d get the next job, go to the lumberyard and get more material.”

This pattern continued until Wales realized he was buying the same material again and again. So he purchased several thousand feet of lumber and put it in his warehouse. He entered the transaction into QuickBooks to keep track of his stock.

Now, whenever Wales gets a new job, he records the data in QuickBooks, and the computer tells him whether he has enough material to do it. When his inventory gets low, it sends him a reminder to buy more.

“When you update accounts, it updates your system,” Wales says. “You have to account for the material.”

He loves having inventory management and accounting functions linked. “Otherwise I’d have to do the inventory first and then update the accounting system,” Wales says. “If they can’t talk to each other, you’re doing double entry.”

Put your money where your mouth is

Inventory management is more than just counting how many pencils you have to sell. It’s “your face to the world,” says Sarath Samarasekera, CEO of, in Calgary, Alberta.

“All the other bells and whistles will attract people – nice signage or Web site will bring people to your store,” he says. “The completion of that relationship is the actual product. If you don’t have the products when the customer wants them, you damage that relationship permanently.

“That’s what you’re looking for in your inventory management software – can this software deliver to me on that promise?”

The right software can deliver, but it’s important to remember that while it’s available for both online and bricks-and-mortar businesses, software needs for each type are different.

For an online business, inventory management programs must include item description, image, number of units and availability to sell, according to Ken Powell, president and CEO of Atlanta-based Marketworks, an online inventory program. For bricks-and-mortar businesses, the number of units is also important, but so is location, item description, date acquired by the business and cost.

And remember, inventory management programs just help take care of what stays at the company. Think of it like grocery shopping – you keep spices in one drawer, canned goods in another cupboard, and when supplies get low, you head to the store. In business, the right software will make your list for you and tell you when it’s time to shop, Powell says.

It does not, however, include the logistics of the business – what Powell calls “pick, pack and shipping,” or how you get an inventory item from shelf into consumers’ hands.

Inventory management software is “a lot about efficiencies and organizing,” Powell says. It can help you keep track of prices so Web items are tagged the same as in-store. When linked, software makes updates in all your selling channels.

Finding the right system

“A lot of solutions focus on the technical side,” says Shopster’s Samarasekera. “You need to analyze your business and say, ‘How am I going to use this data? When am I going to use it? How often will it change?’”

The answers to such questions will help you pick the right software. Microsoft Office Accounting (our sponsor), QuickBooks and Peachtree are but a few of the options available, but you can also create your own system. That’s what Shopster did because it needed to accommodate folks from multiple points of entry.

Ultimately, you want software that allows you to keep promises – if you advertise a blue chair available for delivery within 24 hours, you’d better be able to do so. Inventory management systems keep it clean.

Lynne Meredith Schreiber is a freelance writer at StartupNation.

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