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Inventory Management 101: Small Business Guide

by | Apr 22, 2021

Inventory Management 101

This article will guide you through the different facets of Inventory Management and why it is the most crucial tool to scale up a business. First, let us try to answer the following question:

What makes a business successful? Is it to have a wonderful centralized communication system? Balanced Stock levels so that none of the products remain unadhered? Or Is it to have a bird’s eye view of all the segments’ proper functioning, without the unnecessary hassles of inefficient tracking progress? Bingo!

And it all revolves back to efficient Inventory Management. Worried about how to get started? Check this tutorial out: Tutorial : How to use Imprezz inventory management tool?



To understand Inventory Management in a simple way, let’s take an analogy of our ladder. We do like it to be organized and well-stocked, with our favorite food and drinks at their usual places. We want to keep a check on all the ingredients for our favorite recipes, prepared dishes, and quantity of leftovers from yesterday’s dinner party so as not to cook extra the next day! 

“The vital essence of any business is to have a well-managed team, well-stocked products, but not in excess.”

Unfortunately, in a business, especially a small business on the exponential rise in growth, we can’t keep a mental record of the new inventories and the demand and supply ratio. Allocating inventories with clear visibility to each channel is vital. This is possible only if we know the exact amount of stocks on hand and manage it with ease. 


We resort to good Inventory Management software to help us keep track of everything going on effortlessly. The massive bulk of inventories create a plethora of discrepancies, such as shortage or excess, leading to the disruption of management. With no inventory tracking, the chaos leads to heavy damage in profit. 

If you wish to know more about GST and other business tools, do read: Online GST Registration Process in India

Critical aspect of Inventory Management


Important for all types of product-based businesses. Inventory management is the tracking step in the supply chain where the stock supplies’ entry and exit are tracked. Using barcode scanners has become most common.  The latest emerging field of Computer Science deals with the Industrial Internet of Things (IIOT). It tracks the inventory in real-time and self sufficiently, it is highly reliable and precise. 

So this emphasizes the need to track inventory as accurately as possible. No matter if it is an e-commerce company, a retail store, or a small tech start-up. In other words, inventory management is a tool suited for all types of businesses where there is a need for proper management and systematic tracking of inventory.


The four categories of Inventory management are:

  1. Raw materials: Inventory that has not yet been processed and is in the staging area. The raw materials have to be transformed further to the finished good. Maintaining a detailed purchase order is a must in order to track the progress.
  2. Processing Inventory: Inventory which is a work-in-progress to be morphed to the finished product. 
  3. Finished Product: The inventory has undergone the process through the supply chain and is now handed over to the sales team. The sales team is supposed to draft a sales order and sync it with the central system.
  4. Maintenance, Repair, Operation (MRO) goods: The supporting goods are prospects for future purchases. This creates a reorder point and prospective clients need post-purchase services. 


Let us look at the process in the Supply Chain and how demand and supply are managed. Whenever a sale is made, it is recorded, and the item is removed from the warehouse. The void created is the demand, and if synchronized with a centralized database, real-time feedback can help fill the gap. So there remains no scope of scarcity or excess inventory.

Here comes the role of Inventory management software. Having efficient communication with all the business sectors, right from sales to the production level, ensures the bridging of the gap in supply and demand. So this ensures smooth functioning.


  • Smooth Functioning. Inventory management processes play a crucial role in laying the foundation building blocks in order to have a smooth journey ahead. There is the smooth functioning of the supply chain. Various problems like repeated orders, shipment issues, under or overstocks, and so on can easily be avoided by keeping track through Imprezz inventory software.
  • Automate repetitive tasks. Improper Warehouse management leads to messy warehouses. Mis-shipment and repeated orders are the subsets of improper management. It can easily be avoided using Imprezz Inventory management tools and automation techniques. These techniques automate the repetitive tasks of maintaining the database for warehouses, which can smoothen warehouse management. So even emergency situations can’t hinder the production scale with the availability of safety stock.
  • Avoid Losses. Stock levels lead to drastic losses because the lion’s share of the working capital and total cost is allocated for inventory.

So to automate such tasks, automation software is recommended. If in a whittle which one to choose, do check out: Compatible and Best Online Accounting Software for Small Businesses, Accountants and Freelancers


Businesses invest almost 80-90% of their capital in inventories. Keeping inventory over or understocked leads to drastic losses because of the loss of working capital. This creates the need for good Inventory Management Software.

Inventory management software

The objectives of Good Inventory Management Software are:

  • Continuous supply of inventory so that during high demand and supply ratio, the production does not suffer
  • To have an on-demand supply of stocks in case of emergency
  • Record the amount of inventory and manage it
  • Optimizing the cost of production, maintenance, storage cost, sales, cash flow, and other costs indulged with scaling. 
  • To synchronize ledger entries with physical inventories available in the warehouse.
  • In order to maintain stability in price and systematic record through accounting automation software. 


Small businesses need investors to invest in scaling up their business. In order to get funds, businesses can offer Initial Public Offering (IPO) only after a certain level. So the start-ups have to attract investors to invest in their business for them to grow. 

Investors need a clear picture of the management and the supply chain. Especially the details of accounting with the integration of all levels of the business breathing as a single entity. This is not feasible on spreadsheets or any software not having a centralized relation.

Therefore to provide accurate accounting data and a clear overview, an inventory management system becomes necessary. 

Read for more info on Investors and Funding: Funding Guide to Your Small Business Idea


Inventory, being the largest shareholder of the business’ working capital, inventory control is the most crucial and delicate part of the entire supply chain and must be managed with utmost care. Common problems of stocking and mis-shipment problems lead to a considerable loss in revenue. This seriously impacts the growth of a small business. 

Sign up with a reliable and trusted inventory management system like that of Imprezz. This is because it deals right from the basics of Inventory Management all the way up to advanced features of automation technologies using IIOT.  So we have to use the software in an informed and correct manner to have an edge and make them the catalysts to reach new heights during the present age of technological advancements. 

Also read: What is the best free inventory management software?


One of the perfect software for small businesses to balance all inventory levels mentioned above is the Imprezz Inventory management software. Hence, having a user-friendly interface with all the tools for a quick deployment is necessary for all start-ups, small and medium businesses to take up inventory management techniques, optimizing lead time. All the necessary features are present – ranging from warehouse management to accounting automation, leaving no stones unturned. 

Do check out: A Complete Guide To Inventory Management


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