Small Business Owner Utilizing an Inventory Management System

Recession Proof Your Business Through Inventory Management

Inventory-based businesses have faced significant challenges over the past few years, with supply chain disruptions being a primary concern. However, the focus has shifted to managing inventory during inflationary times with a potential recession on the horizon. For instance, the oversupply of cars could lead to price wars as lower demand translates to lower prices, and businesses must strike a balance between overstocking and understocking. It would help if you took the following actions to ensure your inventory meets the required standards:

  1. Evaluate Your Current Position NFIB’s – Small Business Optimism Index indicated a drop in inventories from the previous month. With a recession looming, businesses should consider the Gartner survey findings, which show that over 40% of manufacturers and retailers increased inventory to hedge against ongoing scarcity, while nearly a quarter reduced stocks. Inflation also affects inventory decisions, meaning businesses may pay more for items, hence the need to stock up now. However, the cost of carrying inventory and the potential for reduced demand should also be weighed.
  2. Integrate an Inventory Management System (IMS) – An inventory management system tracks inventory, supply chain, and sales activities, simplifying inventory management by providing data necessary for informed decisions. Forbes recommends the best inventory management software for 2023, but the choice depends on the business type.
  3. Anticipate Future Changes – Inventory management requires anticipating customer tastes and needs changes, inflation, and interest rates. Educated guesses help businesses stock shelves appropriately and price items correctly.

Inventory-based businesses must remain vigilant in managing their inventory in supply chain disruptions and inflationary times. By evaluating their current position, using an inventory management system, and anticipating future changes, businesses can balance overstocking and understocking to weather a possible downturn.