How to Manage Inventory & Supplies

It's easy for a business to get overwhelmed with inventory, especially when just getting started. One mistake many businesses make is ordering a lot of product at once without first establishing an inventory management system and setting up a warehouse space that will be able to handle storage issues in months and years to come. If you find that your business grows and your warehouse space is getting too tight, you will have to either spend the money to have the entire inventory transported to another location or rent additional space, which will complicate your inventory system. This article explains how to manage inventory and supplies for both large and small organizations.

Inventory Management for Large Organizations

If you are a new business, set projections for where you believe your company will be in 1 year, 3 years, 5 years and beyond. Line those projections up with the amount of inventory that you estimate will be on hand at each of those milestone dates. Rent or buy a warehouse space that will meet your needs for at least the first 5 years.

Be sure to keep your inventory in a cool, temperate location that you can easily access with a cart or forklift (depending on the size of your warehouse and inventory). Keep supplies for your business in a separate location that is more readily accessible to the company's employees. You want to move specific orders immediately to the appropriate departments that need them and keep the surplus in a convenient supply room that is under lock and key.

Hire personnel who will be dedicated to managing, receiving and tracking inventory and supplies on a daily basis (depending on the size of the inventory that needs to be maintained).

Implement an inventory management computer system. With this system you will record new shipments from vendors as well as orders that go out to customers and products that are sent off to other departments as part of the manufacturing process. Record receipts of supplies for your business under a different purchase order series in the inventory system. For example, you might want to start all purchase orders for company inventory as INV (i.e., INV00001, INV00002 and so on) and all supply orders as SUP (i.e., SUP00001). This way you will be able to separate which received items will be stocked in the warehouse and which will be sent off to individual departments.

Set up a surveillance system in your warehouse to monitor inventory. This will protect your business from inventory shrinkage problems.

Inventory Management for Smaller Operations

Set aside a cool, dry room at your home office or rented office space to stock your inventory. If you find that you are running out of space, rent a small self-storage unit in your town for the products that you don't need often. You can also just keep a modest amount of each product at your office and the rest in stock at your self-storage unit.

Computerize your inventory using a spreadsheet file. Name a new worksheet for each product you sell. List the description of the transaction in the first column (such as "order in," "sale to XYZ company" or "damaged product"). List the amount of the product that was adjusted, and then in the third column keep a running total of how much of each product you have left.

Keep a short running list of supplies that need replenishing on your office wall. Then you can take this list with you on your monthly trip to your local supply store or when placing your supply order online.

Since you will most likely have to manage your own inventory as a small business owner, set aside a couple hours each week dedicated to updating your inventory totals with new orders and recording new supply needs.


  • Some inventory management computer systems allow you to set up a barcode scanning system. You will need to purchase a barcode scanning device that is linked to your computer system and a barcode label printer to mark each package received. As orders go out, you scan the product or package and enter the number of units that are being taken down from inventory. It is an expensive, yet more streamlined way of managing your inventory.

    If you are an established business that is looking to get your inventory tracking back up to par, organize a week-long house cleaning where you manually count your inventory, reorganize the products and set everything up on an updated inventory management system on your computer.