Has your small business been growing to the point where your office is bursting at the seams with inventory? If so, it might be time to find a new inventory storage solution.
But how do you choose the right inventory storage solution? In this blog post, we’ll break down the types of inventory storage available, tips for increasing efficiency, and how to use regular audits and inventory management software to streamline your business operations.
Understanding Inventory Storage
Inventory storage systems are the backbone of any retail, wholesale, or e-commerce business, encompassing item management, organization, tracking, and storage.
A well-organized inventory storage system can increase cost-effectiveness, allowing warehouse personnel to move a considerable volume of inventory while reducing the likelihood of errors.
Inventory Storage Solutions for Small Businesses
Optimizing inventory storage can be particularly challenging for small businesses due to limited resources and space.
There are three primary options for business owners looking to store their products. Your choice will depend on how much inventory you have or plan to have.
Home-Based Storage Options
Many entrepreneurs or small business owners use home-based storage for their goods, purely because it’s the affordable option.
Spare rooms, closets, and garages can be economical solutions for small businesses looking to store inventory. Home storage is flexible, cost-efficient, and easy to access. Plus, in some cases, setting up a single shelving unit in your office or garage might be all you need to run your business effectively.
However, if you have a larger stock of inventory, home storage might not be the best option for your business for a few reasons:
- You might have difficulties distinguishing between your inventory and personal items. (For example, if you’re storing personal boxes and boxes of inventory in the same section of your basement, you may struggle to keep these boxes separate)
- You might lack cool, dry storage space in your home that maintains consistent temperatures. (Note: If the only available storage space in your home is an unfinished business, temperatures will fluctuate too drastically).
When storing inventory at home, you’ll also need to ensure your home or renter’s insurance will cover the cost of your stored inventory if it becomes damaged. If you run your small business from home, lines may be blurry in the eyes of your insurance provider.
Storage Units or Self-Storage
Storage units are the step between home storage and warehouse storage. They are more affordable than renting a warehouse, but will lend more room for inventory storage than your garage or spare bedroom can provide.
Storage units vary in both size and price point, starting with 5’x5’ lockers on the low end and stretching to 10’x25’ units on the high end.
Typically, most retail or e-commerce businesses can get away with storing inventory in a 10’x10’ storage unit.
Before you get a self-storage unit, consider the following:
- Storage units involve monthly or yearly payments
- Storage units may not be as secure as a privately owned warehouse
- You’ll need to install additional shelving to maximize storage unit space
- Facilities might impose time restrictions for when you can access your inventory
Despite these pitfalls, renting a storage unit is often a great option for anyone looking to maximize efficiency and take their operation to the next level.
Need More Space? Learn How to Turn a 10’x25’ Storage Unit Into an Organized Warehouse.
Warehouse Storage
The other storage option is renting, leasing, or purchasing a warehouse. Warehouses are an integral part of a large inventory operation.
If you’re running a retail operation, a warehouse can also store extra shelving or product displays that clutter up your storefront. Plus, if you receive shipments from suppliers, you can easily direct them to the warehouse in lieu of a storefront.
However, warehouse storage comes with a few added stressors, which can include:
- Securing the funds to cover rent or mortgage payments (depending on whether you choose to buy or rent a warehouse)
- Preventing security breaches and setting up a security system
- Covering the costs of shelving, equipment, and an inventory system
- Transporting goods from the warehouse to other locations
Warehouses and other storage facilities help define a clear line between home and work, as your goods aren’t stored in the attic or garage of a residential property. While this bleak separation between work and play may tame stress, you’ll need to weigh the pros and cons of home-based storage, self-storage, and warehouse storage to find what’s right for your business.
How to Utilize Vertical Space in Your Storage Solution of Choice
If your inventory storage location doesn’t have a lot of square footage, it’s important to make the most out of your vertical space. To maximize the storage space in the small warehouse or self-storage unit, leverage vertical shelving, hanging racks, and step ladders.
Larger operations might require specialized equipment, like picking machines or forklifts.
Items stored above eye level should be properly labeled or stored in clear containers, so you can quickly locate units of inventory, even if they’re stored on 12-ft shelves.
To improve visibility and streamline workflows, you’ll need to map out an optimized layout of your warehouse, designating walkways and order-picking access points.
Strategies for Reducing Inventory Costs
Paying for your inventory storage can get expensive, especially if storing excess inventory. With the right strategies in place, you can reduce your overall costs by keeping a maximum of 4-6 months worth of inventory and auditing regularly.
Just-In-Time Inventory Management
The Just-in-Time Inventory Management System (JIT) allows businesses to cut storage costs, predict demand, and downsize by only ordering what is needed to meet short-term demand. Forewarning, JIT systems run on very tight schedules.
You’ll also need to be aware of the potential risks associated with just-in-time inventory management, such as inventory shortages if suppliers can’t meet the demand.
To ensure successful Just-in-Time Inventory Management, businesses should have reliable suppliers and plan ahead for seasonal demand. By implementing this strategy, businesses can save on storage costs and space while still maintaining a competitive edge.
Minimizing Excess Stock
Reducing surplus stock can decrease the risk of inventory obsolescence and free up much-needed space.
When downsizing, you’ll need to frontload products that sell quickly and order less popular products in much smaller quantities. Failure to minimize excess stock could clutter your valuable floor space and make it harder for you and your staff to complete routine inventory tasks.
To prevent excess stock from accumulating, businesses can:
- Invest in inventory management systems that provide accurate forecasts of demand
- Track inventory levels in real-time
- Maintain a lean and efficient inventory that minimizes costs and maximizes profitability.
Conducting Regular Audits and Cycle Counts
Employing regular audits and cycle counts helps verify the accuracy of records and identifies opportunities for improvement in inventory management processes.
This is where an inventory management software program like Cin7 Orderhive or inFlow can be useful. With the ability to track trends, you can make informed decisions about your inventory, aka, what you plan to store in the long-term and short-term.
Conducting regular audits can also help businesses refine their JIT system to better stand up against supply chain issues.
Find Inventory Storage Solutions That Work for You
As your business grows, you’ll become more pressed for space. You might not have the funds to purchase a warehouse nor the space at home to store inventory.
Thankfully, peer-to-peer storage marketplaces like Neighbor make finding affordable inventory storage easier. Thanks to Neighbor’s extensive host vetting system, you can rest easy knowing that the cornerstones of your small business (aka your product) will remain safe and secure.
