When you run a product-based business, it's critical that you have a firm grasp on supply and demand: your inventory levels plus purchase orders to your supplier and/or work orders to your production floor are your supply, while sales orders plus sales forecast are your demand. It's easy to make errors when you don't have an accurate view into your inventory. You could sell products that you don't have in stock or fail to order or produce products in a timely manner. You can also make errors if you don’t have an accurate view into your current and future sales.
The effort can be further complicated if you run a wholesale product-based business. You may have different pricing structures for different clients. You may mix in direct-to-consumer sales with wholesale distribution. You may also vary your products depending on the client, or be in a seasonal industry.
Wholesale order management can be difficult, especially if you're not using the right software. Fortunately, QuickBooks can resolve all of these challenges. However, it's important that you use QuickBooks the right way. There are specific features and functions that can make QuickBooks more effective for a wholesale product-based business. Follow the link to learn more about the QuickBooks' Price Level Function.
Here are six best practices you can implement today to improve your wholesale order management system:
1) Set up unique SKUs for each product and variation. Many businesses make the mistake of setting up a SKU just for the overall type of item, but not for each individual variation. For example, if the product is a shirt, the company may set up a SKU for the shirt, but not for each size and color.
This practice can lead to serious problems. If each size and color doesn't have its own SKU, it can become impossible to know what you have in stock. QuickBooks may say that you have 500 shirts in stock, but what if they're all size small and navy blue? What about the other sizes and colors?
If there is any variation, use a unique SKU. This will also come in handy as you grow, as any sophisticated customer will prefer to have unique SKUs on the ordering side.
2) Don't use the generic "customer" label. In an effort to save time, many businesses will use a generic label for one-off customers. The result is that the business has dozens or possibly even hundreds of orders in their system with no way to know where those orders came from.
Using generic labels wastes one of the most powerful features of QuickBooks. The system allows you to drill down on your client base to see who is driving your profits and who isn't. If a large chunk of your orders are attributed to "Customer" or some other generic name, that function becomes nearly worthless.
3) Do manual inventory audits to confirm QuickBooks numbers. While QuickBooks is great at keeping track of your inventory, it's important that you don't place all your trust in the software. If your inventory gets off track in QuickBooks, you'll never know unless you do a manual count of what you have in stock.
It is a best practice to manually count your inventory periodically and to analyze the results for the root causes of inventory inaccuracies. Count your most expensive and biggest selling items more frequently. Make sure you are disciplined in the QuickBooks transactions that impact inventory (mainly receiving of purchase orders and work orders, creating invoices, and processing returns). This will confirm that QuickBooks is correct and this will allow you to run your business and manage your inventory with greater confidence.
4) Use different pricing levels rather than different SKUs. You may offer the same product at different pricing levels to different customers. A large national client who orders in bulk may pay a lower price than a small regional client who places one-off orders. Many businesses set up different SKUs for these buyers. Better practice is to use QuickBooks pricing levels feature to apply different prices to the same SKU. This keeps your inventory in check and makes it easier to manage your supply chain.
Wholesale order management is often one of the biggest challenges in a product-based business. However, it doesn't have to be difficult. QuickBooks is a powerful tool that can make wholesale order management a breeze. The trick is using it correctly. Of course these are not the only best practices for QuickBooks and we invite you to leave a comment below about some of the other best practices for QuickBooks.
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