Manufacturing and inventory management best practices, tips & tricks all in one blog. Every manufacturer should be able to unlock the full potential of their business. We believe that small manufacturing industry that employs latest technologies, automated processes and environmental friendly business practices will play a key role in shaping our future
Achieving profitability at scale is one of the biggest challenges for modern manufacturers like the guys at “Radis”. That’s why you need to start planning ahead and making sure that you have the tools necessary to tackle them before they arise.
For decades, manufacturers had been stuck going through retailers, wholesalers, and resellers to get their products to mass audiences.
Now though, largely thanks to rising digital technologies and e-commerce, direct to consumer brands can disrupt entire markets without the need for an intermediary to connect them with customers.
The middlemen are in shambles trying to deal with this phenomenon as consumers are drawn closer and closer to product-making businesses through the power of the internet.
And it totally makes sense if you think about it.
DTC brands can sell products at a cheaper price, ship it to the customer’s door and directly connect with them through social media and live chat.
In a madly confusing world of endless possibilities, that personal touch can make a huge difference for consumers. And not to mention that customers are as informed as ever about their purchases, whether that be from a quality, purpose or even ethical perspective.
Direct to consumer brands are taking these issues seriously and tackling them with innovative approaches. We’ll soon get to some of these approaches and how you can use them to make your brand stand out.
The real question though is, how can you even find the time to meet customers growing expectations when there’s so much to do!
It can feel like being amongst a hurricane in winter with all the responsibilities falling on your shoulders.
Thankfully, there is a way to calm the storm and do business with a straight head.
In a nutshell, you need to be using cloud manufacturing technology to smoothen the running of your business operations, so that you can focus on your products, marketing, and customers instead.
It really is that simple. Take the pressure off by using software to streamline the daily tasks which take up so much of your day. Inventory management, purchasing, production scheduling, and all that overwhelming headache.
Then you can focus on growing your product-making business.
But before we get to that, let’s dig deeper into what it means to be a successful modern direct to consumer brand.
How to Be a Successful Direct to Consumer Brand
Alright, so let’s get things straight.
A direct to consumer brand is a business that makes, markets, sells and delivers their products themselves.
But it has more connotations to it than just that.
Usually, they also create products that solve a problem, with an inspiring story to tell and an environmental awareness that appeals to socially conscious shoppers.
The range of sectors that have been moving to this model is incredibly vast.
As mentioned though, there are certain elements which remain a consistent thread.
And if you want to become a successful direct to consumer brand then you need to understand what they are, and then take on as many attributes as you can in your own unique way.
Here is a list of attributes you will commonly see:
1. Streamline Product-making Business
The most considerable barrier to small manufacturers making it big lies in the fact that there are just so many balls to juggle at once. By cutting out the middleman you might have gained the opportunity for greater profits, but don’t forget that it comes at the expense of greater responsibility too.
That’s why growing manufacturers know to use Smart Workshop Software to combine their daily workflow onto a single dashboard which unifies their DTC business.
By having your inventory, production and sales managed from one place mean that you can leave confusing spreadsheets behind and focus on growing your business. Because ultimately you need to be spending as much energy as you can on your product and customers, rather than constantly putting out fires.
For example, Smart Workshop Software will tell you right away if you have materials available to produce for a particular sales order. It makes sure that materials are allocated to each separate manufacturing and sales order so that they never cross over with each other.
This way you know exactly when to purchase materials, and can effortlessly make sure to deliver on time to customers.
The difference the right software can make to your scaling efforts is not to be underestimated.
2. Tell Your Inspiring Story
Steph Korey, co-founder of Away Travel says that “Storytelling is a central part of our marketing. We think about what stories we can feed to the press and to social media - things that make people take notice, things people want to share and talk about”.
And that’s a vital point to note. Because your story is what tugs on your customer’s heartstrings and keeps them invested in your DTC brand.
Worried that you don’t have enough of a story tell?
Rubbish. Just the fact that you’re making and selling products that you love is a valuable narrative in itself. So, take the time to tell it, whether that be on your website or as part of your marketing strategies.
The people demand it.
3. Transparent with Customers
Revealing your business and production practices might seem counter-intuitive to the cynical ones amongst you. But the reality is that consumers today love to see how you do what you do.
So, take the time to explain what you do and how you do it to start building that bond of trust.
Having a great product is one thing, but expectations are moving beyond that now as people look to market experts first when going shopping. If you can show that you care and have a deep passion for your product through your content, then customers will respond well in kind.
Casper is a mattress making company which does this exact thing incredibly well. They set up an online magazine which is dedicated to comfort and wellness, on a separate website to their main shopping channel. The effectiveness comes from the fact that if anything, it keeps these topics at the forefront of people's minds.
And that’s not to mention the potential created for user-generated content.
But what approach should you take? Well, if you haven’t heard of Glossier then get Googling. Because they are the perfect example of how a totally new direct to consumer brand can use the power of social media to bring their brand to the fore and boost sales with few prior customers.
When Glossier started their beauty product-making business they had 13000 Instagram followers before a single product had been sold. By documenting the process and engaging with beauty product enthusiasts they were able to set themselves up for a running start.
Goes to show how much value social media can have for a growing DTC brand, simply by engaging thoroughly with potential customers and giving them the content they desire.
7. Create a Personalized Customer Experience
The evolution of technology has meant DTC brands can create brilliant online stores which offer support and pledge to deliver on time. But beyond that is the expectation that you provide a personal connection that shows you care about each individual's needs.
So not only should you take care to source your goods as ethically as you can, but also show your customers that you are doing this too.
Example of Successful DTC Brand
Small manufacturers like “Walk With Me” know that they need to be as customer-orientated as possible to stay ahead of the competition. One the hand that means communicating with them directly and the other is making sure they find the time to do so.
So, clearly there is some essence of a formula when growing your direct to consumer brand.
But what better way to get an understanding than a clear example.
They make awesome leather backpacks, shoulder bags, stationery and accessories suited to fashion and functionality.
A quick look around their website and you will see that all of the above-mentioned points on becoming a successful DTC brand are there.
They tell their story, reveal their processes, limit environmental impact, give tips on product care, whilst keeping the shopping experience as smooth as possible.
And that’s exactly the kind of overall package you need to be aiming for.
PRO TIP: Wondering how Walk With Me found the time to focus on all of these elements?
Well, the answer lies in their adoption of Katana, which helped rid them of Excel and improve their inventory control by 65%. Find out how you can do the same by following the Walk With Me case study.
Challenges for DTC Brands
Alright, so let’s get real for a second.
It’s not all sunshine and roses when it comes to direct to consumer brands. Because with all the increased potential comes extra responsibility.
No longer can you rely on mass retailers to do your marketing and draw the crowds in. That’s all going to be up to you.
Exciting yes. Easy no.
You have to start juggling your small business inventory management, production, sales, and shipping all at once. And that’s not to mention all your business asides like accounting.
There’s a lot to take on, and frankly, unless you have the tools to help you it can be very easy to get overwhelmed. Especially once your business starts to grow and the responsibilities increase exponentially.
That was by far the biggest issue faced and it makes sense when you factor in the quick increase of responsibilities that pour in as your business grows.
So, what’s the solution?
Breaking Through as a Direct to Consumer Brand
Katana is an easy to set up software which unifies your order fulfillment process and lets you manage your product-making business from a visual, color-coded dashboard. You get an overview of your entire business so that you can focus on growing your DTC brand instead.
It’s clear that there are great benefits to becoming a direct to consumer e-commerce brand. Total control of your brand, the ability to directly communicate with customers, and the opportunity to increase profits by cutting out the middleman are to name a few.
But there is also no doubt that challenges do lie in the face of those that take this ambitious path.
Especially as your business starts to grow and you have to focus more on your product and marketing, with less time to handle operational tasks.
The solution to this lies in Katana Smart Workshop Software.
Katana is an all-in-one software solution for product-making businesses that are looking to scale at their own pace. It helps you handle inventory, production, and sales from a single, visual dashboard.
Spoiler Alert: This article investigates the limitations of your QuickBooks bill of materials (using online and the desktop version), the feature gaps which need to be bridged, and how to set up your online BOM.
Let’s jump headfirst into this article with a hypothetical set in the pinnacle of popular culture, Hell’s Kitchen.
You have a fast-food background but are confident that you can easily transition to a fancy restaurant's working conditions.
Before you start, you study the dishes, but unfortunately, as soon as you’re in the kitchen, Gordon Ramsay asks you for a risotto with scallops which wasn’t on the list of dishes.
Uh-oh, turns out you don’t know how to make it.
To put it politely, Gordon Ramsay is going to ask you to sling your hook.
As a manufacturer using QuickBooks bill of materials, you’re going to need to know how and where you can save your products recipes.
Maybe your bill of materials is saved in that entrepreneurial noggin of yours. But, if you don’t have it written down and stored elsewhere, just like the hypothetically inexperienced chef, how can you expect to scale your business if any new staff doesn’t have access to those all-important QuickBooks bill of materials?
In this article, we’re going to give a brief overview of what is a bill of materials, how to save them in QuickBooks (or if you can...), and how you can get more control over your QuickBooks bill of materials.
So, if you don’t want to become the screaming, quick-to-anger, swearing Gordon Ramsay we all know him as because your teammates are struggling to put a product together, then be sure to read all the way through.
PRO TIP: If you’re using QuickBooks online bill of materials, you’ve probably learned the hard way that you’re going to have to save your bill of materials elsewhere. That’s why we offer a free small business inventory spreadsheet template that you can use to manage your inventory levels and define your bill of materials.
What Is a Bill of Materials?
A bill of materials (often referred to as a BOM or product recipe) is a document which contains a list of the materials and components which are used to make your products, and the manufacturing process these products pass through.
Recall the last phenomenon of an IKEA purchase you made. Remember the instructions it came with (and like a responsible consumer read before you blindly started constructing your item)?
That is basically a bill of materials.
However, a bill of materials comes in different forms depending on the complexity of the product:
— Modular; — Configurable; and — Multi-level.
But we bet you already know this, you’re here because you want to figure out how you can configure your QuickBooks bill of materials.
And we have some potentially unfortunate news...
How Does QuickBooks Bill of Materials Work?
If you can even use QuickBooks bill of materials all depends on what package you purchased:
— QuickBooks bill of materials is possible, but still missing some features, with some desktop versions; and
— QuickBooks online bill of materials isn’t an option, unfortunately.
Most modern product-making businesses start off with the online version of QuickBooks.
And why wouldn’t they? QuickBooks Online doesn’t require installation, can be accessed on multiple devices and allows anyone to easily access company accounts.
But, don’t panic if you’re one of these companies who got set up with QuickBooks Online. QuickBooks online bill of materials is possible, but you will need to implement a manufacturing scheduling software for small business which can integrate with your QuickBooks account.
PRO TIP: Regardless of if you’re using QuickBooks bill of materials or any other software for managing your business, configuring your bill of materials is just the tip of an iceberg when it comes to manufacturing.
To get yourself QuickBooks Online bill of materials, instead of going all-in on one piece of software (in this instance QuickBooks), you should marry it with another tool which can help you get those missing features.
Use QuickBooks for what it was originally designed for, tracking finances, and find something else to help you manage the rest of your business.
Katana’s Smart Workshop Software is a QuickBooks inventory management integration designed by manufacturers, for manufacturers.
But, it goes beyond improving your inventory management, it also; centralizes your business management, gives you more control over your inventory, helps you plan production, gives you an option to easily save your QuickBooks bill of materials, and helps you improve your order fulfillment rate.
So how exactly does the QuickBooks integration work?
Katana x QuickBooks Integration [Updated] - YouTube
Once you connect Katana to QuickBooks, you can close the gap between your manufacturing operations and finance tracking.
When using Katana, you can sync invoices by tracking your sale orders in Katana and generate invoices for QuickBooks once an order is fulfilled, with just a click of a button.
You can also transfer purchases by taking your purchase orders for raw materials and pushing them into QuickBooks as a bill.
Finally, once you have integrated your accounts you can synchronize all your contact details, so all your customer and supplier information (their details, invoices, and bills) are pushed into QuickBooks.
But, that’s just some of the many juicy features that come with integration, the headache cure for when using QuickBooks for manufacturing is the ability to save your QuickBooks bill of materials.
Once you’ve integrated Katana, you’ll be able to store your QuickBooks bill of materials in one place to speed up your production processes and easily access them in the future.
The great thing is, if you’re a product-making business with multiple variants of the items you sell, Katana is equipped to help you easily generate each possible variation when creating your QuickBooks bill of materials.
However, not only can you save your raw material information, but in your bill of materials, you can also track:
— Lead time; — Scrap factor; — Quality criteria; — Done criteria; and — Roll-up cost.
To view and create a bill of material (or product recipe) in Katana simply follow these four steps:
Step 1 Log in to Katana or sign up for the 14-day free trial if you don’t yet have an account.
Step 2 Once you have logged in, at the top of the dashboard select “Items” to proceed.
Step 3 Here you will be able to see all the products your store manufactures under the “Products” tab.
To access your bill of materials, simply select one of the products. Once you have accessed the Product Card, make sure to then select the “Product Recipe” tab.
Step 4 From here, you’ll now be able to create, reconfigure, and edit the respective quantities on this bill of material.
And that’s it! Ooh, fun fact, the stock cost will automatically update too (assuming the relevant fields have been correctly filled in).
If you’re more of a visual learner, our handy tutorial on how to set up a bill of materials on Katana will have you covered.
How to Create a Product Recipe / Bill of Materials (BOM) in Katana? - YouTube
However, all of the above are steps which you can take to get yourself QuickBooks Online bill of materials.
As we said earlier in the article, there is a bill of materials available on some of the desktop versions, but they also come with limitations.
If using the correct QuickBooks Desktop package, you can find your QuickBooks bill of materials under the Inventory Assembly (sometimes referred to as an assembly).
But what is an Inventory Assembly? Basically, it’s an Item in QuickBooks.
QuickBooks bill of materials contains labor, other assemblies (or sub-assemblies) and other components used to make a product.
When you select the Inventory Assembly, you can see your QuickBooks bill of materials report partially, which shows component parts, item type, quantity, and the total cost for the materials and product.
But, now comes that special QuickBooks finish, tracking the finances behind manufacturing a product.
QuickBooks calculates the costs of manufacturing by crediting raw materials used and debiting the cost of the finished product.
If you want to see the entire QuickBooks bill of materials report, simply select the “Full View...” button.
Selling in person gives your Shopify store the opportunity to make the connection that many consumers are craving for. The problem comes when making sure that you are still running your workshop efficiently in the background, and that’s where good Shopify POS inventory management comes in.
Oh, the wonders of Shopify, how loved they are.
Because even as your business grows and you want to sell in person, Shopify still has your back.
When you decide to go to trade shows, create a buzz with a pop-up store, or even go full brick-and-mortar, Shopify still supports you with its POS system. Or to be precise, Shopify’s Point of Sales system.
It gives the ability to quickly take payments and sell products on the spot with cutting edge hardware that is directly connected to your Shopify store. So, you can continue to manage your business comfortably with Shopify.
The real question comes when we get to Shopify POS inventory management.
Because if you want to continue running a tight ship back in the workshop while you sell, then you need to have your inventory management running efficiently and in real-time.
Sadly, this is where using Shopify POS falls a little short.
Thankfully there are software and tools which can support your mission to expand from the virtual world into the physical realm.
For now, let’s start with the basics...
What is Shopify POS?
Before we get to Shopify POS, let’s start by defining what a Point of Sales (POS) system is.
Well, the answer to that is fairly simple.
It refers to the tools you use to process a sale at the point it occurs. In your local grocery, this likely means a cash register and a basic receipt printer.
In a supermarket, you're probably going to have electronic scales and barcode scanners too.
Now, considering Shopify is an online platform, you might be thinking, “what is a Shopify POS?”
Shopify POS is an application which allows you to process orders and payments directly to your Shopify store in a physical location from an iPad or iPhone.
That means that if you are selling at a tradeshow or a pop-up store then you can continue to keep all of your data and processes in one place. Pretty neat, huh?
The application comes free with your Shopify account so you might already be ready to use it, but the reality is that you will need some hardware to start processing payments.
Be aware though that there are a few limitations to your POS app if you are using Shopify Basic.
For example, you will be lacking the register shifts feature which helps with holding your staff accountable for cash they’ve handled. And the same goes for unlimited Shopify POS staff PINs.
To be honest though, these will not be vital to most of you who are occasionally selling in physical places for promotional purposes.
And the main problems arise when you think about your Shopify POS inventory management. But, we’ll get to that later.
PRO TIP: If you’re just starting out with your product-making business then it’s a good idea to start saving and tracking your products and materials. Check out our free small business inventory spreadsheet template so you can get started on your inventory management journey.
Shopify POS Hardware
There is some awesome software out there to help you up your Shopify inventory management game, but everything starts with having the right hardware to keep sales operations running smoothly.
So, your customer is browsing your wonderful wares at the craft fair and comes across an item of choice. They gracefully pick the product up and bring it to you with a wide smile of glee.
You stand there with a blank stare in your eye because you realize that you have no tools to process their payment.
Thankfully you wake up, realize it was a dream, turn on your laptop, and get on the Shopify POS hardware store to get the tools you need to process physical sales, when you will actually be selling at a craft fair.
Because without the right hardware your Shopify POS system is going to be redundant.
Now once you get on the store you will see that there is a bunch of collections to choose from. And that’s aside from the necessity of having an iPad or iPhone.
The list boils down to these:
Shopify retail kits;
Barcode scanners, printers and labels;
Receipt printers and paper;
Customizable gift cards;
Shipping printers and labels; and
Now obviously you won’t be requiring all these items to get your POS Shopify system on the go.
In fact, all you really need is a card reader to get started.
But do keep in mind that barcodes can make life a lot easier if you sell products in high volumes, and in the same way receipt printers are going to make sales much smoother too.
The main point here is to focus on what you need and build from there. No point going all out and then realizing no-one wants to buy your gift cards anyway.
What’s Shopify POS useful for?
Alright, it looks like we might have got ahead of ourselves here. After all, why should we even be selling in person anyway?
Isn’t the whole point of Shopify to get away from old school brick-and-mortar selling and take advantage of the decreased overheads?
You can give them that experience just by the mere fact that you are there today and gone tomorrow. A fleeting in moment in time where a connection can be made, and when the stars align, sales are made too.
How to Add Shopify POS
Getting your Shopify POS inventory management set up starts with getting the app downloaded onto your iPad or iPhone. It’s a much simpler process than some may have you believe, but make sure you do your tax research first.
The great thing about setting up your Shopify POS is that it’s a very quick and painless process.
As long as you have an iPhone or iPad at the ready, you can be good to go in five minutes.
And just to clarify here, you don’t need to start creating products all over again. It’s just that you want to choose which ones are available to be bought with POS.
When it comes to the payment provider, you won’t have to do anything more than you have done before. Shopify payments is a solid choice, and unless you are running a Shopify CBD store, you don’t have to worry about changing to a third-party provider.
Now there probably is one point which has been niggling away at your mind throughout all this.
How do we deal with our Shopify POS inventory management?
At the end of the day, you are running a workshop as well as a sales unit when you’re going close-and-personal with customers.
So ensuring that you have a real-time overview of your inventory, and running it efficiently is vital to making the most out of your Shopify POS.
It’s certainly no secret that using Shopify POS is already a massive improvement on what many e-commerce stores did in the past, which is to have two totally separate systems when dealing with online and offline inventory management.
But the reality is that Shopify’s inventory management system is rather weak when it comes to the product-making business needs.
You are not able to track detailed product recipes which give you accurate costing, and there is certainly nothing in the way of raw material inventory management.
The cool thing about Shopify is that it allows you to use software and apps to tackle the areas it falls short on.
Now when it comes to Shopify POS inventory management you want to make sure that you find an app which gives you:
These elements are essential to running a smooth operation when selling in person simultaneously to running a workshop.
Katana Smart Workshop Software is the solution which has all of these elements and allows you to take full advantage of your Shopify POS. It gives you that real-time view of your Shopify inventory with raw materials, finished products and product recipes synced up with your production line.
Here’s an example to give you a clearer picture.
You’re at a local trade show with your finest handcrafted furniture on sale.
It’s a golden day of sales and somehow you manage to get to selling all of your products. But you want to push through and make the most of this opportunity.
So, you check your real-time inventory levels in Katana and see that the team have just finished a batch of products at the workshop. You can now continue to take orders for quick delivery, or even better go and grab the fresh stock yourself.
Now, this might seem like a unique and unlikely scenario, but the truth is that it is one of many opportunities that will come up for growth when implementing proper Shopify POS inventory management.
Going a Step Further with Your Shopify POS Inventory Management
Katana has been designed to work as the complete package for product-making businesses. It goes beyond just being Shopify POS inventory management and actually works to streamline your inventory, production, and sales together.
But beyond increased sales, the value for selling in person goes to creating that personal touch that so many crave for now. You can create trust, and ultimately loyalty, amongst your customer base which can do wonders for your brand that all the digital marketing in the world could never do.
Having a solid base for your Shopify POS inventory management is key to securing the growth that this opportunity provides.
Katana offers you real-time inventory management which tracks and books your raw materials so that you can keep your multiple sales channels in sync with each other at all times.
When an order comes through your Shopify POS system, it is automatically read as “Fulfilled” in the Katana workflow, and this will automatically adjust your entire workflow.
Because this is a software which goes beyond inventory management and acts as the foundation for your entire product-making business.
You can manage your inventory, production, and sales from a single dashboard. Everything is visually color-coded for the maker’s eye and designed so that you can manage your business without having to depend on inefficient spreadsheets.
Here are just a few of the benefits Katana offers small manufacturers:
For the skim readers: You can use this blog to better understand how to use QuickBooks for manufacturing, how to find and fix the negative inventory issue, and what steps you can take to optimize your business.
Dorothy doesn’t know the first thing about fear, skipping happily through the so-called Haunted Forest, whimsically signing timeless classics.
But, if that tornado had spat her out into a maker's workshop instead of Munchkinland, she would have quickly lost her courage, heart, and mind.
Come on, that was funny.
In all seriousness, you might have pursued your dreams to start your own business to sell your manufactured goods, but you probably also quickly learned that managing your own business isn’t a song and dance.
That’s why we wanted to help you optimize your QuickBooks for manufacturing.
But firstly, why QuickBooks?
A lot of small business manufacturers start off with QuickBooks because it helps you with the daunting task of handling your company's finances and, depending on which package you purchase, inventory management.
However, for makers, this does come with limitations, and if this is all news to you, we’d recommend checking out this article on QuickBooks inventory management to get a better understanding on how it works.
But if you’re a small manufacturer who has already started using it, we’re going to look into QuickBooks manufacturing, how manufacturers can use it for inventory management, how to identify and fix negative inventory, and our four sure-fire steps you can take to optimize your small business manufacturing for QuickBooks.
Consider this article your ruby slippers and let’s begin.
PRO TIP: This blog is your cake on how to manage your manufacturing in QuickBooks, but of course you want the cherry on top too, right? Our small business inventory management guide will help you unlock the secrets to success and maximize your business's performance.
Using QuickBooks for Manufacturing
FYI: We’re looking at QuickBooks Online for manufacturing purposes. You can use desktop versions of QuickBooks, but bear in mind that they are more expensive and are rather tailored to medium and large sized businesses.
Using QuickBooks for manufacturing is possible. However, the built-in inventory management system is designed mainly for businesses tracking the stock levels of finished goods.
There is a way you can monitor your more granular raw material, such as the nuts and bolts that go into your products. Although, QuickBooks manufacturing doesn’t track these expenses or calculate your cost of goods sold based on the materials you use.
You'll monitor your inventory in one of four categories:
Inventory items; Non-inventory items; Services; and Bundle.
What we’ll be focusing on is non-inventory items mainly, as this is where you’ll be storing your raw materials and components.
The biggest issue with using QuickBooks for manufacturing is that you can save how much raw material you have stocked, but you can’t convert that into a finished product.
In manufacturing changes to your raw material levels affects your finished product stock but QuickBooks doesn’t register this.
Of course, it's fine if you're using your raw material to repair damaged stock, but that is the exception of doing your raw material inventory management with QuickBooks.
Either way, this can be an issue, considering you’re going to have to update your product levels manually every time you finish a new project. Otherwise, you run the risk of going to Ship Negative.
But, what is this?
What Is Negative Inventory in QuickBooks Manufacturing?
Negative inventory is when you generate an invoice in QuickBooks manufacturing, but you didn't update the inventory beforehand.
For example, you currently have a product level of zero on your QuickBooks manufacturing system but have just finished a manufacturing order. In a rush and to fulfill a sales order, you ship a product for delivery and generate an invoice for payment.
QuickBooks will update the inventory level as –1.
This might not sound like a big deal. But negative inventory can cause problems such as QuickBooks incorrectly calculating the average costs. Meaning if you generate any inventory valuation type reports in QuickBooks online for manufacturing, it will be incorrect.
Unfortunately, if this issue occurs, it’s not a straight forward fix.
How to Find and Fix Negative Inventory When Using QuickBooks for Manufacturing
To locate any negative inventory, you’ll need to run an Inventory Valuation Detail (IVD) report in QuickBooks:
1. On the QuickBooks Dashboard select “Reports” and select “Inventory Valuation Detail”
2.2. On the drop-down menu for “Dates” select “All” to get an entire overview of your inventory movement.
3.3. Under the QTY On Hand column, you’ll be able to see at which point negative inventory has occurred.
So, you’ve found when negative inventory has taken place, so let’s move onto how to fix it:
1. Select the negative inventory under the “QTY On Hand”
2. If you’re legitimately able to do so, adjust the dates of the bills or invoices so that the bill date is set before the invoice dates
So, as you can see, it is quite easy to fall into negative inventory. And this is why using QuickBooks for manufacturing becomes tricky due to not being able to convert raw materials into final products.
So, the big question.
Is QuickBooks Good for Manufacturing?
Let’s cut to the chase, QuickBooks for manufacturing isn’t ideal.
It’s got your business covered for tracking your finances and even handling some inventory. But, the long and short of it is QuickBooks isn’t designed to support a small business manufacturer, at least in terms of running the production side of the business.
You’re still going to need to figure out how to:
Save your BOMs; Plan production; and Track inventory at different locations.
That’s why we’ve put together these four steps for you to follow that’ll help you optimize your small business manufacturing for QuickBooks.
Four Ways to Improve Using QuickBooks for Manufacturing
Once you have learned about the QuickBooks for manufacturing limitations and how to avoid getting into negative inventory, you can start to overhaul your manufacturing business by following these steps.
1. Eliminate Bottlenecks
A bottleneck is a term used to describe a point along your manufacturing processes where production slows down for various reasons, such as a tool being in use frequently or even running out of inventory.
So, how do you phase out bottlenecks from your production?
— Improve Your Process Figure out where your bottlenecks are occurring and then decide which approach you need to take to fix this. This could be in the form of remapping your workshop known as routing manufacturing.
— Implement Safety Stock Another tactic to take is to use safety stock. So, when inventory begins to quickly run out due to an increase in orders, you’ll have a buffer of inventory to help you fulfill orders as you purchase more material and finish your manufacturing orders.
— Calculate Your Manufacturing Lead Time Calculating your manufacturing lead time, which is the period from scheduling production to completing the finished product, will allow you to get an overview of your operations for each product. By having this, you can figure out exactly where in your workshop is prone to bottlenecks, address this issue, and potentially lower your lead time.
— The Seven Mudas When a business wants to implement lean manufacturing into their business, they follow a step-by-step plan called The Seven Mudas. However, just as a starting point, we’d recommend looking into Transportation first, how you move inventory around your shop floor, because this can be a quick and easy fix that’ll streamline your production.
— How You Store Inventory When using QuickBooks for manufacturing, it is essential to understand how the built-in inventory management works. By default, QuickBooks tracks inventory using the first in, first out (FIFO) system. Basically, this means whatever is placed into inventory first, is the first to be removed.
However, regardless of if you’re a make to stock or make to order business, this is a good system to follow as it’ll help you better understand your product's performance in the marketplace and eliminate any potential dead stock from building up.
3. Develop your master production schedule
Your master production schedule (MPS) is going to be the backbone to your entire small business manufacturing for QuickBooks, so if you don’t already have one, quickly implement one now.
Your MPS is going to incorporate key areas of production such as:
— Your available raw material levels, onsite and in transit;
— Machine specifications;
— Storage capacity; and
— The estimated frequency for stoppages for maintenance.
By focusing on your scheduling production process, you’re going to be able to maximize the efficiency of your production flow. In turn, allowing you to fulfill orders as soon as possible, minimize delays, meaning less stress for you and a more satisfied customer.
The issue with not having an MPS implemented along with your QuickBooks manufacturing is those small inefficiencies in your business are difficult to notice and only become detectable when they’ve become a significant problem.
You don’t need tons of money, conveyor belts, and heartless machinery working away 24/7 to automate your workshop.
Automation simply means finding tools and software which can help boost your QuickBooks for manufacturing. This could be in the form of QuickBooks add ons for manufacturing such as marketing automation software or an MRP system.
The purpose of using these QuickBooks add ons for manufacturing is to make running your business that little bit easier and free up time so you can get back to your love of manufacturing your items.
And that’s about it!
Following the few steps listed above is going to be difficult to get your business all in order.
That’s why we’ve put together the ultimate guide on what is manufacturing so you can go above and beyond with optimizing your business.
But, let’s tie this back to our initial Wizard of Oz reference since this article has become pretty technical.
Optimizing your QuickBooks for manufacturing doesn’t have to be a headache, Dorothy didn’t have to march across Oz to throw water in the Wicked Witches face, all she had to do was click her ruby slippers.
The same goes for any maker who is looking to improve their business management. You don’t have to go through every step and manually identify the issues in your..
Product-making businesses like the guys at “Framed” have to keep on top of their stocktakes to make sure that their data is on point. It can take some time to get in the flow, but the advantages of getting it right are numerous.
Most of us take stock of our own lives on a daily basis.
Asking questions like, what have I achieved so far in life? What are my plans for the future? Why doesn’t my cat love me?
All totally confusing and also essential parts of our existence. Important to find answers to so that you can grow as an individual.
Now, similar questions can be applied to your product and material inventory. You want to know how much you have in the stockroom so you can plan for the future. Maybe not always on a daily basis, but certainly as often as you can.
But, when it comes to your product-making business, what is stocktaking?
Stocktaking is the process of physically checking inventory levels for each of your products and materials to make sure that your data is up to date.
And like those life-affirming questions, it is also important to have a fine grasp on your stock levels to make sure your business can grow.
Without knowing what you have and what you’re doing with your inventory levels, there’s no way you can run your business efficiently enough to nurture growth.
There are many caveats which come with this age-old procedure though, especially when you have to deal with raw material inventory management as well as finished products.
The stocktaking procedure can be a minefield to navigate without the right tools and a well-thought-out strategy to carry you through.
Thankfully though, there is a way...
Why are Stocktakes Necessary?
It doesn’t take a lot of self-reflection to realize that stocktaking is a necessary step in taking care of your product-making business. After all, it is the make-up of everything you use to make and sell your products.
Without a strong foundation, you might find yourself in sticky situations.
Just imagine that you leave your stock room to fend for itself over an extended period of time. You might well end up:
Running out of stock on a product, or the materials to make the product;
Finding yourself with an overflowing stock room which is tying up your cash and resources;
Landing with a pile of dead stock which is no longer usable;
Having a load of unchecked damaged goods on your hand; and
And these elements can add up fast to create a monster which gets totally out of control. Imagine that your stock data is so out of sync with reality that you cannot fulfill orders on time without wasting huge resources on overstocking.
Sadly, this is a reality many businesses have to face, simply due to a lack of focus and attention on their stocktakes.
But hey, not everything is doom and gloom.
What you should really be keeping your eyes on are the awesome benefits which come with having a solid stocktaking procedure in place.
Benefits of the Stocktake
You should always make sure to check your inventory thoroughly during a stocktake. Simply going through the motions is only going to let those underlying issues go unchecked.
Alright, so we know what can go wrong, but what about if we get our stocktaking on the right track?
Well, this is where the fruits of your upcoming labor will become clearer.
Because the reality is that the advantages of good stocktaking practice are going to see a vast range of benefits across your business.
In fact, there are so many that we thought we might as well make a list for your painless consumption.
1. Keep your inventory up to date
The importance of accurate data cannot be understated. Maintaining correct inventory data is both useful for the manufacturing of your products as well as making sure you have products in stock for delivery.
Without it, your production planning may end up becoming obsolete, and even more sadly, your customers might not end up with their products being delivered on time.
Get it right though, and you can save your business on carrying costs and keep your inventory at optimal efficiency.
2. Uncover stock room issues
There are so many elements which can affect the products and materials which lay in your stockroom. Poor conditions, damp atmosphere, badly handled boxes, and even theft are just to name a few.
Of course, a lot of these problems are just going to be one-off cases which are simply a reality of business. But there’s no doubt that maintenance and security measures can be taken to make sure that you don’t lose any more stock than you have to.
We’re talking humidifiers, advanced locks, handling procedures, that kind of thing.
3. Improve your sales strategies
Nothing cleanses the soul like a good spring clean. And that’s basically what a stocktake does, except on an even more regular basis (we’ll get to the frequency later).
The main point here is that by constantly being in touch with your product stock you can make a strong visual connection between your sales figures and what’s happening behind the scenes.
It won’t take long to realize that one of your pet products is actually doing a lot worse than you thought when you see it on the same shelf week after week. The opportunity will then arise for you to adjust your sales and marketing efforts to suit the supply you already have in stock.
How Often Should Stocktake be Done?
This question of stocktake frequency is one which pops up in the mind of many a curious maker.
The reality is that there is no standard for how many times you should be doing stock takes, but the truth boils down to: the more stocktakes the merrier.
There are obvious limits to this mantra, but the point is that you want to have as many updates to your data as you can to ensure that you’re running at your maximum efficiency.
Now the process becomes a lot simpler once you have yourself an MRP software to keep track of your inventory. Especially with a software like Katana where you can upload your inventory data with a simple inventory spreadsheet template.
But the truth is that you still need to be stepping into your stock room and checking off your inventory physically to get an accurate picture.
There are two general approaches. The first is to do a huge annual stocktake, shutting down your operations and checking under every carpet with one fell swoop.
The second and frankly more beneficial is to be checking your stock regularly throughout the year. Potentially at weekly or monthly intervals.
It's going to be of much more use to be keeping your records consistently up to date unless your stock room is so tiny that discrepancies are immeasurably rare.
The exact interval is, of course, depending on the length of your product life cycles, but weekly checks are an ideal to aim for.
How Do You Do a Stocktake?
Now, don’t be shocked, just because you aim for stocktakes every week (or small intervals of your choosing) doesn’t mean you do everything at once.
In fact, this type of stocktaking, also known as cycle counting, is designed to keep your business running as the process is going on.
The trick is that you categorize your products into groups that are easy to identify together. They could, for example, be from the same collection, or simply be placed beside each other in a larger stockroom.
Then you can go through a different category at each interval, without interfering with your daily operations too much.
So, what is stock take process?
Well, it’s going to vary for every business, but you can follow these general steps once you have allocated the days for your stocktaking groups:
Prepare a list of products and materials that need checking;
Have one person ready to call out quantities and another to do the updating;
Go through your list one by one checking each box thoroughly for damaged/lost/missing good;
Update your list with the correct quantities, making notes on any issues;
Check through to make sure you have examined all the right inventory; and
Now that might seem simple enough to do on paper, and sure enough, after time it will be. But likely at first, you will find that some products are missed, and data is not being updated correctly.
Take the time to make sure you have a clear stocktaking process which keeps those involved focussed, motivated and ready to take discrepancies seriously.
The brilliant thing about getting this right is that it will likely improve the flow of your workshop because everyone on the team is going to be more aware of what is moving in and out of the stockroom.
Making the Most Out of Your Stocktake
It’s one thing to have an accurate and up-to-date inventory, but it’s a totally other to be able to use it to your advantage. After all, there’s not a whole lot of point in taking the time to implement stocktaking procedures if it isn’t affecting the overall efficiency of your business.
Now that’s where the real tools come in.
Because spreadsheets can only take you so far before they become a hindrance and nuisance in themselves.
You need to look for stocktaking software that can keep your products and materials in sync with your production and sales.
Katana is a solution which threads your sales, manufacturing, and inventory into one seamless workflow.
One of its awesome features is that you can mass edit your inventory in one go. That’s for both your products and materials.
So, for the initial stocktake you upload your spreadsheet data directly into the software and it can be used to feed into the rest of your product-making business.
From then on you can do future stocktakes directly on the Katana dashboard.
For that initial mass update, it's a simple two-step process.
Firstly, you download a template from Katana which already has your products and materials listed. You can then take this spreadsheet with you as you perform the stocktake.
The spreadsheet will look something like this:
The second step is to upload the spreadsheet back onto Katana and let the software do the rest of the work. You will find that all of your inventory is up to date with the data you entered.
And even better, you have the option to also put in your new reorder points if you find that some stock needs to be purchased more or less often.
From here on in though, no need to touch an Excel spreadsheet again.
You can adjust your stock directly on Katana and make sure that your entire production schedule is up to date as a result.
Taking Your Stocktaking to the Next Level
Katana isn’t just made to help you with your stocktaking. It’s been designed to make a seamless flow of your entire order fulfillment process. That means you can manage your inventory, production, and sales from a single dashboard.
Okay, so stocktaking is clearly a process which can have massive effects on the efficiency of your business. And if anything, it’s a great way to stay in touch with your products and get thinking about how stock is moving from workshop to customers' doorsteps.
It’s certainly not a simple procedure though. There are so many little gaps and cracks which can become apparent when doing consistent cycle counts of your stock.
The important thing is to take all of these issues, as opportunities rather than burdens. Because every gap you manage to fill will lead to a cleaner and smoother running business.
Now, we already got a little taste of what Katana can do for simplifying your stocktaking efforts. But the reality is that this is a solution that offers a lot more to the product-making business than just that.
Katana ties your sales, manufacturing, and inventory altogether on a single dashboard that has been designed for the maker’s eye.
Here are just a few of the awesome benefits it brings:
Manage your product and material inventory levels;
Have your entire business workflow on a single dashboard.
Now, of course, no software is going to be able to completely eradicate the need for a physical stocktake.
But you can be sure that with the right tools you can simplify the process. That means you can spend less time on those existential inventory questions that keep you up all night, and spend more time growing your business.
TL;DR: WooCommerce is the most popular platform for online merchants, and WooCommerce inventory management is great, but if you're a maker, it's far from enough. In this article, we uncover what you need to do to succeed as a maker selling with WooCommerce.
Running a product-making business is a tough gig.
And when you finally find the confidence to start branching out to sell online, it isn’t made any easier by the fact that there are tons of e-commerce platforms available for you to start trading from.
You want to pick the best platform out there, and with a little research, you’ll quickly discover that there is one option in particular that dominates the market...
But, how does WooCommerce inventory management hold up for small scale manufacturers?
We’re going to explore everything WooCommerce: including WooCommerce inventory management, how to set-up products, the limitations, and how to optimize your manufacturing business with the e-commerce plugin.
If you’re a seasoned WooCommerce user, skip straight to limitations to find out what you’re missing.
Otherwise, let’s begin.
PRO TIP: If you're already using an alternative e-commerce platform such as Shopify, then we’ve got you covered! We have an article covering everything you need to know about Shopify inventory management for small manufacturers.
What Is WooCommerce?
WooCommerce is a free and open-source e-commerce WordPress plugin that lets small to medium-sized businesses sell online.
The fact that the plugin is open source lets product-making businesses use modifications and customize their site, providing businesses with more control on how they sell their products online.
Best of all, WooCommerce isn’t just limited to physical products, you can also sell software, services, and digital goods too. Which is perfect for any makers who offer installation packages along with their products.
WooCommerce inventory management doesn’t have a limit on the number of products and images you can have on your site.
Essentially, WooCommerce aids makers in getting more control over their store, design, and scalability.
WooCommerce gives you the opportunity to set-up your preferred payment gateways (it doesn’t have to be limited to online, you can also set-up check or cash on delivery payments) and shipping specifications (such as the weight and dimensions of the units you sell).
Finally, advanced features let you enable automated taxes. Which basically means WooCommerce inventory will automatically calculate the associated taxes on a product when a customer makes a purchase. Great for those trading internationally.
Yes, we know, this is all pretty awesome for a free plugin.
What is WooCommerce? - YouTube
That is basically how the e-commerce platform works and can benefit your business.
But, the big question on all manufacturer's lips, what about WooCommerce inventory management?
The Ins and Outs of WooCommerce Inventory Management
There is a built-in system to let you manage inventory WooCommerce style. Though, to actually track inventory, you have to Enable Stock Management in the Products Inventory Settings.
WooCommerce inventory management allows you to manage your stock and track inventory, however, the function has to be enabled for this to work properly.
If you do not select this feature, you will only be able to see the stock status’ in the Product Data Inventory box.
If you decide not to use WooCommerce inventory management to automatically track changes, you’ll be responsible for updating the status of your stock.
As you can already see, WooCommerce inventory management isn’t the most in-depth system and can only track your finished products. This is going to be an issue for makers who also need a system to track raw material inventory.
But before we get into the limitations and solutions for WooCommerce inventory management, we’ll quickly investigate how to get your inventory set-up.
How to Set-Up WooCommerce Inventory
Managing WooCommerce inventory is straightforward if you’re just handling finished products.
You simply select WooCommerce (once you have it installed on your WordPress), and you can start your inventory management process.
Firstly, adding products will fall into one of four categories:
— Simple Product;
— Grouped Product;
— External/Affiliate Product; and
— Variable Product.
PRO TIP: This WooCommerce inventory variations screenshot was taken from the video below. If you want a full in-depth analysis of the inventory management system built into WooCommerce, be sure to check the video out.
We’ll talk through each one, but the two main ones you’ll be using as a product-making business is simple products and variable products.
You would select this when you’re selling a product that isn’t sold in any other WooCommerce inventory variations.
For example, if you’re a fashion designer and you sell a salsa dress in only one color and size. You’ll just need your products information and marketing materials to upload the dress individually as a simple product.
This is where you make a type of product that comes in different WooCommerce inventory variations.
For example, you finally realize that selling that salsa dress in only one size and color isn’t the best business strategy, so you decide to up your game and include different versions.
Using the variable product function saves you from having to enter each product variant separately.
But what about the two other options?
This option is for if you have products that you’re taking a commission on by displaying on your site.
But why would you do this?
Well, perhaps you support artists by helping them learn how to make woolen shirts, but instead of selling them yourself, you take a commission on what the artist sells.
By making an affiliate product, it’ll open the point of sales externally to where the artist sells that product.
This is for any business who practices inventory kitting in their business. If you sell products in a bundle, you can display them on your website by using the grouped products feature.
However, it should be mentioned that if you group items, customers will also have the choice to purchase items individually.
So, if several items of clothing are grouped together to make an outfit, a customer is able to pick and choose what they like from that outfit.
Whilst you’re setting up your products, or after you have finished, you can go ahead and set your reorder points (on the WooCommerce inventory management system it’s referred to as “Low Product Threshold”).
This will let the WooCommerce inventory management send you a notification when stock is running low.
During this stage, you can set the product’s stock levels and SKU's, which will help you navigate your WooCommerce inventory.
PRO TIP: If you’re struggling to come up with your own SKU’s you can take advantage of a free SKU generator.
You can also set-up upsells and cross-sells.
This means that WooCommerce inventory management will suggest these linked products to customers when they’re shopping on your site.
Upsells – This will appear on a product page as a recommendation such as “others have purchased these items along with this product”
Cross-sells – Products will be suggested to the customer when they’re in the cart
If you’re a product-making business that sells different versions of the same item, there is a way to save the different types of WooCommerce inventory variations to make it easier in the future when adding more product variables.
Under “Products”, go to attributes to save your WooCommerce inventory variations.
For example, if your products come in different colors, you can save these WooCommerce inventory variations as:
Name: Color Slug: Color
Once you have done that, go to “Terms” on the right side of the screen, select “Configure terms”, and then save the colors which are commonly used.
Once you have done this, when setting up your products in the future you can simply select the new variations you have created and save a ton of time creating new products.
How to Use WooCommerce Plugin 2019 | Complete Wordpress Woocommerce Tutorial 2019 - YouTube
And that’s it in terms of getting started on WooCommerce inventory management.
You’ve probably already noticed there are some downsides to using WooCommerce, especially as a product-making business.
But to its credit, it’s quick, easy, and gives you a lot of control over your business for free... Well, in principle.
So, let’s look at the obstacle's makers will have to overcome if they decide to rough it out in WooCommerce inventory management.
Limitations of Using WooCommerce Inventory Management
First things first, a few times in this article we have mentioned that using WooCommerce inventory management is free. Which is true, the only issue is it’s only built in mind for getting control over your store.
You’re still going to need to pay for other things such as themes, your domain, SSL certificate, security, etc.
A rough estimated cost of all these additional requirements can run up to $1,000 per year!
Don’t freak out just yet, this is an estimation calculated with the more expensive bells and whistles a website might need, but the hidden costs are something you should take into consideration and research:
WooCommerce Inventory Management: Free
Running a Website: Not Free
So, what are the other issues and limitations product-making businesses should take into consideration when deciding to continue or get started with WooCommerce inventory management?
1. WooCommerce Inventory Management Doesn’t Support Raw Material Inventory
WooCommerce inventory management is only designed to track the inventory of finished products, and many other small manufacturing businesses use a 3rd party app such as material requirements planning software to bridge this feature gap.
2. Can’t Track Inventory at Multiple Locations
If you have multiple selling points or keep inventory at different locations, for example, maybe you have inventory on consignment with a wholesaler, you’ll need to track that inventory separately and manually.
3. Inconvenient to Handle a Large Database
As your business begins to grow, WooCommerce inventory management begins to strain under the pressure.
For whatever reason, be it a change in design or perhaps pricing, you need to change details regarding your products. Unfortunately, with the current WooCommerce inventory management, you can’t update products in bulk and you’ll need to go through each product individually every time you need to make an adjustment.
It’s not always easy to find a high converting Shopify theme, especially when there are so many on offer. That’s why it’s best to start with a few trial runs and start to narrow them down from there.
As a maker, you simply cannot ignore the appearance of your website. It’s one of the most crucial aspects to your success for the reason that it makes that first impression which decides on whether visitors stay.
But how is it possible for you to create a well-organized layout that showcases all your wonderful products? We suggest that you to look through the best Shopify themes that express your brand identity and approach.
In this post, we will guide you through a few simple steps that help you select a high converting Shopify theme for your next online-store. Without any further ado, let’s begin...
Choosing the Most Stylish Design: Is It Really Important?
You’re going to have doubts when looking at the ready-made solutions laid in front of you. Each of them have different layouts, color combinations, and typography which are all equally important. Your task is to choose the most appropriate theme that is ideal for your business considering all these terms.
In addition to this, the right template is capable of building an image of your business, turning your company into a brand, and presenting your goods in the best possible light. It also allows improving the rate of exchange, trustworthiness, and so on.
In the biggest number of cases, users opt for F-shaped patterns. This means that a high converting Shopify theme must have a great header and a sidebar situated on the left side. As a result, it takes little effort for visitors to navigate through your online store and view your various Shopify images. Even for those who visit your website for the first time.
It’s an ideal consideration when looking for a high converting shopify theme.
Start Your Business with the Most Robust Theme
Now, the first thing is that you should get familiar with a website called Speck and Stone. This business specializes in handmade ceramics. For this reason, they need something that has both a professional and elegant look.
The owners of this business decided to choose the Brooklyn Theme, a particularly high converting Shopify theme. Check out their cozy and eye-catching website for yourself.
Large high-quality images, user-friendly navigation, and marvelous typography. Each of these elements allow your eyes to focus on the unique assortment presented on the store.
What Questions Should You Ask Before Picking Your Template?
Have you never created an online store before? If not then you might be wondering where to start.
Once you have an idea though, it is always possible to take advantage of the default template to get the ball rolling. In such a way, you can make experiments with multiple components, edit them, and see what is better for your website. If you want to get closer to a real online-store, make sure to answer the following questions:
What kind of user experience will be suitable for your target audience?
What are the main instruments that you should include in your online store?
How can you overcome your competitors?
What is the best way to present your assortment?
What are the number of products that will be demonstrated on the website?
What kind of ready-made solution you need (a free or premium one)?
Do not forget that you are free to change the color scheme and work with fonts. If you like a ready-made solution but not its colors and typography, there is no need to worry. You can always work with them.
Have you already answered all these questions? Are you fully aware of all the specific components that you should include in your online store? In this case, let’s start speaking about a few real high converting Shopify themes in the next paragraph.
PRO TIP: As a maker you need to be making the most out of your Shopify theme by keeping your operations running smoothly in the background. That means using order and inventory management tools which integrate with Shopify.
Paper Republic is a leather journal and accessory manufacturer that managed to do this using Katana Smart Workshop Software. With this tool they were able to:
- Improve production planning by 60%;
- Product personalized products on order; and
- Improve inventory accuracy by 29% through stock sync.
It is impossible to speak about hundreds (and even thousands) of ready-made solutions that can be found on the web. Today, let’s focus your attention on three impressive variants that should meet your expectations.
This ready-made template can be used for all purposes that you can imagine. Fashion, fishing, building materials, wholesale, electronics, cosmetics, jewelry, and so on and so forth… Each of these niches can be presented in the best possible light. You are also free to take advantage of the mega-menu, different social options, sorting options, collections catalog, newsletter subscription, and many other options.
This sophisticated template was carefully crafted for those people who are interested in promoting jewelry and accessories on the Internet. You will get an easy-to-use Shopify Builder that allows creating as many different layouts as you want in a codeless way.
There is also a powerful Ajax cart, contact and search forms, brands, product quick view, and other features. For the jewelry maker this is a top choice when searching for a high converting Shopify theme. Just remember to look at what the current best Shopify Jewelry stores are doing to get an idea of what to aim for.
If you are looking for an original theme to present your fashionable clothing, you should take a glance at this professionally-looking variant. You will be provided with different slideshows with animation effects, blogging functionality, and Google Map. Do not forget that you can translate your online-store into several languages.
Now of course every enterprise differs from others in its needs and requirements. But hopefully this path will give you some ideas so that you can make a reasonable decision and create an effective online-store.
Which is why it’s important you take your time here try out as many themes as you can and align them with your customers needs.
Always remember to compare different items, look through their advantages and disadvantages, and imagine how your website will look like. It won’t be long before you find a high converting Shopify theme that works for you.
Running a small business is difficult, even for dropshippers.
However, as a small manufacturer like yourself, you must contend with the difficulties of running a business, scheduling production, inventory management (including raw material management) and, finally, administration.
Most of these points won’t be that much of an issue since making things is in your blood.
But, the admin side of things can be intimidating. Especially when it comes to things like taxes. It gets even scarier when you realize filing your taxes incorrectly could have serious consequences.
This is why many product-making businesses use QuickBooks inventory management so they can keep track of their finances at the same time.
We imagine this is how you reacted to that statement. But it’s true, QuickBooks inventory management is not unusual and is a popular first choice for small manufacturers.
It’s not an uncommon choice among small scale manufacturers to use the QuickBooks inventory management online feature. Obviously, QuickBooks isn’t a cloud manufacturing software first, but the idea behind adopting QuickBooks is to hit two birds with one stone:
1. Manage Inventory 2. Manage Accounting
And let’s be honest, it’s a good idea since the two go hand in hand and you don’t have to continue searching for an ERP system which is usually built in mind for bigger manufacturing companies.
Unfortunately, however, it’s not that straight forward. QuickBooks is a phenomenal piece of software for managing your finances (and it has years of awards and accolades to back this up).
But, QuickBooks inventory management? Eh, not so renowned.
In this article, we’re going to investigate QuickBooks inventory management, why product-making businesses use it, its limitations, and what software you can use to overcome these challenges.
If you’re familiar with QuickBooks inventory management, then we’d recommend not running away just yet. Instead, skip to limitations and read on from there.
PRO TIP: Managing your inventory is more complicated than you might imagine. This is why we’ve put together a must-read inventory management guide to help you in your quest to find more control in your workshop.
What Is QuickBooks?
QuickBooks is an accounting software package geared primarily toward small and medium-sized businesses. It offers accounting applications either through a desktop or cloud-based version that can help businesses accept business payments, manage and pay bills, and organize the company payroll.
This is just a quick and basic explanation of QuickBooks. As it’s been primarily developed for handling your finances. If you want to know more about that aspect of how it works, check out their video below:
How to Navigate QuickBooks Online 2018: Menus, Transactions & Set Up - QuickBooks US - YouTube
But, what about when it comes to QuickBooks inventory management?
Why Manufacturers Use QuickBooks Inventory Management
Many companies use the inventory management QuickBooks online feature to try and get ahead of the competition by having their business management centralized.
First things first, by using QuickBooks inventory management, you can track your inventory, and have it reflected in your bookkeeping immediately, making this very appealing to any product-making business who sell direct to consumer.
So, how does QuickBooks inventory management work? It breaks down your inventory into four categories:
Inventory Items This is comprised of the items that you sell (and buy if needs be), allowing you to track those quantities. However, to be able to track them, you need to enable Inventory Tracking under your settings.
To enable Inventory Tracking in QuickBooks, go to the Gear/Cog icon at the top right corner of the screen.
Select “Account and Settings” and go to “Sales”.
In this window, you can find the option to enable tracking under “Products and Services”.
QuickBooks inventory management comes with the ability to track inventory. However, you need to make sure you’re on the correct payment plan and have it enabled.
A quick disclaimer: Tracking and inventory management with QuickBooks requires you to be on the correct payment plan, as these features are not offered on most versions of the software.
Non-Inventory Items Simply, these are the nuts and bolts of your inventory. If you’re handling raw material, then this is where it’s stored. We’ll explain the complications of recording raw materials a bit later, but it mainly concerns recording the conversation of raw materials into finished goods.
Services These are the services you provide. Perhaps you sell a product, such as a piece of specialized equipment that needs to be installed on a prebuilt machine, and you might offer an installation service too. This is where you’d track these costs.
Bundle If you practice inventory kitting, making gift baskets, or selling products and services together, for example, it’s all tracked under your bundled inventory.
How Exactly Does QuickBooks Inventory Management Work?
QuickBooks inventory management consists of tracking some of the costs to manufacturing and providing an evaluated balance sheet to track these expenses.
QuickBooks records your inventory item by the value it was purchased at (or how much it costs for you to make) increasing the value of the Inventory Asset account on your Balance Sheet report and increasing inventory (or Quantity on Hand) of said product.
Once the finished product has been updated as sold, the built-in inventory management software for QuickBooks decreases the value of Inventory Asset and the Quantity on Hand units for that item.
When you record a sale, the inventory management in QuickBooks increases the Cost of Goods Sold and records the Income from your product.
To figure out your gross profit, you'll need to check the difference between your COGS and your Income.
When using QuickBooks inventory management, it performs inventory evaluation using the first-in, first-out (FIFO) system to track any fluctuations in product costs and the COGS.
How to track inventory in QuickBooks | AUS - YouTube
This might sound all confusing, but basically, all you need to know is that when doing QuickBooks inventory management, it tracks your finished goods and gives you an evaluation of their costs, profits, and losses.
However, QuickBooks can be used to track other manufacturing costs, such as the cost of labor and manufacturing overheads. But, to edit these you're going to need to access the settings page and look into your “Chart of Accounts”.
You might be rubbing your hands together if you've been contemplating getting started with QuickBooks. Hey, we don't blame you, it's accounting software, and it's top-notch.
But, there are downsides to using QuickBooks inventory management, which we'll explore before you make any decisions.
The Limitations of QuickBooks Inventory Management
QuickBooks inventory management isn’t designed to support businesses that have huge quantities of raw materials or handle products that deal with more granule materials.
It would be awesome to conveniently manage your business from one place, and it’s the very reason you’re here looking into how to record finances and do your QuickBooks inventory management.
However, software is usually designed to be used for one thing and sometimes comes with extra features for those who might need a particular aspect of business management.
And this happens to be the case in this instance.
As said earlier, it’s super awesome for accounting, but the QuickBooks inventory management system, it lacks a lot of features which are essential for small manufacturers.
1. QuickBooks Inventory Management Isn’t Designed for Manufacturers This is the simplest way of explaining the biggest problem.
Yes, QuickBooks inventory management is possible, but it isn’t designed to support businesses that run job shop manufacturing. If you solely depend on QuickBooks, you’re going to need to organize your routings for productions either in spreadsheets or with another tool.
2. No Production Scheduling Once again, there is no feature for you to establish and save a master production schedule (MPS) within QuickBooks. Meaning you’re going to have to figure out your production planning and have it saved somewhere else. Which can be a pain for you and your teammates as this information will now be stored separately.
3. No Serial, Lot Numbers and Location Tracking Okay, this isn’t 100% true, there is a module for location tracking on the more expensive QuickBooks packages. But, otherwise, the core QuickBooks inventory management feature doesn’t support any of the above which you’ll likely need as a product-making business.
5. QuickBooks Cannot Convert Raw Material into Finished Goods Once again, you can use the system to track sub-assemblies or group items together, which you’ll purchase together to make a final product. However, you’ll need to sell on the grouped item as the final product for this to work (which will be reflected on the customer’s receipt).
Think of it like this:
In QuickBooks - component A and component B represent the finished product
Basically, QuickBooks is fine for tracking your finances and inventory if it only consists of finished goods. However, if you’re a maker, it doesn’t support the most crucial element of your business, which is the manufacturing process your business follows.
You can probably see how this would be an issue for you...
This might be your initial response to QuickBooks inventory management after discovering these limitations. But, don’t pull a Ron Swanson just yet! QuickBooks is still fantastic, especially when it’s partnered with smart workshop software.
Don’t overreact, as we can’t overstate this any more than we already..
Product making businesses like the guys at “Framed” need to make sure their order fill rates are as high as possible. Their brand’s success is tied to how reliable they are in delivering to customers.
What’s the worst thing that can happen to you in the first world?
We’ll tell you what.
Ordering a drink at a restaurant and it coming back half full.
No one is happy when they spend five dollars for a meager sip of orange juice. No matter how refreshing it tastes.
It’s the same thing when it comes to your order fill rate.
Fill rate is a metric of satisfaction and disappointment. It investigates how many of the orders your customers made were in stock and therefore likely reached them on time.
You want to make sure that you have a high enough fill rate to match customer needs, without overstocking and increasing your carrying costs.
A delicate balance as any for the product-making business.
Which is why we’re going to delve deep into the fill rate formula and work out how to walk the tightrope of this elusive metric.
But first, let’s make sure we understand what this tightrope is made of.
What is Fill Rate?
Alright, so let’s define fill rate.
Or rather let’s look into what order fill rate is. Because the metric simply relates to how successfully you can fulfill demand.
An order fill rate calculates how often a product is available for on-time delivery to customers that demand them.
But keep in mind that fill rates can also refer to other demands for your business.
For example, you could look at inventory fill rate which is related to your purchasing efforts. That would mean looking at your purchases and seeing how many times materials are ready to buy on demand when you need them.
If you purchase materials and they are only available half the time then you have yourself a 50% inventory fill rate.
You would then know to look into your supply chain and potentially finding a more reliable supplier.
Anyway, going back to the order fill rate definition. That’s when we look into how often we have items in stock when customers want them.
So if two times out of ten you are out of stock on an item then you have an order fill rate of 80%.
That might sound alright but actually, that’s not a great number.
It’s going to mean losing out on resources and potentially ending up with wasted stock.
Instead, you want to get on to that tightrope with the help of inventory management software that can get your fill rate as close to 100% as you can.
How to Calculate Fill Rate
Once you calculate fill rates for your products you’re going to want to make sure they actually improve. That means using the right tools and inventory software to keep your stock levels at optimum points.
Alright so here’s a shocker for you. There’s no standard way to work out your order fill rate.
Businesses have different data available to them which can vary the techniques used to attain this metric.
It’s already a different story if you pre-emptively display the stock of your items because many customers won’t even try to order if they see you’re out of a product.
Regardless though, there are two general methods we can take to work it out.
This order fill rate calculation basically divides all successful orders by the number of attempted orders.
Here’s an example of how to calculate fill rate in excel.
First, you can simply create a spreadsheet with a list of your product on the one side and then create columns with attempted and successful orders on the other.
Then you can go ahead and add a new column for order fill rate.
Divide the successful orders column by the attempted orders column for each of the products and display them as percentages.
Simple as that.
You have your order fill rates for each of your products and can move on to getting the most out of them. But if you don’t have access to successful order attempts then try…
Another way of working out order fill rates is to focus on how often an item goes out of stock.
This is a slightly different perspective to take because it doesn’t consider the amount of customer demand for a product. It just lets you know that there have been moments where an item has not been available for purchase.
In some ways that makes this method of calculation a little less valuable, but if your data is better suited then you can save some time here.
Anyhow, the way it works is that you first select a time frame in which to improve. This could be a month or even a week depending on how short your product lifecycles are.
Then you can count how many days your item was in and out of stock for in this period.
So, let’s say if your orange porridge candles were in stock for 28 out of 31 days then you can calculate your fill rate to be 90%.
Make Your Fill Rate Count
If you have the data and resources it might well be a good idea to calculate your order fill rates using multiple methods. That way you have an accurate picture which can highlight any discrepancies in your processes.
Alright, now we know our fill rates. But what do we do with this information?
Well, the first thing to do is look into why your fill rates are not at 100%. Because once you know the source of the issue you can get improving.
There’s going to be a good reason why, and usually, it’s going to come down to either:
Bad shipping practices; and
Poor inventory management.
In the case of unreliable suppliers, you might want to do a bit of searching to find better alternatives for sourcing materials or to diversify your supply chain.
If you see that you are having trouble with tracking your shipping then it might be a good idea to start integrating a shipping software like Shipstation. Or at least to pay more attention and focus to making sure you are sending your deliveries out as efficiently as possible.
But when it comes to inventory management, then it might get a little trickier. Especially if you are using inefficient inventory excel sheets to monitor your stock levels.
In this case, you’ll want to start looking into inventory software which can track your stock movements and ensure that you always have materials ready for your sales orders.
Okay, so realistically very few of us are going to hit that 100% mark. And even if we ever do, there’s going to be some swamps to wade through before we get there.
That’s why it’s important to identify products where the fill rate is lowest and come up with solutions to deal with these unhappy customers in the meantime.
In the example we gave, it would be the orange porridge candles, at a meagre 77% order fill rate. Meaning more than two of ten customers couldn’t get their brilliantly named bottle of wax.
Here are a few starting points to how you could deal with this:
Offer alternative products – depending on what selling platform you use, often you have the option of offering alternatives when a product is out of stock. A lot of Shopify integrated stores offer this. Of course, you won’t improve your fill rate but will at least keep customers interested and buying.
Contact customers – if orders are coming through and then you’re finding out that they’re out of stock then you have a problem. But whilst you solve that problem, make sure to be letting customers know that their delivery will be late as soon as you have that information. It will be appreciated.
Reduce available product options – until you implement proper inventory management practices you might want to reduce the number of products you have on offer. Taking a product off the shelf with a low order fill rate might seem counter-intuitive, but if it’s mainly creating disappointment for the customer then it’s not worth having it there.
Knowing your order fill rate can give you a great overview of how customers are satisfied with your ordering system.
And hopefully, you already have a fairly decent percentage for your products as they are.
But remember that every customer that can’t or doesn’t get the product they desire in the timeframe you promise is going to tarnish your companies services.
It’s much easier to retain trust than to gain it back.
Which is why it’s important that you have your inventory ready to serve the sales orders that are bouncing in.
Katana Smart Workshop Software is a tool which can not only help you attain optimal levels of inventory but also streamline your whole product-making business.
That means taking care of your manufacturing, inventory, and sales from a dashboard designed for the maker’s eye.
It’s going to be of particular use in these cases:
Orders getting delayed or lost;
Overloaded with spreadsheets;
Inefficient inventory, whether that be over or understocking;
Finding someone who is open to influencer marketing can be extremely helpful in boosting sales and driving traffic toward your website.
Paid marketing is no longer enough to promote your manufacturing business in 2019. You may have tried increasing your ad spending only to find that your sales are the same.
Paid advertising is becoming more and more expensive as we speak, whilst its effectiveness declines.
Your customers will no longer buy just because of what you tell them in your ads. Instead, they consult their peers and resort to influencers to get product feedback before they buy them.
It is not that they don’t believe you. They just have this quick access to a wealth of information online, that it is inevitable for them to seek it when they want to buy something.
So how can a small manufacturer compete in this Internet-driven world? It’s simple. You just need to harness the power of influencer marketing. As you get more honest feedback on your products and services, you will have higher chances of closing more deals.
The core of influencer marketing is the power of trust. This is the trust that influencers have built with their followers and is nurtured with the continuous creation of content. When marketing is done with this trust, it becomes extremely effective. In fact, a simple influencer promotion can result in a tidal wave of sales if done the right way.
However, if you feel that there are still things that you need to address in-house, before rushing into finding an influencer to begin marketing, it might be worth looking at your manufacturing process and understanding how Shopify inventory management works (assuming you’re using an e-commerce platform) to try and boost sales.
But, now that you understand the role that influencers play in promoting a manufacturing company, let us look at some ideas on how you can leverage this a bit more. Here are ten ways on how you can use influencer marketing in your small manufacturing business.
Ask for Influencer Reviews
The easiest way to get an influencer to promote your business is to ask for a review. It is not that difficult if you will go with non-celebrity influencers. Celebrity influencers are those influencers that have millions of followers.
While their reach may be wide, the engagements that they generate is lower than micro influencers. In fact, statistics from Collective Bias show that consumers are 10x more likely to buy because of non-celebrity influencer promotions. This is because they know that influencers are most likely paid to promote a particular product while non-celebrities only review a product that they like, and they will only promote it if they think the product will authentically help their followers.
The easiest way to ask for a review is to approach them. Look for their contact information or you can contact their social media profiles and ask about where you can send your products. You don’t even need to require them to review your products.
You can just ask them where to send your products and they can review it if they like it. If you are confident with your products, you’ll find that they will review it for you just to return your kind gesture.
Alternatively, ask customers to leave reviews as this is also an effective tactic to drive up sales. It might be worth considering a multichannel approach to increase your leverage and get more reviews in different places.
Attract Influencers with a Knowledge Campaign
Influencer reviews are not the only way to use influencer marketing for your business. It is also important to create a system which will make it easier for influencers to find your products and approach you.
For this a content or knowledge campaign is essential. In fact, it is recommended for newly launched products for it will allow you to educate your audience. If your product is not that complicated, you can just upload something as simple as a blog to your website.
This will allow you to have some extra content aside from your shop. It will not only make your website look more credible, but it is also a great link to refer to when you approach influencers for promotion.
A knowledge and content marketing campaign can help you do that.
Harness the Power of Influencer Groups
Try looking for an influencer in any niche and you’ll find that they often communicate with a small group of people. This is their influencer group. They often belong in the same niche and they communicate with each other constantly.
If your product is relevant to this group, you’ll want the entire group to promote you. This way, every promotion will create a wave of conversation in the niche. So, it is not just one influencer talking.
Instead, it is a group of influencers promoting the product at the same time. This is powerful for it will show their followers that the product is so good that the entire group promotes it.
The best part is that once you have done this, you will not only get to build a relationship with one influencer. You get to build a relationship with all of them.
Create Exclusive Offers
Earlier, we mentioned that you need to give influencers a reason to promote your products.
Another way to convince them is to give them exclusive offers. This could be a coupon code that is made in their name, a special discount that is made just for their followers, or even an exclusive deal like inventory kitting products exclusively for their audience.
Taking any of these approaches will give the influencer a reason to promote, and the tactic is often a good way to find new customers from, potentially, a single promotion.
Another way to get an influencer to promote you is to host a contest with them. In this type of contest, you don’t ask them to do anything other than promote your business as you’ll provide the prize and other specifics.
So, if you are giving away a product, you can set up the mechanics so that it can increase, not only your followers, but the influencers’ followers as well.
You can see this a lot in social media channels like Instagram where you must like the post and follow the influencer and business pages in order to qualify for the prize.
This is a nice way to boost your influencers’ followers while also promoting your manufacturing business.
PRO TIP: You can combine this marketing strategy with influencer groups. Instead of approaching only one influencer, you can approach a group of influencers. You can then set the mechanics by requiring follows for all the influencer accounts in the group. This is better as you’ll have a group of influencers promoting you all at the same time.
NOTE: You need an attractive prize for this to work though, A discount code or a free product will not cut it. The prize should be higher in value for group influencer contests to work. But if done correctly, it’ll generate more traffic to your website.
Did you know that you can actually trade via social media? It might be lucrative to find an influencer who also has an online store and seeing if they’re willing to carry some consignment inventory and sell from their own store.
If you are a small manufacturer, it is easy for you to create bespoke products for your customers. With this, you can collaborate with influencers on certain products so you can make and design a product that the influencer has designed.
This works extremely well for creative niches such as fashion and makeup. If you can create a product based on the influencer’s taste, then they have more reason to promote you because it has their brand on it.
Host Influencer Events
Ever wonder why big brands always host conferences for their new products and invite the biggest celebrities to it? It is all about networking and promotion. By hosting events in your niche, you get to connect with influencers who can promote you.
However, hosting an event is not easy. You can only do this if your company has enough followers who will support you. Hosting an influencer event when your company is brand new will only waste money.
There are so many things involved in launching an event. Not only do you need to reserve the venue. You also need to create a program that is worth your visitors’ time. If your company has enough followers, this is a great way to solidify your relationship with influencers in your niche.
Attend Influencer Events
If you cannot host your own event, you can just attend existing influencer events in your niche. You can look for open events and attend them. There is a huge chance that your target influencers will be there. The good thing about connecting with influencers face-to-face is that you get to know them. Even if you don’t get to talk with them one-on-one.
You can listen to them if they are going to talk and you can ask questions afterward. This is your chance to connect with them and get to know them. It is also a nice reason to connect with them online after. Just tell them that you saw them at the event. Whether or not they remember you, you still have a higher chance of getting a reply from them.
Remember, it is not just the huge influencers that you need to target. I have mentioned the power of micro-influencers and that they are far more likely to get their followers to act on their promotions. This is because they don’t have celebrity status which makes them far more reliable when it comes to reviews.
Micro influencers can have a few thousand followers to a hundred thousand. But they focus more on connecting with their followers instead of promoting to them.
Have a Referral Program
An easy way to get an influencer to promote your business is to have a built-in program that will allow them to do this. This can be a referral or affiliate program where they get rewarded for every person they refer.
This will encourage them to promote you when they like your products. Plus, they can promote you to the people who are closest to them. Companies such as Hunting Bow Lab have reported a 30% increase in sales after starting a referral program.
Influencer Marketing for Life
However, influencer marketing is not done on a one-time basis. You cannot expect results from it immediately either. You have to give it some time.
The promotion done by influencer marketing is not as direct as paid marketing. You need to give the influencer’s followers some time to get to know you and your brand. You need to give them reasons to try your products. It is not a quick marketing method that will give you results right away.
Instead, it is better to see influencer marketing as part of your business regimen. You should focus less on paid advertising or getting backlinks and focus more on building relationships with your customers and highly influential people in your niche.
Influencer marketing is groundbreaking because it approached marketing from a different perspective. Instead of the old spoon-feeding approach where information is fed to the prospect.
Influencer marketing is about exploration and stories. It is about how one influencer came across your product and tried it. It is about how they use the product in their lives. It is more than just saying that the product is good or bad. It is about the value that the product can give them once they buy them.
If you plan to implement this in your small manufacturing business, I recommend having a list of potential influencers to work with. It is important to take note of their content topics and how their audience engages with them. You can see this in the likes, shares, and comments in their content.
From here, you can choose a group of influencers to work with. These influencers should not only be the best people to promote your product. You should be able to predict that they will have an interest in your product as this will make them more enthusiastic when promoting your products.
That is how you do influencer marketing for your business, but don’t forget to overlook your businesses infrastructure. Don’t forget to optimize your business manufacturing and production processes with cloud manufacturing software, so that way the traffic the influencers bring in, won’t be lost to inefficient business practices.