• A wholesale license allows businesses to purchase products in bulk without paying sales tax.
• It is not always required to have a wholesale license. Some jurisdictions only require wholesalers to have a reseller’s permit when selling to businesses (B2B). 
• While not always a requirement, obtaining a wholesale license fosters trust and adds legitimacy to your business.
• A seller’s permit is also required if your wholesale business plans to sell directly to consumers (B2C).
• To apply for a wholesale license, you’ll need to submit a variety of information about your business. Generally speaking, the process is simple.
• Legislation surrounding wholesale licenses differs based on your location. Be sure to check your local legislation beforehand. 

Not all businesses that sell physical products fall into the same category. For example, you’ve got retailers, wholesalers, distributors, and other business models like dropshipping. But in most cases, regardless of your business model, you’ll need a license of some sort before getting started. Otherwise, you may find yourself in legal trouble. 

Today, we’ll focus on wholesale in particular. We’ll go over how to get a wholesale license, why you need one, and what benefits it brings. So, if you’re thinking about how to sell wholesale, this article is a must-read. 

What is a wholesale license?

A wholesale license is a legal document that allows individuals and/or businesses to buy products in bulk directly from manufacturers or distributors without paying sales tax. In some areas, a wholesale license is required if you intend to sell goods to other businesses rather than consumers. However, wholesalers can operate in many places using a reseller’s permit or sales tax exemption certificate.   

Why do you need a wholesale license? 

While it’s true that you don’t always need a wholesale license, these situations are typically the exception rather than the norm. That’s why knowing how to get a wholesale license is so important. 

Even if it’s not always a requirement, having a wholesale license has some great benefits. Most notably, US businesses with a wholesale license are exempt from sales tax at the time of purchase. This is because the consumer will ultimately pay the sales tax when making the final purchase through the retailer. 

A less tangible benefit of having a wholesale license is that it’s a sign of trust. Sometimes, just having a business license isn’t enough. Manufacturers are more likely to trust someone with a wholesale license and may also be more open to negotiations with wholesalers who hold one. Ultimately, it adds an extra level of legitimacy to your business. 

How is it different from a reselling permit?

We briefly mentioned reseller’s permits above. These allow retailers to purchase goods tax-free from wholesalers. Although this sounds similar, the key difference is their intent with those products. Retailers specifically aim to sell to consumers, while wholesalers typically sell to other businesses.  

Although the two serve similar purposes, they’re split into two different documents. However, depending on your location, these two permits might be bundled together. Always double-check your local rules and regulations to determine what’s required in your area. 

What about seller’s permits?

Another important permit to mention is a seller’s permit. This permit allows businesses to collect sales tax legally when selling their products. It’s an essential part of any business that sells products directly to the consumer (B2C).

Wholesalers who are only doing business with other businesses (B2B) don’t need to worry about a seller’s permit since they won’t be collecting or paying sales tax. However, if you plan on selling both B2B and B2C, you will need a wholesale license and a seller’s permit.  

How to apply for a wholesale license

Now that you know why you need a wholesale license, you need to know how to obtain one. Some of these steps will differ from place to place, but the basic outline remains the same. Still, it’s best to look into your local legislation beforehand. Organizations exist specifically to help businesses obtain their licenses. 

Step 1: Register your business 

First things first, you’ll need to make your business legitimate. This means you’ll need to register your business, obtain a business registration, and choose a legal classification for that business. In this instance, “legal classification” means sole proprietorship, limited liability company (LLC), and so on. 

Step 2: Obtain an employer identification number (EIN) 

Even if you’re a one-person show, you’ll need an EIN. This also functions as your business’ tax number and is what you’ll use to open bank accounts and file taxes. To apply for an EIN, you’ll need to go to the IRS website and supply a variety of information. This includes your social security number, business address, and business name. 

Generally speaking, this process is relatively easy and not time-consuming. 

Step 3: Obtain a seller’s permit (if applicable)

Remember the seller’s permit we mentioned above? Well, if you plan to sell wholesale and directly to consumers, this would be the time to get a seller’s permit. The specific requirements to obtain a seller’s permit will differ based on location, so make sure to check ahead of time. 

Step 4: Gather the relevant information and apply

Before applying, you’ll need to put some information together. Most of it should be easily obtainable. A non-exhaustive list is as follows: 

• Business name
• Owner’s name
• Taxpayer ID
• Business address
• Contact information
• Nature of the business
• Seller’s permit (if applicable)
• General business license
• Employer identification number (EIN)

From here, you’ll submit an application to your local jurisdiction. We’ve said it a few times, but local legislation tends to differ based on where your business operates.

Additionally, applying for a wholesale license usually involves fees. These amounts can vary wildly depending on where you apply. For example, Alaska requires a bi-annual fee of $2,00 to maintain the license. On the other hand, Texas doesn’t require a wholesale license at all. 

Different industries may have different requirements

It’s also important to keep in mind that different industries may have different regulations. For example, a wholesaler carrying bulk hazardous chemicals will likely be subject to stricter regulations and require more certifications and licenses than a fashion company.

Knowing how to get a wholesale license is just the first step. You’ll also need to know the legislation surrounding the rest of your business and where to go next. 

Software that will help you succeed as a wholesaler

Whether it’s a wholesale license, reseller’s permit, or seller’s permit, obtaining the proper legal documentation is key to ensuring compliance with local regulations. This will keep your operation running smoothly from day one.

However, having the proper legal documentation is just the beginning of running a thriving wholesale business. How you manage your day-to-day operations is what truly determines your success. 

That’s where inFlow’s wholesale software comes in. Our all-in-one inventory and order management software helps wholesalers track stock levels, process bulk orders, and manage sales across multiple sales channels with flexible pricing schemes. That means you can easily sell both B2B and B2C seamlessly. With inFlow, you can also:

• Generate and track purchase and sales orders.
• Create, print, and scan barcodes with our built-in barcoding system.
• Automatically apply special tax rates for customers with exemptions.
• Integrate with ecommerce and accounting tools such as Faire, Shopify, QuickBooks Online, and Xero. 
• Create a private inFlow Showroom sales portal to display selected products and pricing for clients.

With inFlow, you’ll be ready to take your wholesale business to the next level. So what are you waiting for? See for yourself and give inFlow a try today!

The post How to Obtain a Wholesale License: A Simple Guide appeared first on inFlow Inventory.

• VAT (Value-Added Tax) is a consumption tax applied at each stage of the supply chain, where value is added to a product or service. 
• A VAT number is a unique identifier required for businesses in countries with VAT systems. These numbers enable businesses to charge, collect, and reclaim VAT.
• Businesses operating in VAT-collecting countries may need to register based on turnover thresholds, imports, or the type of goods/services offered, including digital products.
• Unlike a sales tax, businesses collect VAT at every stage of production and allow them to reclaim VAT on purchases.
• Not only does a VAT number ensure your business is compliant, but it also enhances your credibility. VAT numbers also make it possible for businesses to reclaim VATs paid, which will reduce their tax burden.
• Over 170 countries, including the EU, Canada, and Australia, use VAT systems with varying rates and regulations.
• The average VAT rate is 21.6%. Some countries apply rates as high as 25% and others as low as 5%. 

Most businesses operate with a central goal: to make money. But growing revenue isn’t easy, especially when you’re confined to a specific region. After all, you can only convert so many people locally before your sales eventually reach a plateau. A common way to overcome this hurdle is by expanding your operations across international borders.

While international business can be a powerful way to boost your reach and revenue, it comes with a slew of complications to consider. One significant aspect is compliance with international tax laws, including obtaining a VAT (Value-Added Tax) number. So, what is a VAT number? Why might your business need one? And how does it differ from other tax identification numbers?

What is a VAT number?

If you’re a business, particularly in the EU, looking to sell your goods across borders, you’ll need to know what a VAT ID is. A value-added tax identification (VAT) is an identifier businesses use for tax purposes in countries that collect Value-Added Tax. It allows businesses to charge, collect, and remit VATs to the relevant tax authorities.

VAT numbers are commonly required in the European Union (EU) and many other countries where VAT is a standard tax. VAT IDs can consist of up to twelve characters and can contain both numbers and letters. Many countries will have their own suffix to make identification easier, for instance, DE for Germany and FR for France.  

This is distinctly different from a country like the US, which does not have a VAT system. Instead, they use a sales tax system, and businesses use identifiers like the Employer Identification Number (EIN). Other countries, such as India, use a Goods and Services Tax Identification Number (GSTIN). This number serves a similar purpose as a VAT number. 

What is a Value-Added Tax?

As we mentioned above, VAT number stands for value-added tax number. Some also refer to it as a value-added tax identification number. It’s a consumption tax that VAT nations apply at each stage of the supply chain where value is added to a product or service.

Unlike a sales tax, which is only collected on the final sale of a product, VATs are collected throughout every stage of production and distribution. However, you only add VAT on the value added at each stage, not the entire transaction value.

For example, let’s say you’re a manufacturer out of the UK, and one of your wholesale clients is from Portugal. When you make a sale to that client you would charge VAT on the sale. The wholesaler would then be able to reclaim the VAT paid on that sale once they sell the goods to a retailer, and the retailer can reclaim the VAT once sold to the consumer. While each member of the supply chain pays the tax, the end tax burden ultimately falls on the consumer. 

The overall goal of VAT is to increase a country’s tax revenue without unfairly taxing higher income individuals. The system aims to tax consumption rather than income, which means people contribute based on their spending habits. 

What countries collect VAT?

At the time of writing, more than 170 countries currently collect VAT. This includes most countries that are part of the EU, Canada (where it’s combined with GST in some provinces), and Australia. Though their individual collection numbers tend to differ, the average VAT is 21.6%, but these rates can vary wildly from country to country.

For instance, Germany applies a VAT of 19% while Sweden adds 25%, and some countries such as Canada have rates as low as 5%. Comparatively, the average combined state and local sales taxes in the US come in at just over 6%.

Does your business need a VAT number?

The idea that only large companies need a VAT number is a common misconception. In truth, if your business operates in a VAT-collecting country, you may need to register for a VAT number, depending on the country’s regulations.

For example, in the UK, businesses only require registration past a certain annual turnover threshold. Some EU countries even have a tax relief scheme for businesses with low turnover, exempting them from VAT payments while still requiring registration.

Something important to note is that Value-Added Tax doesn’t only apply to physical goods. You’ll also need to factor it in for any services, such as digital products or consulting. Therefore, businesses that offer these services across borders may also need to register for a VAT number. 

While the general rules and regulations of VAT are similar across borders, each country’s process tends to differ slightly. Remember, this is a legal obligation. It’s important to remain in compliance, especially if you’re a foreigner doing business across borders. 

An often overlooked part of having a VAT number is that it’s a sign of trust. Operating across borders requires building and maintaining relationships with the locals in order to maintain supply lines. Not having a VAT number is the first sign that something might be amiss, and it may prove a hindrance. Even if you don’t strictly need a VAT number, it may be best to register for one anyway.

How do you register for a VAT number?

The process of registering for a VAT number varies from country to country but generally follows a similar structure. Here are some of the typical steps you would need to take when applying for a VAT ID number:

1. Determine the appropriate tax authority: Each country has its own regulatory body for VAT. For example, the UK uses HM Revenue and Customs (HMRC), while Ireland uses the Revenue Online Service (ROS).
2. Gather Required Documentation: This may include a national insurance number, a unique taxpayer reference (UTR), and detailed business data such as revenue, turnover, and projected revenue.
3. Complete the Registration Process: Depending on the country, you may be able to register online, via post, or through an authorized agent. However you choose to apply, ensure you submit all required documents accurately to avoid delays.

Keep in mind that VAT is a requirement regardless of whether you have a VAT number or not. If you register late, you’ll need to go back through your records and retroactively pay the total you owe, including any penalties you may have incurred.

How inFlow Inventory Can Help with VATs

Adhering to VAT compliance is no easy feat. But luckily our software inFlow can make it much more manageable. inFlow streamlines your inventory management processes while helping you track and organize tax requirements like VAT. With inFlow, you can:

• Automatically calculate VAT on transactions.
• Easily generate tax-inclusive pricing schemes on sales orders.
• Save a specific taxing scheme and pricing scheme to a customer record.
• Manage multi-country inventory and tax reporting with ease.

Additionally, inFlow has everything you would expect from a complete inventory management system, including barcodes, reorder points, and real-time inventory tracking.

Conclusion

If your business operates out of the EU or any of the other 170 VAT countries, obtaining a VAT number is essential. Whether you’re selling physical goods or offering digital services, understanding VAT regulations is key to not only avoiding penalties but also building trust in international markets. While the process can seem daunting initially, you can start in no time with just a bit of research and preparation.

The post How to Manage VAT Numbers for International Businesses appeared first on inFlow Inventory.

• The core difference between wholesale vs retail is wholesale involves selling products in bulk to other businesses (B2B), while retail focuses on selling individual products to end consumers (B2C).
• When you sell products wholesale, you face less risk and lower overhead costs, reducing carrying costs and shipping expenses. In contrast, retailers face higher overhead costs due to the need for storefronts and a larger workforce.
• Retailers enjoy higher per-unit profit margins than wholesalers due to the added risk they take on.
• Some things to consider when choosing between wholesale and retail are product type, profit margins, overhead costs, customer relationships, marketing, and inventory management.
• Wholesalers rely on B2B marketing through trade shows and networking, while retailers focus on advertising and sales promotions.
• Some companies can successfully operate with a hybrid approach, acting as both wholesalers and retailers.

Wholesale and retail are two fundamental pillars of the supply chain, and each comes with its own challenges and benefits. While these business models generally have similar foundations, getting physical goods into the hands of the consumer, they differ significantly. Whether you’re an aspiring entrepreneur or a seasoned business owner, understanding the difference between wholesale and retail can significantly impact your business decisions.

In this article, we’ll explore the key differences between wholesale vs retail, the challenges and benefits each offers, and how businesses can decide which model aligns best with their goals. 

What is wholesale? 

As a consumer, you may have wondered where retail chains like Walmart and Target get all their products. After all, they offer a wide variety of products, ranging from food items to pharmaceutical medicine. They very clearly don’t manufacture everything in-house. 

That’s where wholesalers come in. Wholesalers sell products to other businesses in bulk at a discounted rate. Those businesses then sell those products directly to individual customers at a markup. Wholesalers typically charge less per item than retailers because they sell products in large shipments, which reduces carrying costs and shipping fees.

In general, selling wholesale carries less risk. Selling things in bulk makes moving products easier and means storing them for less time. Wholesalers also don’t have a physical storefront, further lowering overhead costs. This also reduces the need for staffing, which in turn reduces labor costs. 

On the other hand, selling in bulk to retailers can be difficult. A business-to-business (B2B) model requires building relationships, which can take a lot of time. And once you have those relationships, you’ll need to maintain them.  

What is retail?

We mentioned Walmart and Costco above because they are quintessential examples of retailers or a business-to-customer (B2C) model. Retailers purchase products in bulk from wholesalers, mark them up, and sell them to consumers. They play a significant role in the global supply chain because they are the ones who get the products into the hands of the consumer.

Selling retail vs wholesale can be challenging because having a product and being able to sell it are two very different things. Marketing your products to customers ultimately decides whether or not they sell, which can sometimes be expensive. 

Retail also involves more risk because you sell products individually. This means you hold products longer, adding storage costs and opportunity costs. Displaying and selling one product means that they can’t sell another at the same time. 

On average, retail has higher overhead costs. You need a storefront and somewhere to store the products that are not currently on the shelves. You’ll also need staff to handle day-to-day operations and more robust payment processing for things like returns. 

Retail vs wholesale: which is right for you? 

We can’t tell you specifically which model is best for your business. That will depend on a lot of different factors. However, we can give you some things to consider when deciding between wholesale vs retail.

• Product type—A good rule of thumb is that wholesaling works well with essential items, like food or clothing. Consumables, in particular, are great since you know they must be replenished, which means repeat business. However, consumables also often have expiration dates and lot/batch numbers to worry about. 
• Profit margins—Wholesalers will get a lower per-unit profit margin than retailers, but they typically get a higher sales volume. While retailers enjoy higher per-unit profit margins, they also have higher overhead costs. 
• Overhead costs—These expenses are arguably the most important difference between wholesale and retail. Typically retailers will have to worry about more overhead costs than wholesalers, which will eat into their gross profit margins. 
• Customer relationships—While wholesalers don’t deal with the end consumer, they still manage customer relationships. In this case, their customers are the retailers they supply with products. The relationships may be different, but both require work to maintain.
• Marketing and Branding—Depending on whether you sell wholesale or retail, attracting people or businesses to your products will require a different approach. Wholesalers tend to rely on B2B marketing through trade shows and networking events. Retailers, on the other hand, focus on advertising, social media, and sales promotions. 
• Inventory management—Both retailers and wholesalers will need to manage inventory, but the challenges differ. For example, wholesalers will likely need a larger warehouse space, potentially multiple locations, to store large quantities of products. Retailers might not have to store as many products, but they’ll likely have a much more extensive selection of products to manage. 

Wholesale vs retail: why not do both?

Of course, many companies act as both wholesalers and retailers. Take Nike, for example. While it has its own stores, it also sells its products in bulk to other retailers. While the scale on which they do this may be unattainable for most small businesses, it doesn’t mean it’s entirely out of reach.

Many retailers have found success selling their products wholesale online while still offering their goods to the individual consumer. This hybrid business model provides the benefits of selling wholesale and retail. You’ll be able to have the peace of mind that large wholesaler shipments provide but also benefit from the high per-product profit margins that retailers enjoy. However, you’ll also need to manage the challenges of both business models. 

For example, you’ll need to account for different pricing schemes for your products based on which customer you’re selling them to. You’ll also need to track your inventory across multiple sales channels to ensure you’re not overselling. Thankfully, our software inFlow can do all that and a whole lot more, such as barcodes and real-time inventory tracking.

Ultimately, when deciding between wholesale vs retail, you’ll need to consider the products you carry, what problems they solve, and your business goals.

The post How to Choose Between Wholesale vs Retail for Your Growing Business appeared first on inFlow Inventory.

• Small businesses can create barcodes in Excel using a barcode font such as Code 39 to avoid additional software costs.
• Barcodes enhance operational efficiency in many ways, like tracking inventory, organizing shelves, labeling documents, and managing pallets or containers. 
•  Implementing barcodes doesn’t require technical know-how and has minimal to no start-up costs. 
• Barcodes reduce human error, speed up processes, and improve customer satisfaction.
• While creating barcodes in Excel is a budget-friendly solution, it has limitations compared to specialized software like inFlow, which offers advanced barcoding and inventory management features.

It’s no secret around here how much we love barcodes. Few things provide the same amount of value and function when it comes to managing inventory. In addition to tracking product flow, barcodes are great for a myriad of other applications. For instance, you can use them for asset tracking, barcoding shelves, documents, and warehouse pallets or containers.

If you’re having an inventory-related issue, barcodes may help alleviate it. Small businesses, however, may find implementing them daunting. They require some know-how and a bit of extra hardware, but the truth is that just about anyone can implement barcodes at little to no additional cost.

For example, many small businesses create barcodes in Excel when they’re just starting out. You read that right– Excel. Today, we’ll be going over how to create barcodes in Excel and why it might make sense for your business. 

Why are barcodes so important? 

First things first, though: why? If we haven’t made that abundantly clear by now, the answer is simple: barcodes are incredibly useful.

For example, you can place a barcode on a warehouse shelf and code it to carry information for every product on that shelf. This can help employees locate products more quickly and increase customer satisfaction by reducing customer lead time. 

You can also use QR codes on documents to quickly link to valuable resources and information. This could significantly increase the efficiency of your shipping and receiving process, saving your employees time.

Another popular use case is LPN barcodes. These barcodes are placed on pallets, shipping containers, and other warehouse moveables and are integral to managing inventory in large, busy warehouses.    

In short, barcodes have many different uses. Their use cases are really only limited by your imagination. 

How barcodes in Excel work

Not all barcodes are the same. For example, a QR code is a type of barcode, but it’s distinctly different from the black-and-white stripes you see in stores. We refer to different barcode formats as barcode symbologies. Some of these symbologies are easily accessible through barcode fonts, and these fonts are how you create barcodes in Excel.

It’s as simple as installing your barcode font and then typing it in Excel like any other font. From there, you can create barcodes using alphanumeric characters. 

Why create barcodes in Excel?

Strange as it may sound, there’s a few reasons to create barcodes in Excel. For starters, it’s fairly easy and accessible to just about anyone. Businesses tend to use Excel for one thing or another, so it’s really just expanding its use case.

Investing in a new system or software is going to cost money. There’s no way around it. However, if you create barcodes in Excel, software you’ve already bought and paid for, you save on purchasing something new. This means you can start to get the benefits of barcodes at no added costs to your business.   

How to generate barcodes in Excel

First, you’ll need Excel (duh).

Next, you’ll need a barcode font. For this guide, we’ll use the Code 39 barcode font. This font initially only had 39 characters, hence the name. However, it has since expanded to contain up to 43 individual characters and is widely used for internal inventory management. We created our own free Code 39 barcode font, which you can download below. 

<div style="text-align: center;"><div style="text-align: center; display: inline-flex; flex-direction: column;"><a class="inflow-button" href="https://www.getdrip.com/forms/381769907/submissions/new" data-drip-show-form="381769907">Get the inFlow Code 39 font</a><span class="disclaimer">You are minutes away from typing out barcodes</span></div></div>

Installing and using the barcode font

Once you’ve downloaded the font, you’ll find two TTF files: machine-readable and human-and-machine-readable. If you want the characters to appear below the barcode when you type it out, you’ll want to download the human-and-machine-readable. Otherwise, you can download the machine-readable version.

Installing and using the barcode fonts works like any other font. Once installed, you simply select the font from the list of available fonts, and like magic, your keystrokes will now generate barcodes.

One thing to keep in mind when generating barcodes is that for a scanner to read them, you’ll need to start and end each code with an asterisk (*). These symbols are a way of telling the scanner when to start and stop reading the code. So, for example, if you want to create a barcode for M32D67G, you would need to type *M32D67G*.

Setting up your barcode generator in Excel 

Now that we have our barcode font ready, it’s time to create a spreadsheet in Excel that will act as our barcode generator. We’ll only need two columns: columns A and B. We’ll use column A to type in the characters of our barcode, and column B will be the cell that will generate the barcodes. The setup process looks like this:

1. Start by formatting column A so that it leaves numbers as plain text rather than equations or scientific notation. To do this, right-click column A and select “Format Cells”.
2. When the context menu appears, select the “Number” tab.
3. In the “Category” column, select “Number” and click “OK”.
4. To automate the process of putting asterisks on both sides of our text, we can enter the following formula into column B: =”*”&A1&”*”
5. Once you input the formula, apply it to the entire column. You can do this by selecting the relevant cell and then dragging down from the bottom right of said cell.
6. To finish your barcode generator, select column B and change the font for the entire column to the barcode font you installed.   

Important: We assume you’re also using columns A and B, but you can use any of them. You’ll need to adjust the formula, but that’s simple. For C1, replace A1 in the formula, F4 for F4, and so on. 

Creating your barcodes in Excel

Now that you have the spreadsheet set up, things are pretty simple. Whatever you type in column A should appear in column B as a barcode. And since we set the formula in column B to include the asterisks, we don’t need to worry about those in our codes.  

And that’s it! Now, you have a barcode generator in Excel. What codes you use for your products is really up to you. You may want to use random numbers and letters or build in some sort of naming convention. The important thing is that you connect those codes to your products in whatever system you’re using to track your inventory.    

What to do after you’ve generated your barcodes

Generating barcodes in Excel is great, but now what? Once you have your barcodes ready, you can print them out and attach them to your inventory. There are several options when it comes to barcode label printers, but if money is an issue, a standard office printer would work just fine.

The same goes for barcode scanners. While there are a number of options depending on your use case, the camera on a smartphone can also function as a barcode scanner. How the scanner functions will depend on which software you use with your barcodes. For example, if your inventory sheet is in Excel, a scanner could populate cells simply by scanning a barcode.

You can use the same function to search for a barcode in your Excel sheet. Just hit Ctrl + F to bring up the find menu and scan your barcode. It should populate into the text line, and from there, you can quickly look up the inventory connected to that barcode. 

How inFlow’s built-in barcoding system can help

Now that you know how to create barcodes in Excel, you can start to use them in your business. Keep in mind, though, that this isn’t a perfect solution. It gets the job done, but there are some inherent limits to using Excel as a barcode generator. 

It’s also worth mentioning that if you’re using Excel to generate barcodes, you’re also using it to track your inventory. While Excel is certainly an option for managing your inventory, when it comes to getting the most out of barcodes, it falls short.

Software solutions like inFlow offer inventory management with built-in barcoding functionality. Our software allows you to create detailed product listings that include all the information about your inventory, including pictures. We enable you to generate barcodes for your products and design custom barcode labels with our built-in label designer.

With inFlow, you get more than just a barcode generator. You get a full-fledged inventory management system at an affordable price.

The post How to Generate Barcodes in Excel for Inventory Management appeared first on inFlow Inventory.

• 3PL vs 4PL: refer to 3rd and 4th party logistics, respectively. 
• These logistical models involve handing off logistic operations (packaging, shipping, storage, etc) to external parties. 
• 4PL is the next “step up” from 3PL and involves handing over almost the entirety of supply chain control. 
• 4PL providers act more as coordinators and usually don’t own any of their equipment. 
• As a rule of thumb, 3PL is best when experiencing sudden rapid growth, and 4PL is best when approaching enterprise level. 
• While 4PL is more expensive than 3PL and involves giving up a lot of control, the service is much more comprehensive. 
• Sometimes, it’s better to keep things in-house, and business software offers a solution to achieve this. 

These days, it’s rare for businesses to operate entirely independently. Even retailers that operate primarily online need to coordinate with payment processing companies, shipping carriers, suppliers, and so on. These vital tasks are expensive, time-consuming, and require specialized equipment, training, and personnel. 

This is why so many businesses outsource these tasks and instead focus on their core operations. A manufacturer, for example, may outsource shipping and logistics to focus on its manufacturing process. That’s part of why we’re seeing a growing demand for 3PL logistics (third-party logistics) and 4PL logistics (fourth-party logistics) companies. 

Today, we’ll be discussing both 3PLs and 4PLs. As a business owner, how do you decide between 3PL vs 4PL? What are the benefits of each, and what are the major differences between the two?  

What is 3PL? 

We’ve talked about 3PLs in depth here before, but here’s a quick refresher. In business, “logistics” refers to how a company handles and allocates resources. Translated, it relates to how they package, ship, source, and store their products. A third-party logistics provider aims to take care of these things for a business. In short, 3PL providers handle order fulfillment. 

For example, an ecommerce shop may use a 3PL company to store their products in warehouses. When they receive an order online, the 3PL is in charge of picking, packing, and shipping the product to the customer on behalf of the ecommerce shop. 

What about 4PL? 

Unsurprisingly, there are quite a few similarities between 4PL vs 3PL. However, they differ in two significant areas: scope and scale. You can think of 4PLs as being one step up from 3PL. Instead of handling just a few things, a 4PL provider coordinates practically the entire supply chain. 

For example, a 3PL may only handle warehousing, picking, packing, and shipping orders. On the other hand, a 4PL company would do that, as well as handle supplier relationships, last-mile logistics, and coordinate between various separate 3PL companies.  

Another important distinction is that 4PL providers generally don’t own their own assets. This differs from 3PL providers, who usually own everything (vehicles, forklifts, etc.). 4PLs act more as coordinators across the supply chain. 

Why use 4PL? Or 3PL? 

Different parts of business operations require different skill sets, which means you’ll need to hire new staff. For example, a mechanical engineer would likely make a terrible inventory manager. They’re good at designing and building things, not managing a busy warehouse.

Not only will you need to hire new staff, but you’ll also need to consider warehousing space and assets such as forklifts, pallet movers, and wrapping machines. For many small businesses, it’s simply easier to use a 3PL or 4PL that already has the infrastructure to handle these tasks.

Generally, small to medium-sized businesses can manage fine using a single 3PL. On the other hand, more extensive operations may consider 4PL logistics. This is especially true if you have to coordinate between multiple 3PL companies for your fulfillment. Fostering these relationships can sometimes be difficult, especially as your business grows. A 4PL logistics company will manage these relationships on your behalf, eliminating headaches down the road. 

What are the benefits of 4PL logistics? 

The biggest advantage of using 4PL vs 3PL is that it offers a more comprehensive end-to-end solution. In general, there are quite a few advantages to consolidating as many business operations into a single place as possible. 

This is a large part of why integrations in business software are so important. After all, manually migrating data between platforms is a massive waste of time. Because 4PL companies handle so much of the supply chain, they have a much easier time comprehending information and coordinating efforts based on that information. 

Another often overlooked benefit of working with a 4PL provider is that they provide you with a network of suppliers. Because they work with such a broad range of vendors, they can help you find better prices.

The bottom line is that it’s often easier for businesses to outsource some of their work, especially at the beginning of their lifespan. Initially, you should focus on building your business at its core and let the professionals handle the logistics. Once you start to see some success, consider investing the time and money into bringing more of your operation in-house, ultimately improving your gross profit margin.  

Downsides of 4PL vs 3PL

Of course, despite all the benefits a 4PL offers, it has downsides. The biggest downside of 4PL vs 3PL is cost. 

While using a 4PL logistics provider may be cheaper than handling everything in-house, it’s still more expensive than 3PL services. It’s often worth the price, but it can be prohibitive nonetheless. 

Another downside is the lack of control. There’s no two ways about it: using a 4PL logistics provider means giving up a lot of control. They control where your product goes, whose hands it goes through, and how it ends up at its destination. That’s a lot of control to give up, and it certainly takes a lot of faith to surrender that control to an outsider. 

This also means that switching 4PL providers can be daunting. Ideally, you’ll never need to switch, but sometimes, things happen. It’s best to take the time to find a quality, reliable provider. 

When should you start using 3PL vs 4PL?

As a rule of thumb, it’s a good idea to start looking into a 3PL when you experience rapid growth and can no longer manage fulfillment alone. This could be due to a higher volume of orders or a lack of necessary storage space; often, it’s both. Handing off fulfillment to someone else allows you to focus on maintaining the growth you’re experiencing.  

4PL, on the other hand, is a bit more tricky. Their job is effectively managing the entire supply chain, and not every business needs that. A good rule of thumb here is to look into 4PL when approaching the enterprise level. Doing so beforehand makes the cost much more relevant, and often, it’s better to have a closer connection to the supply chain. 

For many businesses, the downsides of 3PLs and 4PLs are too significant to overcome, so they try to keep everything in-house. Doing everything yourself may seem daunting—and it often is—but sometimes, it’s worth the trouble. 

That’s where software solutions for different business areas, such as warehousing, customer relationship management, and shipping, come into play. Tools like inFlow can help you manage inventory, invoicing, and shipping in one place. With inFlow, you can manage your inventory and order fulfillment in-house for longer without resorting to a 3PL or 4PL.  

Are there any other options?

Of course! There’s other “tiers”, such as 1PL, 2PL, and 5PL. First-party logistics, though, actually refers to handling everything in-house. There are no other parties involved, hence “first-party.”

Second-party logistics refers to a business that transports goods from one location to another. This differs from 3PL logistics, which handles packaging, warehousing, and shipping. 

It’s perfectly possible to take different pieces of logistical models and meld them together. For example, you can use 2PL and hire a 3PL to manage them. It doesn’t offer as robust a network or solution, but it gets you most of the way there. And it’s usually much cheaper. 

When deciding between 3PL vs 4PL, it’s important not to rush into things. Ideally, you’ll work with them for quite some time, so make sure you find a reliable partner. 

The post How to Decide Between 3PL vs 4PL For Your Growing Business appeared first on inFlow Inventory.

• Automated inventory management systems use barcodes, real-time updates, reorder points, and integrations to reduce human error and increase speed.
• The benefits of automated inventory tracking include improved workflow efficiency, fewer errors, and improved demand forecasting.
• Key features in automated inventory management software include barcodes, perpetual inventory tracking, integrations, reporting, and reorder point notifications.
• Implementation involves identifying business needs, setting up automation like barcodes and integrations, and calculating reorder points.
• Automation will save businesses money through reduced labor requirements, faster workflows, and minimized errors.

AI and automation seem to be all anyone talks about these days, and as it turns out, there’s a pretty good reason for that. It’s hard to ignore the value AI and automation bring. These key features can help businesses through process automation, predictive analysis, and automated inventory management.   

So, today, we’ll focus on automated inventory tracking, including its benefits and what to look for when implementing an automated inventory management system. 

What is an automated inventory management system? 

Inventory management, in theory, is pretty simple: track products and assets as they move through your business. In practice, though, it’s much more complex. You’ll need to juggle many moving pieces, like sales orders, purchase orders, stock levels, price, inventory movement across multiple locations and sublocations, and so on.

Manually tracking these things is possible but usually inadvisable. Human error is a constant, and we are especially susceptible to mistakes when performing repetitive, menial tasks. Automated inventory management seeks to remedy this by using software to minimize the need for human input. Automated inventory management software achieves this through various means ranging from barcodes to automated reorder notifications.

Unlike humans, computers are great at handling repetitive tasks. They can also integrate with other systems, making them ideal tools for many different applications. 

What are the benefits of automated inventory tracking?

Automated inventory management has two main benefits: speeding up workflow and reducing human error. This is where barcodes shine. Scanning a barcode is much easier and faster than manual data entry, not to mention much more accurate. While barcodes may not be the most exciting automation available, they arguably bring the most value.

Scanning barcodes may only save you a few minutes here and there, but that time will add up quickly. Not to mention, barcodes work in a very binary way; they either scan or they don’t. Unlike manual data entry, where it’s easy for someone to make a mistake.

Automated inventory tracking is also a great way to protect your business from the unexpected. Inventory management software like inFlow has built-in reorder points, which means when your stock levels dip below a specific level, the system will send an automated notification to let you know it’s time to order more. 

Another incredible benefit is the data that inventory tracking yields. Automated inventory management software tracks sales as they happen, providing a comprehensive log of when they occur. Collecting this data will improve a business’s demand forecasting in the long term. These forecasts help guide business decisions and can also help identify cost-saving measures.

Key features for automated inventory software

Not every automated inventory management software functions the same, but unsurprisingly, they tend to operate on the same principles. In the same vein, there are some must-have features that any automated inventory management system should have (some of them we’ve already touched on).

Barcodes 

We’ve mentioned barcodes a couple of times already, and that’s because much of automated inventory tracking hinges on them. When an employee scans a barcode, the machine matches it to the relevant product within the barcoding software. This simple function allows you to automate several tasks, such as picking, stock adjustments, cycle counts, and more. Without barcodes, the efficacy of automated inventory management decreases drastically. 

Real-time tracking

Real-time tracking means that inventory information updates whenever a change occurs. Accurate assessment is crucial when making business decisions; real-time tracking always provides an accurate picture. This is particularly useful when your business operates from multiple locations. When you take something from one location, all other locations will be automatically updated. 

Integrations

These days, businesses often rely on multiple different software solutions to perform various tasks. For example, you might use inFlow for automated inventory management and QuickBooks Online to handle accounting and other financial information. It’s important that these systems can talk to one another, which requires a robust list of integrations.

For instance, inFlow integrates with QuickBooks Online, which automates two-way payment sync. This allows you to push payments from inFlow to QuickBooks Online and pull payments from QuickBooks Online to inFlow—no more double data entry.  

Reporting

Inventory management software stores quite a bit of data. It collects sales information like quantity, date of sale, price, and so on. This data is super helpful, but organizing and analyzing it in a meaningful way can be tricky. Thankfully, automated inventory management software will handle the grunt work for you. As a result, all you need to do is click a button to generate various reports easily. 

Reorder point notifications

Inventory drives revenue—without inventory, there can be no purchases. That means you’ll need to stay on top of your inventory levels to avoid potential stockouts. Reorder points are a great way of automating this process. They ensure you maintain the perfect balance of stock to prevent both stockouts and carrying excess inventory.

How to implement an automated inventory system

If you’re looking to implement your own automated inventory management, it’s important to remember that your needs are unique. Even businesses operating in the same sector or niche may have different procedures. For that reason, we can’t offer a perfect guide to finding a solution, but we can provide some general steps. 

First, identify your business needs. Are you looking to improve the accuracy of your stock level records? Are you trying to reduce inventory shrinkage, or is there something else entirely? Your business needs will ultimately decide the ideal solution, so it’s important to know what exactly you need while looking. 

Once you find an automated inventory management solution with all the features you want, you’ll need to set up your automation. This step is easily the most time-consuming but is a one-time process. Once you’re set-up, you should be good to go for a while. 

If you plan to use barcodes, you must generate, print, and label all your inventory. To use reorder points, you’ll need to calculate them for each of your products. If you’re interested in integrating your various software solutions, you’ll need to go through the process of connecting your software solutions. 

Does it save money for small businesses?

Short answer: yes.

While automated inventory management software often has a recurring cost in the form of a subscription, it still saves money in the long run. This is mainly because it dramatically reduces the need for staffing. Labor is expensive, and reducing workforce requirements while allocating it elsewhere is a tremendous boon. 

This is without taking into account additional costs incurred by human error. Human error can be exorbitantly costly, and avoiding it as much as possible is yet another reason to favor automated inventory tracking. 

The post Avoid Costly Mistakes with Automated Inventory Management Software appeared first on inFlow Inventory.

• Price anchoring is a business strategy that sets a price “anchor” as a reference point for consumers to make prices seem more attractive. 
• Anchor pricing is one of many modern marketing tactics that take advantage of human psychology. 
• Humans prefer a reference point to make decisions; by giving consumers something to build their frame of reference with, businesses can influence their buying decisions. 
• Businesses should be careful how they implement price anchoring. 
• Often used in tandem with other strategies such as decoy pricing, comparative pricing, and bundle pricing. 

Regardless of what product you sell, deciding on a selling price is crucial. After all, the right price can make or break a sale. If you set your prices too low, you risk leaving money on the table, but if you set them too high, you risk scaring off potential customers. Thankfully, there are some tricks of the trade that many retailers use to give themselves an edge. 

One of those tricks is price anchoring, one of many tactics that capitalize on human psychology. Today, we’ll discuss price anchoring, how it works, and its role in modern business. 

What is price anchoring?

Price anchoring is a marketing technique that businesses use to drive sales and influence customer decision-making. It does this by providing customers with a price point (“anchor”) that they can reference when making a purchase decision.

The technique itself is relatively simple. You’ve almost certainly seen an example recently and probably never even realized it. Think of the last time you were in a store and saw a heavily discounted item. You see a big sale sign with the original price prominently showcased above with a slash through it. It turns out that’s technically price anchoring! The higher, undiscounted price is the “anchor.” 

The lower price seems like a good deal when you compare the two side-by-side. Even if the product was never intended to be sold at the original price. That’s what price anchoring seeks to take advantage of– and studies indicate it works. Businesses use this technique regularly in retail, real estate, luxury products, and especially ecommerce.

What is the price anchoring effect?

It may seem strange that we mentioned psychology above, but it’s actually part of a growing trend. Understanding how consumers (your potential customers!) think is a crucial component of effective marketing, and it falls squarely within the purview of psychology. 

It’s important to note that “cheap” and “expensive” are all relative. For example, if a vital tool costs $1,000, it’s still cheap if the next best option is $5,000. Smartphones can provide a more relatable answer. 

Even within their different SKUs (iPhone 15, Galaxy S24, etc.), there are variations. They might have different storage or connectivity capabilities or even processors—like Samsung’s Exynos variants. Regardless, consumers typically buy whatever they think is the best value. But best value according to what?

Generally, they look at other products adjacent to the one they’re interested in. So whatever phone they select is likely one of many. Let’s say that a full-feature phone costs $1000, and there’s another $500 version of that phone with 80% of the features. 

Most consumers will purchase the $500 model. Because in their mind, if they purchase the $1000 model, they’re paying double the price for only 20% more features. By comparison, paying $500 for 80% of those features is a really good deal! Or at least, that’s what they’ll think– and that’s the price anchoring effect in action.

Even if consumers don’t sit down to figure out the exact numbers, they almost certainly follow a similar thought process. The human mind needs a frame of reference to analyze something properly. You can steer them towards a specific option by providing a reference point. That’s the fundamental goal of anchor pricing. 

Tips for effective price anchoring

While price anchoring is effective, it’s not foolproof. Should you choose to implement it as part of your overall pricing strategy, here are some things to remember: 

• Start with a higher anchor price—If you intend to get the most out of price anchoring, choose the right anchor price. While it may be tempting to immediately price something at your desired markup, charging a bit more will make your price anchor much more attractive to the consumer.
• Ensure your anchor price is realistic—Your anchor price shouldn’t be exorbitant. Instead, it should be relatively in line with your competitors’. Customers won’t see as much value in the anchor price if they perceive it as overpriced.  
• Present your price anchor proudly—Next, ensure the price difference is noticeable. Most ecommerce sites, for example, use strikethroughs. It’s obvious, simple, and tells potential customers exactly what’s going on– and what sort of deal they’re getting.
• Create a sense of urgency—This is pretty simple to implement, as it can be as easy as including “while supplies last.” This takes advantage of another psychological phenomenon, fear of missing out (FOMO).

Common pitfalls to avoid

When implementing price anchoring, there are some things you should steer clear of. First and foremost, it’s essential that your price anchoring doesn’t seem manipulative. While it’s true that good marketing does aim to manipulate consumers to a certain degree, there’s a fine line between right and wrong. Trust is an important part of doing business– if customers don’t trust your word, they won’t buy from you. 

It’s also crucial that price anchoring makes sense for the product. Some products exist in a vacuum; sometimes, the strategy simply doesn’t make sense. 

Lastly, try to avoid overusing price anchoring. While an effective strategy, it often relies on a sense of urgency and scarcity. If you overuse price anchoring, you may find it will have the opposite effect. 

Complementary strategies

Price anchoring is just one of many relatively new business strategies that stems from human psychology. Many of them operate similarly to price anchoring and, as a result, have complementary effects. Here’s a short list of a few you should consider using; whether on their own or alongside price anchoring. 

Decoy pricing

This concept refers to when a business presents an inferior option to drive sales to the target. Returning to the phone example above, let’s say there’s a third option: $400 for a phone with only 40% of the features. Most consumers will likely view the $500 phone as a better deal despite its higher price.  

Bundle pricing

As the name suggests, bundle pricing involves offering discounts for purchasing multiple items together. It’s a common strategy for selling multiple products at once and works well with price anchoring. This tactic is also a great way to eliminate slower-moving items in your inventory, which will help you reduce dead stock. 

Comparative pricing

This particular pricing practice involves comparing your competitor’s pricing and setting your prices accordingly. This strategy may take a different shape depending on the business’s needs. For example, a new company may purposefully price its product lower than competitors to gain market share. 

How does inFlow fit in? 

Price anchoring may initially seem complicated, but it’s actually relatively simple. Unfortunately, implementing it and maintaining it can be difficult. 

The good news is that software like inFlow can help. Our inventory management software lets you set up different pricing tiers for the same product, such as Standard, Premium, and Discounted. We have great sales and invoicing features, and our reporting and analytics make it easy to check the performance of specific pricing initiatives. Our software even allows you to create and manage product bundles, just in case you want to add bundle pricing along with anchor pricing. 

So, if you want to implement anchor pricing successfully in your business, inFlow is here to help.

The post The Benefits of Price Anchoring for Your Small Business appeared first on inFlow Inventory.

• You can create a barcode using a free UPC barcode generator, but it will not be genuine.
• Universal Product Code, or UPC, refers to barcode symbology used in North America and other parts of the world.
• A UPC barcode is encoded with a Global Trade Item Number (GTIN) through a not-for-profit organization known as GS1.
• GS1 is the sole provider of globally accepted UPC barcodes. 
• Most retailers, like Amazon and Walmart, require a product to have an active GTIN encoded into the UPC. 
• It’s best to avoid UPC barcode resellers to avoid potential legal issues.

Since the explosion of ecommerce in the past decade, products have been getting into the consumer’s hands in record time. Anything we could ask for is just a few clicks away from being at our doorstep within 24 hours. Many contributors make that possible, but a major one is barcodes. They streamline the entire supply chain by making inventory management quick, easy, and more accurate. Despite their importance, however, figuring out how to actually obtain them can be confusing– and a bit headache-inducing. 

Today, we’ll be going over what Universal Product Code (UPC) barcodes are, why they’re so crucial for modern businesses, and other things, such as whether or not you can use a free UPC barcode generator. 

Why are barcodes so important?

The average consumer only regularly sees one use of barcodes: to tally up their total at checkout. And while that’s undoubtedly one of their primary use cases, they offer much more behind the scenes.

Barcodes are great for tracking inventory levels, keeping an eye on asset usage, and you can utilize LPN barcodes to enhance your warehouse management. You can even use barcodes on shelves and documents. The possibilities are endless. However, because they keep track of sales, they’re also an essential part of accounting. 

They’re not quite a necessity– some businesses that primarily offer services, for example, may not need them. However, most common services like electrical and plumbing often need to track their components and equipment internally. 

In short, they’re a critical component of running a modern business. There’s a reason practically every business under the sun uses them– things are just more difficult and time-consuming without them. 

UPC barcode definition

For starters, lets go over what is a UPC barcode. A UPC barcode refers to a specific barcode symbology businesses in North America and many other parts of the world use on their products. You’ve almost certainly seen one of these barcodes somewhere; they’re on basically every item in every store. These barcodes are encoded with a Global Trade Item Number (GTIN), registered by GS1 (more on GS1 below).  

Now, if you search “UPC barcode generator,” you’re bound to find a few online barcode generators that are totally free to use. Technically, there’s nothing wrong with using these barcode generators; you’ll undoubtedly get a UPC barcode from them. However, the barcodes they produce won’t be authentic. This means they won’t be registered with GS1 or recognized globally by other organizations.  

Most popular retailers require products to have officially registered UPC barcodes for their products to ensure their authenticity. Even online retailers like Amazon and Walmart require them for products to be listed on their sites.

Who is GS1?

Now, you’re probably wondering: Who is GS1, and why do they matter? GS1 is an essential figure in the business world—it is the only official global provider of UPC barcodes. That might seem strange, considering that most markets try to avoid monopolies, but GS1 is a not-for-profit organization, and they’re not doing this to line their own pockets. They aim to bring standardized systems worldwide. Of course, barcodes are a significant part of that. 

Nowadays, the global supply chain involves hundreds of different countries. Imagine if every country developed its own barcodes independently of one another. This would make it incredibly difficult to maintain the supply chain and make collaboration nearly impossible. The role of GS1 is to ensure that everyone is on the same page regarding processes, including barcodes.

Do free online UPC barcode generators work?

Plenty of tools online claim to be free online UPC barcode generators. However, the reality is that the UPC barcodes generated by these tools lack the most critical component that makes UPCs valuable, and that’s the GTIN.

If you use an online UPC barcode generator, your barcodes will work fine within your barcoding software, but that’s about it. If you’re just generating barcodes for in-house use, then there’s no real problem with that. However, if you want Amazon, Walmart, and other large retailers to recognize them, you need to go through GS1. 

Where to find an authentic UPC barcode generator?

There’s a few different ways to get your hands on authentic UPC barcodes. The easiest, most obvious way is to order them straight from GS1. When you purchase from GS1, you have two options: buy them individually or license them under a company prefix. Depending on how many barcodes you license, both the initial and annual fees will vary. For 1-10, there’s a $250 initial fee and $50 annual. 1-100 is $750 and $150 respectively. To 1,000, it’s $2500 and $500. The prices continue to increase at both 10,000 barcodes and 100,000 barcodes. 

Licensing under a company prefix has benefits, most of which apply to businesses operating in multiple locations and/or countries.

Alternatively, you can use a UPC barcode generator from authorized partners. inFlow’s GTIN barcode shop is the easiest way to purchase retailer-ready UPC barcodes. Just enter your product and company information, and head to check out—no renewals– just a one-time $30 fee per barcode.

What about UPC resellers?

It’s best to avoid UPC resellers for several reasons. First, they may be illegally selling you something they do not own. The only UPC barcodes that can be legally resold are those created before the 2002 lawsuit.

In 2002, the Uniform Code Council, or UCC, who would later become GS1, lost a class action suit. As a result, the owners of any barcodes before 2002 can legally sell them. And to be clear, there’s a ton of them out there. However, they don’t count as an active license, meaning retailers like Amazon and Walmart won’t accept them. 

And then there’s also the illegal part of things. If the barcode doesn’t fall into that category, it’s a registered business asset belonging to someone else. That means it’s something they can’t legally sell you, and you can’t legally use it either. 

Getting all UPCs directly from GS1 or authorized partners like us is the best option. While there is a small initial investment, it will save you massive headaches down the road.

The bottom line is that GS1 is the only true UPC barcode generator.

The post Understanding UPC Barcode Generators and How They Work appeared first on inFlow Inventory.

• Construction procurement is a strategic process focused on long-term goals like supplier/vendor relationship management and involves sourcing materials and specialized labor.
• Procurement in construction is crucial because projects rely on a steady supply of labor and materials. Effective construction procurement will help businesses manage fluctuating costs supplier shortages, and avoid delays.
• Smaller construction companies often face resource constraints, including limited cash flow and smaller procurement teams, which can hinder their ability to secure reliable suppliers.
• Key procurement steps include identifying needs, evaluating suppliers, requesting quotes, negotiating terms, and issuing purchase orders while maintaining clear documentation like requisitions and contracts.
• Some best practices for efficient procurement in construction include building strong supplier relationships, leveraging accurate demand forecasts, and using specialized inventory and procurement software.
• The procurement process involves suppliers (raw materials), vendors (finished products/services), contractors (skilled labor), and project stakeholders (clients), all of whom play distinct roles in project success.

Few industries operate on the scale of construction. Part of that has to do with the physical size of their projects, as well as how broad the construction industry is. However, another part of it has to do with construction procurement or how construction companies obtain the necessary components to do business. 

Today we’ll be going over construction procurement, how it differs from regular purchases, and what it means for construction businesses of all sizes. 

Procurement in construction vs purchasing: what’s the difference?

It’s easy to mistake procurement and purchasing for being one and the same. After all, the two practically share definitions. However, the differences between construction procurement and purchasing are important. 

One significant difference between purchasing and procurement is the goal. Usually, businesses purchase something to solve an immediate problem, such as a lack of inventory. It can also be a problem unrelated to sales, such as emergency repairs for the warehouse or offices. 

Procurement is a more strategic process. It generally has more to do with long-term goals, such as selecting suppliers and managing relationships with those suppliers. Effectively managing these relationships will require someone with a specific skill set and experience in procurement. 

However, procurement in construction extends beyond just materials and can also involve sourcing specialized labor. We’ll go into more detail on this below.  

Why is construction procurement important?

Construction businesses rely on maintaining a steady supply of both labor and materials to deliver projects on time. Procurement is a crucial piece of maintaining a consistent workflow. This is due to a few factors. 

Construction projects are naturally large-scale, expensive endeavors. For example, the average cost to build a house in my area is $320,000 to $600,000. Not only are they expensive, but they also take time to complete. Building a relatively small project, like a house, can take weeks, months, or even years. What does this mean for construction procurement?

First and foremost, construction material costs fluctuate regularly, and considering that construction projects require so many materials, even slight price differences can lead to hundreds or thousands of dollars. And because of the extended timeframes, construction projects are often susceptible to multiple fluctuations. 

Another common issue is supplier shortages. Construction requires a broad range of materials, many of which are both high demand and subject to seasonal market shifts. Sourcing these materials is detrimental to finishing on schedule. However, finding multiple reliable suppliers can be difficult and will take time. 

Poor inventory management is another common mistake that can be disastrous. An inadequate tracking system means you have the potential to run out of a key component at a critical moment. In the worst-case scenario, this could throw off the timeframe for the entire project.

Lastly, logistical inefficiencies can have a cascading effect. Shipping delays and other complications are common. If every shipment is a day late, that adds up to a lot of lost working time. 

Unique challenges faced by small businesses

In 2023, the U.S. Small Business Administration reported 33.3 million small businesses in the US, making up 99.9% of all US businesses. There are challenges to maintaining any business, but the construction industry poses unique ones for smaller businesses.

For one, they tend to operate with fewer resources at their disposal. This can include materials, tools, workforce, and storage space. And, of course, there are reduced cash flows to consider. When you operate with a smaller safety net, it can be easy to fall into the red zone and incur losses. 

Smaller organizations also tend to have smaller teams dedicated to construction procurement. This might not seem like a big deal, but finding suppliers takes time. Having more staff dedicated to finding them is often worth the extra cost, but not every company can afford it. 

What does the construction procurement process look like?

Depending on the project, procurement in construction may follow different steps. Some materials may require special permits or labor, and those introduce additional bullet points. Generally, though, you can expect the process to look something like this. 

• Identify needs – Before purchasing anything, it’s essential to determine what the project requires. In construction procurement, this often means figuring out the necessary material quantities, but it also refers to sourcing different types of contractors. There’s a lot that goes into constructing a building, after all. 
• Write purchase requisition – Once the numbers are final, it’s time to write a purchase requisition. Some small businesses may be tempted to skip this step, but keeping a paper trail is important. It often becomes necessary somewhere else in the process. 
• Evaluate suppliers – Many suppliers offer similar goods, but they may differ in price, as well as other aspects like quality. There are also reliability and lead times to consider. Even if one supplier looks like the perfect partner, it’s best to shortlist a few. 
• Request quotes – Next, it’s time to make contact. Get in touch, and ask for a quote regarding the on-hand project. As we said above, it’s best to contact more than one. Some vendors may be unavailable, or limited in how much they can offer. 
• Negotiate terms and write a contract – Afterwards, you’ll need to negotiate a price. Even if the vendor states one price, they may be able to offer better deals for bulk purchases. A contract is also vital to protect both parties and maintain a paper trail.
• Issue purchase orders and manage purchases – Once all relevant parties agree, it’s time to purchase! Once it arrives, that’s it– it’s your responsibility now. You’ll need to store it and maintain the supply on your own. 

Construction procurement best practices

Keep in mind that a large part of construction procurement is managing relations. A supplier’s prices may increase, or they could find themselves in a shortage, but these things happen. It doesn’t mean you should cut ties and find a new supplier. Shortages and price increases often affect many suppliers, after all. 

It’s also important to develop accurate demand forecasts. Procuring too many materials eats into profits, and procuring too few can halt progress. Accurate forecasting helps prevent this. 

Managing inventory is another integral piece of the process. There are various types of inventory to consider, and losing track of materials can be catastrophic. Some construction materials may also require special storage. For example, some raw goods are more susceptible to humidity and require careful consideration. 

Lastly, it’s crucial to leverage the right tools. In today’s digital age, that often means using software. Accounting software can keep your books up to date, and field management software, like inFlow, will help you track purchases and inventory levels. inFlow even integrates with accounting software like QuickBooks Online and Xero, eliminating a lot of double data entry.

Who are the key players in construction procurement? 

We’ve referenced a few parties involved in the construction procurement process, but having a clear idea of roles is never a bad thing. For instance, “supplier” and “vendor” are often used interchangeably, but there’s some important nuance between the two. 

• Supplier – Generally speaking, a supplier handles raw materials, such as concrete, lumber, and so on. They usually deal in huge quantities and leave the construction companies to handle the rest. 
• Vendor –  On the other hand, vendors usually sell a finished product or offer a specific service. For example, they may sell wooden furnishings like cabinets or offer advanced electrical work. 
• Contractors – These individuals will make up most of the workforce. They’re usually skilled laborers like carpenters, roofers, or electricians. Making a structure habitable requires many niche skills; you’ll often need to find external parties that hold those skills.
• Project stakeholders –  Although these parties aren’t necessarily part of the construction procurement process, they’re essential to the ecosystem. They’re usually the ones seeking businesses to do work. In other words, they’re your clients. 

Wrapping up

And there you have it! A lot goes into construction procurement, and it’s important to remember that project needs will differ. One may require special permits, hard-to-source materials, specialized labor, and so on. Identifying those needs and adapting to them on the go plays a huge role in success.

The post A Small Businesses Guide to Procurement in Construction appeared first on inFlow Inventory.

• Microsoft Dynamics Great Plains (GP) is an enterprise resource planning (ERP) solution and will be discontinued after September 2029. It provides a variety of business needs, such as warehouse management, financials, and so on. With Microsoft Dynamics Great Plains sunsetting, businesses must plan their transition to new systems.
• GP will not receive any further updates or support after September 2029. However, it will receive security updates until April of 2031. 
• Using GP after discontinuation is not recommended, and businesses should look for alternatives. 
• Businesses using Microsoft Dynamics Great Plains should plan ahead and seek alternative solutions. 
• Microsoft offers a transition program to help users migrate from GP to their new cloud-based version, Dynamics 365.

In September of this year (2024), Microsoft announced the Microsoft Dynamics Great Plains sunsetting. While this doesn’t mean much to the average consumer, it has businesses worldwide looking for new solutions– and worrying about their futures. It’s also worth noting that this is somewhat of a trend, considering QuickBooks Commerce did the same last year. 

So, what does this mean for current users of the Great Plains software? How long until they need to find something new? And, perhaps most importantly, what does this mean for the future? 

What is Microsoft Dynamics Great Plains? 

Microsoft is synonymous with Windows and the 365 suite of applications, but that’s far from the only thing they offer. They also provide business-oriented software solutions, and Dynamics Great Plains (GP) just so happens to be one of them. 

It’s an enterprise resource planning (ERP) program developed with small to medium-sized businesses in mind. It provides business intelligence, warehouse management, service management, and other platforms like human resources and customer relationship management (CRM). 

While Microsoft ships it as an all-inclusive platform, critics point to its complexity and many different plugins. Some features also require extra payment to access. 

However, it’s a robust piece of software that many businesses still use today. This means many businesses will be left looking for alternatives now that it’s been announced that Microsoft Dynamics Great Plains will be discontinued. 

Microsoft Dynamics Great Plains sunsetting: what does it mean? 

Headlines like “Microsoft Dynamics Great Plains discontinued” have left many users wondering what’s next. What exactly does it mean now that Microsoft Dynamics Great Plains is sunsetting? 

In the software industry, sunsetting something means intentionally discontinuing or removing it while informing users in advance. Generally speaking, from the time of announcement to discontinuation, the relevant software will receive little to no support or updates. 

In this case, Dynamics GP will cease support and operations on September 30th, 2029. However, it will continue to receive security updates until April of 2031. 

Why is Microsoft Dynamics Great Plains sunsetting? 

There’s a lot of reasons that the Microsoft Dynamics Great Plains sunsetting is taking place, but a lot of it boils down to two reasons. 

First, technology, in general, is seeing a shift towards cloud-based solutions. This is because the demand for cloud solutions continues to increase. In 2023, the US cloud market was valued at a staggering 602.3 billion USD. Experts predict it to grow at a CAGR of 21.2% from 2024 to 2030.

This increase in demand is primarily due to the power of cloud computing. Running systems on the cloud lowers the demand for on-site hardware, which is notoriously expensive. Generally speaking, cloud systems are also accessible by any device that can access the internet. 

Nowadays, everyone has a small computer in their pocket, which further lowers the need for specialized hardware. It also allows employees to access important systems through unconventional means in a pinch. 

The second reason, perhaps unsurprisingly, has to do with money. There’s two facets to this. First, Microsoft is already developing a cloud-based successor to Dynamics GP: Dynamics 365. It doesn’t make sense to continue the upkeep of two of the same products– especially when they’re competing with the other. And at the end of the day, cloud solutions are the future, so it makes sense to cut Dynamics GP from the catalog. 

It’s also worth noting that the shift from Dynamics GP to 365 represents a change in business model. While a Dynamics GP license is a single expenditure, Dynamics 365 works on a subscription model. This aligns with the growing emergence of SaaS companies throughout the business world.  

Will I need a new ERP when Microsoft Dynamics Great Plains is discontinued? 

Technically, no. But effectively, yes. 

An important part of maintaining software involves releasing security updates and live support for existing users. We can’t overstate the importance of these security updates. Not only do they keep customer and employee data safe, but they’re also crucial to remaining within regulations. 

It doesn’t mean regulators will come knocking on your door the moment the security updates end, but it is something to be wary of. 

The lack of support is another thing to keep in mind. If something goes wrong, you’re on your own. There’s no one to help fix whatever error occurs. In the worst-case scenarios, you may be unable to migrate your business data or lose it entirely. And that can be catastrophic. 

Where do Dynamics GP users go from here? 

The most obvious path forward for Microsoft Dynamic Great Plains users is migrating to Dynamics 365. This is mainly because Microsoft offers a migration program designed to ease the burden of transitioning from GP to 365. They also offer a no-cost assessment program that helps users understand the steps they need to take to transition to the cloud. 

Of course, another option is finding a new solution entirely. It may make sense from Microsoft’s perspective for customers to just switch to their new cloud-based system. But this sunset has left many users unhappy with the company for discontinuing Microsoft Dynamic Great Plains, a software they paid for.

Now that Microsoft Dynamic Great Plains is discontinued, many businesses have an opportunity to reassess their business needs. And while GP is a robust platform, not every business needs all its features. In these cases, switching to multiple smaller solutions may make more sense. Like inFlow’s warehouse management software and QuickBooks Online, for example. 

While it may seem counterintuitive to purchase two software solutions rather than just one, the reality is that buying custom software for specific solutions will always yield the best results. Also, it’s worth noting that inFlow’s warehouse management software integrates with various software solutions, including QuickBooks Online, which will eliminate a lot of double data entry.  

What does this mean for businesses today? 

In the short term, Microsoft Dynamics Great Plains sunsetting won’t have any real effect. It will continue to receive support and updates until 2029, after all. But that doesn’t mean current users should sit on their hands, either. 

Five years may seem like a long time, but it’s hardly any in the grand scheme of things. Not only that, businesses these days record and store a lot of information. Migrating all that data takes time. 

Every business has unique needs; finding a suitable platform can take some experimenting. It’s best to plan ahead and demo as many solutions as possible. Chances are there might be something new on the market that wasn’t available when your company first started using Microsoft Dynamics Great Plains.

The post The End of an Era: Microsoft Dynamics Great Plains Discontinued by 2029 appeared first on inFlow Inventory.