6 Advantages of Inventory Management
Inventory management is what goes on behind the curtain of any successful business. It is the art and science of balancing supply and demand within a business – of managing the supply chain so that you always have the right amount of product to make a profit. You may know you need inventory management, but do you know the importance of inventory reports? Here are six benefits of inventory management control that are too important to ignore.
Save Money
Perhaps the most important advantage of inventory management is saving a company money.
Inventory is often the largest asset a company has. Inventory is also expensive to purchase, putting a company in the red until it sells those products for a profit.
If a company doesn’t manage to sell its inventory, it “eats” the cost of whatever is left – plus the costs of storage and handling.
Ordering too much inventory can lead to major losses.
Major overstock can even put a fledgling company out of business. Inventory management allows a company to avoid this risk, ordering just enough to meet consumer demand – no more, no less.
Satisfy Customers
An important byproduct of good inventory management is a great customer experience.
Customers shop at a business with the assumption that it will have items it advertises in stock. When they hear that they have to backorder items, many customers would rather switch suppliers than wait for new stock to come in.
Failing to fulfill customer demands loses business and gives your company a bad reputation.
Consistently running out of stock can lead to permanent customer losses and eventually an unprofitable business. Inventory management keeps a record of customer demand and turns this information into smart, efficient ordering.
Keep Your Warehouse Organized
A disorganized warehouse is inefficient, wasting company time and money.
Poor inventory management strategy can lead to harmful miscommunications and loss of productivity, ultimately hurting your business.
Proper inventory management supports an organized warehouse, with carefully tracked inventory and supply chain movement.
For example, storing your highest-selling products together and easily accessible can help you speed up order fulfillment, keeping your high-paying customers happy.
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Save Time
Inventory management involves accurate record keeping, often using specialized software and hardware.
Inventory management devices, such as mobile phones with barcode scanners, along with an integrated data storage and analysis system like Acumatica, can make your entire inventory operation more efficient. Integrated inventory management helps speed up supply chain management and, as a result, enhances productivity, eliminating tedious and time-consuming manual processes.
Integrated Inventory management tools automate workflow tasks and allow your employees to focus on other, more important, areas of their role within the business.
Keeping track of your products in real time also saves you the time it takes to recount stock or check for record accuracy.
Improve Cash Flow
Quality inventory management allows businesses to spend with the greater goals in mind.
When you achieve effective inventory management, you do not have to spend large amounts of money purchasing huge quantities of inventory at a time. Instead, you spend what you have to on the exact amount of inventory that’s ideal for your operations. This way, you save on the price of large capital balances, handling, and storage costs.
Smart inventory management therefore improves your cash flow, eliminating the need to spend large chunks of the budget all at once.
Improved cash flow means more business stability and money to spend elsewhere, such as payroll or new product development.
Maintain Optimal Inventory Levels
Good inventory management is all about striking a balance between input and output.
Finding and maintaining this balance is critical to the health and profitability of your business. Overstock can sap your company’s resources, spending money to store goods that you aren’t selling. Stockouts can disappoint customers and lose business.
Maintaining the ideal amount of stock and inventory requires walking a delicate line – a feat that’s possible with the right inventory management solutions.
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