Inventory management is the process of organizing the purchase, storage, and sale of stock—whether it’s raw materials, parts, or finished goods—in order to ensure that the correct sort and amount of stock are available without tying up capital. Inventory management, when done correctly, saves money for businesses. Inventory management’s main goal is to guarantee that there are enough items or materials on hand to meet demand without creating surplus or excess inventory.
What Are the Benefits of Inventory Control?
Accurate inventory management is essential for a successful product company. Regular stock tracking can help you avoid stock mistakes and other problems. Some of the benefits of good inventory management are as follows:
- Improved Inventory Accuracy: With good inventory management, you can keep track of what’s in stock and order only what you need to meet demand.
- To avoid overselling, inventory management allows you to keep track of what’s in stock and what’s on backorder.
- Stocks are expensive until they are sold, thus they are a good way to save money. Carrying costs include storage, handling, and shipping charges, as well as insurance and labor compensation. Theft, natural disaster loss, and obsolescence are all threats to inventory.
- Avoiding Stockouts and Carrying Too Much Inventory: Better planning and management can assist a company to reduce the number of days an item is out of stock, if at all, and avoiding carrying too much inventory. In our “Essential Guide to Inventory Control,” we go over how to deal with stockouts.
- Greater Insights: You can immediately notice sales trends or track recalled products or expiry dates with inventory tracking and stock control.
- Better Vendor and Supplier Relationships: Inventory management also provides information on which products sell and in what quantities. Use that knowledge to bargain with suppliers for better rates and terms.
- More Productivity: Effective inventory management saves time that could be spent on other tasks.
- Improved inventory turnover leads to higher earnings as a result of better awareness of both supply and demand.
- A More Organized Warehouse: By grouping items based on demand, which items are frequently sold together, and other factors, a more organized warehouse reduces labor costs and streamlines order fulfillment.
- More Loyal Customers: Customers that receive their orders on time are more loyal.
What Are the Drawbacks of Inventory Control Systems?
Inventory management solutions have the same drawbacks as any other program. Solutions might be costly, difficult to learn, and vulnerable to hacking. Inventory management can make or break a business, and having real-time visibility into your supply is essential for success. Decision-makers can successfully manage their inventories and cut costs with the correct technologies in place.
With the demand planning and distribution requirements planning features, you can establish the proper balance between demand and supply across your entire organization. Check out Fishbowl Inventory to know more.