Importance of inventory management pdf

As we already established Inventory Management and control allows business to be able to handle all cash flow prospects. Companies are not continuously able to procure large amounts of inventory, as capital remains a significant factor in doing so.

By having proper Inventory Management and control, businesses can recognise precisely what inventory size is needed and when to deploy them. This step can Enhances Market Share and free up other capitals for re-investment. The use of Inventory Management and control can assist in remarkably improving business efficiency and product quality. These benefits of inventory management would aid in eliminating waste, and enhances focus on producing Right First Time or Six Sigma Quality.

It remains a fact that having a good inventory management system leads to better success and repetitive customers. If you desire your hard-earned customers always to keep coming, you have to enhance your product quality in the best ways possible.

Proper Inventory Management and control can Bring in Potential Saving as benefits of inventory management. These benefits of inventory management provide businesses with monetary and real-time benefits. There is a debate within controllers if inventory reduction which leads to reduction of inventory carrying cost, can positively impact the bottom line?

For me the answer is Yes! By monitoring which product bring in more sales and what other potentials they have, your business can save more on every effort with an inventory recount to safeguard accurate records. Good Inventory Management and control strategy also benefits businesses in saving money that could otherwise be lost in slow-moving products.

No one can deny this as top reason to show the importance of inventory management! Often costly interruptions in service in businesses can be averted with proper planning. Deprived of inventory control, companies may be none-the-wiser to such disruption. These benefits of inventory management ultimately improve business profitability.

Showing, the importance of inventories management. Good Inventory Management and control aids in Facilitating Purchase Economies and maintaining steadiness in production operations. This approach is down to the maintenance of smooth flows in accessing raw materials.

Consequently, there are no shortages experienced during the production process — these benefits of inventory management aids in reducing the risk of loss due to desuetude or deterioration of items, hence, highlighting the importance of inventory management. Such checks are placed on items regularly. Additionally, selling all slow-moving items promptly and maintains the right stock all Facilitates Purchase Economies. These benefits of inventory management and control are beneficial and good practice for all business types.

It is always important to keep a watchful eye on your inventory, and it is still best to do it properly. With these benefits attached to proper inventory management and control, you can regularly, identify and avert any potential inventory challenges and errors.

Keep the listed benefits in mind whenever you plan to enhance your business inventory management strategy. Please share if you think I have missed out any benefits to emphasis the importance of inventory management! Nice article to read, thanks for sharing it. I have often wondered at the lack of interest from business who have spent fortunes on the their IT systems and yet their inventory management is far from desirable. What is your experience and recommendation.

I agree with your observation Chris. I am pretty sure in that. I appreciate that you elaborated on business owners developing strategies to better control production and sales.

Like you said, execution of these strategies in inventory planning can help businesses manage its cash flow well. I think that businesses should consider getting a NetSuite Warehouse Management System to optimize day-to-day warehouse processes including returns management or task management for efficient operations. Save my name, email, and website in this browser for the next time I comment. Learn More. I Write. We added some pieces at the end of this article you can check out if you want to learn more about inventory and inventory management software.

We also added in some new features for scannability and easy reading! Effective inventory management affects every aspect of your business—from your warehousing costs to your ability to fulfill orders accurately and on time.

You want to be on top of everything from raw materials to finished goods. Unfortunately, inventory management is a difficult business process to do by hand. It takes time, and if you make a mistake, it could have ripple effects that negatively impact your business for months or years. Good inventory management software is designed to help business owners by automating their inventory tracking, inventory planning , and manufacturing. Inventory management is an overarching term that refers to your tracking system for every phase in the product life cycle.

It can include your sales forecasting, product ordering, supply chain management, warehouse management, and customer fulfillment solutions. Fortunately, inventory management software can help you minimize risk and streamline your costs, which ultimately means a healthier bottom line for your business.

Any inventory management software worth its salt should include basic economic order quantity EOQ calculations. EOQ helps you identify the most cost-efficient method for ordering new products by weighing the costs of storing your products versus the cost of ordering your products —it compares product stock level with cash flow. Inventory management software can do this for you automatically so you can minimize your warehousing fees and save money.

Inventory management software helps minimize this risk because many solutions include forecasting. This inventory management process checks your inventory level and ensures proper inventory management for your business. But using inventory management software to do the math for you is still a heck of a lot more accurate than trying to crunch the numbers yourself.

Inventory management software can also integrate with your point-of-sale POS system to update your stock numbers in real time. Depending on the situation, you may stick around and simply choose another item at the store. Chances are, your customers are the same. And if that happens repeatedly, they may stop coming back to your store altogether.

This helps you sell more in the here and now, but it also helps you secure customer loyalty so you can sell more items in the future. Have you ever tried to buy something only to find that the product you want is out of stock?

Or waited for weeks for a product to arrive? Or opened a package only to discover that the item was damaged or the wrong item altogether? None of these experiences paint your business in the best light, and they can all negatively impact customer loyalty making your customers less likely to choose your product in the future.

But again, inventory management software can help minimize these mistakes and deliver the best possible experience for your customers. Some inventory management solutions also integrate warehouse management. It also helps warehouse employees pull items for customer orders with greater accuracy, so your customer actually gets what they ordered.

Inventory management software may also include logistics features that help you track order fulfillment time. That way, you can give your customers an accurate delivery estimate and avoid falling short of those promises.

If your business runs a brick-and-mortar location, an online store, a pop-up location, and an Etsy store, it can be difficult to make sure every customer order gets processed accurately while also ensuring your physical store locations have enough inventory on hand. Inventory management software makes this process a lot easier. It can integrate with your POS system to track sales and stock across multiple channels—all in one place.

Reducing your order processing time helps you keep the products your customers want on the shelf. Combine that with improved order accuracy and product quality, and you get customer loyalty.

Inventory management software may also include other tools to make your business run even more efficiently. Here are a few examples. We already mentioned that inventory management software often includes warehouse management features, which can help you improve order accuracy. But it may also help you streamline efficiency within your warehouse. Some inventory management tools help you map your warehouse space, factoring in pallet sizes and the cost per square foot of storage space to help you find the most cost-efficient, easy-to-use system.

You may also be able to integrate radio frequency ID RFID or barcode scanning so your inventory management system gets real-time updates on stock levels and inventory movement. All that helps you minimize guesswork and get a more accurate picture of your inventory situation when you need it. But some software can also help you manage inventory storage and stock levels between multiple warehouses or brick-and-mortar locations.

These solutions usually integrate supply chain logistics features, allowing you to order product for all your locations in bulk thereby saving on manufacturing costs while moving products between locations based on need—never losing track of where any item is at any given moment. Finally, inventory management software can integrate with any number of other business processes:.

These processes may work short term, but they are not cost-efficient ways of running a business. If you are serious about competing and consistently generating strong profits, you need to purchase an appropriate inventory management software solution.

The ROI on a great system, like Fishbowl Manufacturing or Fishbowl Warehouse, means it will pay for itself in a few short months and make your life much easier and your business much stronger and healthier.

Inventory management is important to small businesses because it helps them prevent stockouts, manage multiple locations, and ensure accurate recordkeeping. An inventory solution makes these processes easier than trying to do them all manually. To see if your inventory solution is up to the challenge, ask yourself a series of questions listed in this article.

Importance of Inventory Management. Do many individuals touch the inventory from the time it arrives until it is sold? Are the processes and procedures loosely defined and poorly enforced?