Inventory is perhaps the most crucial aspect of a business model. Inventory is the material, finished goods, or components that a company utilizes in production or sells to consumers. Keeping a close watch on the inventory movement can make or break a business which is why businesspersons emphasize the importance of inventory management.
Online retail brands and eCommerce companies pay special attention to inventory management because when inventory tracking becomes accurate, it helps brands to fulfill all the orders on a timely basis.
Companies wish to grow, attain success, and retain their clientele. How does that happen? Inventory management is one of the keys to success.
In this article, we will highlight the role, importance, and perks of inventory management. There is always scope for learning something new, especially when it is related to your industry. This might just help you become a successful entrepreneur.
The Concept of Inventory Management System
Companies need to identify how much stock needs to be ordered and at what time. The inventory management system helps in tracking the inventory from the time of purchase to the sales of products.
It’s also essential to identify the current trends so that you keep enough stock for customer orders.
Once your products sell, inventory becomes a form of revenue. Before sales, inventory is just tied-up cash.
Keeping too much stock can cost you a lot of money and it also reduces the overall cash flow. You don’t know if it will sell or not. Poor inventory translates to unsold or deadstock.
When inventory management enters the picture, you never run out of stock or end up with a deadstock.
Inventory turnover is an indicator of whether inventory management is good or bad. It’s an accounting metric that showcases how frequently your company’s stock is sold over some time.
Companies do not wish to have more inventory than they can sell. Unsold inventory translates to low inventory turnover which is not favorable for any company.
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The Perks of Inventory Management
There Are Various Benefits Of Effective Inventory Management Such As:
Precise Order Fulfillment
Overstocking can be a headache for most businesses. You do not want to stock up extra stock in the warehouse. It’s time to bid adieu to an overstock of obsolete items or anything that will not sell. You want your brand to stand out in the market and keeping extra stock will only lead to losses and no cash flow. If you wish to avoid high return volumes and inaccurate filled orders, you must rely on inventory management.
Improved Inventory Planning
There should be a balance between demand and supply in any business. When you have effective inventory management, it translates to improved inventory planning. Imagine there is a huge demand for a certain product but you just don’t have enough stock or material. It’s the biggest nightmare for any company! You should have the stock when needed. Effective inventory management will help mitigate these concerns. Warehouse managers can refresh the inventory only if it is required which is both cost-effective and it won’t even take up unnecessary space.
Detailed Inventory Management = An Organized Warehouse
When a warehouse is organized, it is better prepared for both future and present fulfillment plans. You end up saving a lot of costs at the end of the day. When there is an overstock of goods, it ends up taking up extra space in the warehouse. It is best to not overcrowd the warehouse. With inventory management, you will have enough stock to fulfill the orders, but will never have an overstock of products and materials. In a nutshell, the storage costs will decrease when you have inventory management by your side.
In case the warehouse is not managed properly or is ill-planned, it will cause issues and delays in order fulfillment. The problem arises when there is a disorganized inventory or issues with packing and picking. When warehouses use inventory management software, they can improve order accuracy and also fulfill all the orders quickly.
Minimizing Overall Losses
Products that do not sell are just a loss for your business. You have spent money to manufacture or make the objects, but there is a huge loss if you are not able to sell those products. Inventory management software enters the scene and helps minimize the overall risk of having too many items that won’t sell.
The inventory management process analyzes the inventory level and ensures accurate inventory management. The inventory management software has a forecasting feature through which it can track the number of units you have sold and the number of products you will be selling in the future. Inventory control is important in any business which is why the forecasting feature helps you understand how much is needed in the future.
You GET to Sell More Items – Boosting Product Availability
Let’s say you want to buy brown boots as an anniversary gift for your spouse. You head to a store and you expect them to have that item in stock, but you realize there is no stock. What do you do? You might wait for the stock to come soon, or you walk into another store to buy brown boots. That’s because the store was not able to fulfill your order or need at that moment. Most shoppers will walk into another store and find what they need.
It happens to all of us! When we have an urgent need, we go to another store that can fulfill our order at that time.
Your customers are pretty much the same! If you do not have stock of a product, they will go to some other website and purchase what they are looking for. In case it happens time and again, you end up losing the customer because they will have a negative impression that the store always runs out of stock. A single lost sale could mean a major loss – perhaps thousands of dollars. It is important to have the stock ready, especially the items that are in demand.
When you have inventory management software, you will have the right products at the right time. This way, you will be able to meet the demands of the customer. You can sell more and earn more! Isn’t that a better way to do business? You also get loyalty from your customers and they come back to your store thinking they will find what they are looking for. From a business perspective, inventory management is quite effective and much-needed.
The Importance of Inventory Management
Inventory management helps boost product availability. When products are readily available to customers, you gain loyalty.
Most businesses have multiple sales channels too. They run a brick-and-mortar store, an eCommerce store, and a pop-up store. How do they track everything and keep their business afloat? Inventory management will ensure that none of your stores, whether physical or online, ever goes out of stock or does not overstock. Physical stores tend to have extra stock, but for online stores, it is better to track inventory and keep items that are currently trending.
Slow-moving products are a burden to any brand. Let’s say you have a stock of boots, but it’s not even wintering yet, you will end up putting them up on sale and giving them away at half the cost.
Another example is if you overstock summer dresses during the winter season, it will lead to major losses. It will only increase your warehouse costs and might not sell too.
Most businesses plan their sales based on last month’s report, but that’s not how it works. You need to have efficient inventory management software that stays updated and analyses who buys what and how much revenue is generated over some time. This helps you reorder goods that are being sold everywhere and are in demand.
Overall, inventory management is crucial. No matter what you sell and the kind of brand you have, it is important for you to track the buying trends, how much stock is there, and how much is required.
No More Shortages and Gluts – You’ve Got Inventory Management!
If the idea is to make smart business decisions and boost product availability, then inventory management is essential.
To better organize the warehouse, try out Odoo ERP Custom Inventory management System.
With Odoo inventory, you can completely skip data entry because it is integrated with Odoo accounting. This way, the stock movement reaches the books immediately.
It also updates forecast quantities and stock levels automatically based on sales orders as well as quotations.
As a warehouse owner or any business owner, you want the goods to be available when they are required.
Use inventory management software to ensure that you have a better understanding of what needs to be in stock and forecast future orders as well. If there is efficient inventory management, your business will flourish, and it will also improve your relationship with the customers. The loyalty of customers is everything in a business setting, so pay special attention to effective inventory management.