The benefits of efficient inventory management are numerous. From basic inventory reduction and lower holding costs, to more effective process and manufacturing activities. Controlling inventory is essential to business.
Accurate inventory management is important for maintaining stock control, and provides information that assists with improved supply scheduling. Getting the balance right can free up working capital and aid in the growth of your business.
Integrating the whole supply-chain from raw material ordering, production, packaging and distribution provides a holistic view of operations. This allows you to identify and eliminate areas of activity that provide no value-add; helping to decrease waste through stock rotation and minimising the cost of having out-of-date, lost or damaged stock.
As a major asset on your balance sheet, it is crucial to know and understand the true value of inventory.
An inventory management system, that accurately records and allocates costs at each stage, will improve your accounting and profit reporting. All associated expenditure that’s not accurately captured is a loss to your business, and any part of the supply chain that’s not adding value, is costing you money.
Consider the many elements associated with inventory management and the benefits of accurate information. Knowing exact quantities of raw material, components and finished goods, either onhand or warehoused, will reduce production bottlenecks and labour-lost time.
Customer service is improved by effective inventory management. Having a clear picture of what stock you are holding will assist the sales team by providing accurate quantities of available goods.
Reorder processing is much quicker and straightforward if you can trust the accuracy of your inventory. This also helps to prevent overstocking, and will improve the efficiency of sales order processing and tracking. From quantities ordered and cost-per-unit, through to freight tracking and invoicing.
Stocktakes are easier when stock levels are maintained. Providing early identification of possible stock-outs, back orders and subsequent loss of sales.
Manual handling activities of inventory management can be labour intensive. It is, however, very important for the physical movement of goods in the warehouse or store to accurately match the recorded count of stock movement.
Inventory that has been signed into store but still sitting in the warehouse can affect accuracy. Likewise goods dispatched and not yet invoiced – both activities should happen at the same time.
Occasionally questions arise from customers or suppliers with regards to inward or outward goods discrepancies. Resolution can be quickly and successfully improved when you have accurate inventory records.
Whatever your industry, inventory management needs to meet the needs of your business model, markets and customer base. Optimising inventory accuracy will guard against stock outs, reduce holding and lost sales costs and minimise downtime when products, parts or components are not available.
Accurate inventory management saves time and money. It enhances potential value at all points of the supply chain, improves customer service and can be a source of competitive advantage to any business.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.