Factors Impacting Inventory Management

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Understanding what impacts your inventory management system is crucial, regardless of what type of business you run. These factors can influence your business profitability in ways you might not have considered!

Factors That Affect Inventory Management

Product Availability

Product availability is something to consider when identifying factors that can impact your inventory management. It is an integral part of any production line. Your product is often the sum of many parts from different suppliers. Having reliable suppliers that you can depend will be hugely influential on your inventory management. If a supplier can get you a product on time and produced to your company’s standard, then that is a relationship worth keeping. If external suppliers can’t deliver on time or their quality negatively affects your product, it can backfire on sales and your competitive edge. Likewise, you risk losing customers if a product is not available when customers want it.


As discussed, having a good relationship with your suppliers is imperative to inventory management. If you communicate regularly, you’ll understand suppliers’ lead times and how long they need to maintain product stock. Additionally, it may prove beneficial to have a backup supplier that can help if there is a spike in product demand or unexpected supplier shortages.

Suppliers can also help through supplier-managed inventory. Suppliers provide assistance by accessing the distributor’s inventory data. From this information, the supplier can create purchase orders relevant to the distributor’s needs. This is most effective with distribution intensive companies, as they can use supplier-managed inventory controls to reduce errors with data entry and can promptly administer the purchase orders.

Your Specific Product

Two of the biggest influencing factors with inventory management lie at the root of your product, the type and cost. For instance, a fruit store only sells fresh products. Therefore, the fruit will eventually expire and the product’s shelf life is limited. Perishable goods would require a different inventory management strategy than a hardware store with non-perishable goods.

When looking at stock, it’s necessary to factor in the cost of a product. For expensive stock, it needs to be secured properly and have minimal access to others, whereas inexpensive products can be stored in basic shelf storage. Depending on security needs, some products may be fine in a locked warehouse, where other stock needs a security guard depending on the of company. Additionally, seasonal products can vary in price depending on availability like food that is not in season or clothes that change with the weather patterns. Therefore, you need to be prepared for your costs to change by factoring this into your budget.

These factors can be kept in line through inventory software that supports the management of your business. It is a helpful and easy-to-use tool that allows you to manage factors affecting inventory management. If your business is ready to automate its inventory management, check out this Unleashed Academy video for some helpful tips on how to pick the best inventory management system for your business.

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Melanie - Unleashed Software

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.

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