For most manufacturing companies, inventory is depended on to operate and fill customer orders. In light of this, making an accurate assessment of inventory sometimes means the difference between a profit and a loss. Below we discuss five important ways inventory management can improve business performance for manufacturers.
Helps with forward planning
Inventory management is a major company asset that helps a company with tasks. Planning is a key task that helps a manufacturer stay within budget. Keeping accurate accounts of inventory helps identify data so that a manufacturer can plan how to service certain customers by knowing what inventory is at hand and when to order new inventory. Planning helps review the inventory data and enables you to get a sense of trends in order to make better informed decisions about inventory reordering. With this in mind a manufacturer has the ability to plan better to inform their strategies. Inventory management is important to key stakeholders and investors that need to see specific plans for manufacturing operations.
Increases customer service and satisfaction
Good inventory management means that when customers enquire about certain items a manufacturer will be able to quickly identify availability. This enables fast response times to queries and in turn customers get a better impression of the business and are less likely to take their custom to competitors. Inventory management that is well organized leads to manufacturers knowing exactly what stock is available to serve customers more efficiently, increasing customer satisfaction.
Take control of your expenses
Sometimes manufacturers can face unnecessary costs due to poor inventory management. For example, if stock needs replenishing immediately manufacturers can face enormous costs to expedite freight. This can be minimized with accurate inventory management that help alleviate errors in the supply chain. Moreover, good inventory management can help show profit margins of specific stock helping manufacturers assess their costs and adjust if necessary.
Measuring your efforts
Sound inventory management helps track sales and measure success. By successful tracking inventory, manufacturers can put goals in place. These goals can be assessed by using inventory management for example, by showing areas where by stock needs marketing attention or alternatively, stock that has high turnover and needs replenishing.
Increase manufacturers’ efficiency
Accurate inventory management can help increase a manufacturer’s overall efficiency. Employees can spend their time on other tasks instead of for example trying to locate one particular piece of stock. As well, warning levels can prompt employees when stock is getting dangerously low. Having automated services, which is a feature of sound inventory management, means less work doing time consuming manual input and more time to focus on other parts of the manufacturing business. This increases efficiency, ultimately impacting on your bottom line.
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.