Covering a wide array of techniques, tools and technology, inventory management is the way businesses control and manages the ins and outs of their inventory. It covers everything from the purchase of goods and raw materials and the storage of inventory right through to the production processes and tracking, shipping and sale of the finished goods.
Clearly businesses will utilize whatever aspects of the discipline of inventory management they require. For example, a small brewery may use a relatively simple system to track and sell their products whereas a large manufacturing business will utilize software with functionality that can manage a large and complex supply chain.
Track your stock and products
One of the key abilities of any good inventory management system or platform is the accurate tracking of your parts and products. From the time they are ordered to once they arrive and are then sold, inventory management is the way businesses can have meaningful visibility of all their stock.
Guard against stock-outs
Potentially one of the worst things that can happen to any business is to miss out on sales. Inventory management aims to guard against stock-outs and lost revenue.
Utilizing a range of techniques, inventory management is about having access to, and control of, your whole supply chain.
Insurance against losses
Successfully managing inventory is a constant balancing act between too much and too little stock. Too much stock means precious capital is tied up that could be used elsewhere, whereas too little stock often translates to lost sales.
In this sense, inventory management is an insurance policy against these damaging extremes. With techniques like lean inventory and safety stock automation, businesses are able to build in safeguards against both losses and shortfalls.
Inventory optimization is arguably one of the most highly valued inventory management techniques. While certainly not always an easy thing to get right, optimization is finding the happy middle ground between too much and too little stock.
Many businesses now utilize a variety of tools and techniques to attain inventory optimisation. In this sense, inventory optimization is holding the lowest amount of stock possible relative to demand. Of course, it’s also about knowing you can order what you need and get it at the right time.
Meaningful information about your business
Every business wants to have as much information and data as possible. Whether you’re doing sales forecasting for the coming quarter or figuring out how much safety stock you need for each product, inventory management provides the framework for these tasks.
From spreadsheets to automation
While there are still businesses that use manual spreadsheets to track and account for their inventory, many inventory management software solutions now provide ample scope for automation. This is particularly helpful for manufacturers but just as useful for any business as safety stock levels can be set for each individual item in the supply chain, orders can be automated and inventory optimization techniques better harnessed.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. When not writing about inventory management, you can find her eating her way through Auckland.