Inventory Management - A Concise View
Inventory management provides inputs to identify the exact amount of stock you need to order. The inventory is tracked from purchase to sale of goods. After selling inventory becomes revenue, and before being sold it is tied up as cash. If there is too much of a stock it costs money and reduces the flow of cash.
An indicator of quality inventory management is revenue turnover. In an ideal case scenario, a business does not want more stock in comparison to sales. Poor levels of inventory can lead to unsold stock.
The reasons why inventory management is important?
Inventory management is fundamental to the health of a company. It means that there is not too much or too little of a stock at a given point in time. The companies may document the management processes to prove compliance.
Inventory management and its benefits
There are a couple of benefits of inventory management and one of them is that you will be able to view incoming orders and pick up profits. Inventory management improves cash flow as you are spending money on inventory that sells, so cash flow is part of the business.
Figuring out stock trends gives you an idea, indicating the exact amount of stock you need to have in business to use judiciously. At each location, it enables you to keep less stock, warehouse, store as you will be able to pull from anywhere to comply with stock orders. A series of measures will decrease costs on the inventory front and would decrease the amount of stock that would go unsold before it becomes obsolete.
An aspect of developing loyal customers is that they receive what they want, without waiting.
To conclude there are bound to be challenged in inventory management. You could have a lot of inventory and may not be able to sell it. There could be a scenario where you do not have inventory to fulfill orders or do not understand what inventory you have and where it is stored. All these can be avoided with an effective inventory management module.
