Why You Should Start Managing Your Inventory Now with Inventory Pro

Author: Inventory Pro

Published On: 2021-10-22

Inventory management saves you money and allows you to fulfill your customers' needs. In other words, it enables successful cost control of operations. Knowing what you have, what is in your warehouse, and how to manage the supply chain properly is the backbone of business. The quantity of product a business has on hand appears on the balance sheet as an asset.

Companies that maintain inventory need to know how much of it they have and how much it is worth. This knowledge about their inventory makes it possible for companies to plan efficiently when it comes to their finances.

Inventory control helps connect the upstream activities of purchasing and manufacturing to the downstream activities of sales and product demand to prevent bottlenecks, speed up processes, identify slow-moving or obsolete items, and even help evaluate suppliers.

·        A high cost of inventory.

·        Consistent stock outs.

·        A low rate of inventory turnover.

·        A high amount of obsolete inventory capital.

 

1.      Benefits of Inventory Management with Inventory Pro

·        Consistently restocking.

·        Having a product in stock is critical for fast turnover.

·        Keeping stock outs low.

·        Ability to assess inventory for relevant demand.

·        Ability to enter-into and clear sell-through contracts with suppliers.

·        Ability to find and assess new suppliers.

·        Ability to track and monitor cost of warehousing.

·        Preventing stock outs.

Inventory management allows the business to produce products only when they are needed. Suppliers never want their products to be purchased if they aren't needed. It can cause the product to be returned to the supplier for additional production or storage, leading to additional costs. Companies that adhere to the schedule for ordering have a lower risk of product being returned for a product that is no longer needed.

2.      The Basics of Inventory Control

There are two main phases of inventory control: inventory availability and inventory turnover. Understanding them is necessary to make sure that your inventory is at peak levels. Inventory availability determines how many days' worth of product your customers have access to.

The most obvious way to gauge inventory levels is by looking at a company's inventory turnover ratio. This number represents the percentage of inventory on hand that's actually spent on sales. It is crucial that a company's inventory turnover ratio is at or above that of its industry competitors. When a company's turnover ratio is high, it means that the company is providing its customers with more product in less time.

3.      What Should You Include in Your Inventory Control System?

An inventory control system is a set of tools that helps a company manage its stock, inventory, and other operations. It must include and integrate tools that store and track inventory, but it can also include information about inventory turnover, orders and their status, supplier information, factory management, and warehouse management. You can apply different systems to inventory management, depending on the complexity and requirements of your business. As a minimum, the system should consist of three main sections.

·        Internal

·        Supplier-related

·        Shipping and receiving

·        Selection, procurement, and quality control

·        These sections define the scope of the system's functionality.

 

3.1  How to Organize Your Stockroom or Storage Area

Organizing stockroom or storage areas is a very important skill to acquire. It can even be a skill that helps save your business some money. With the help of a professional inventory manager, you can conduct a full inventory audit of your stockroom and inventory management system, where your supplies are stored.

3.2  How to Determine Your Inventory Level

Because some parts of the inventory management process require heavy investments in training, labor, and time, a good inventory manager should be able to determine the correct inventory level of your company's stockroom. This means that he or she needs to know how many tools and supplies you have, what is there at what price, what condition they are in, how much you plan to sell them, and what is your expected profit.

3.3  Make Sure

1.      Inventory is easily accessible.

2.      Dispatchers maintain inventory details in a customer-friendly format.

3.      All pertinent inventories are easily accessible.

4.      Inventory processes are documented and available to everyone at all times.

5.      Inventory flows through clearly defined points, all the way from the receiving warehouse to the distribution centers to the customer locations, making it easier for all parties to keep an eye on the inventory.

6.      Tracking the status of product in transit from one location to another improves supply-chain integration.

7.      Inventory management should not cost the company money, while profitability should be consistent throughout the entire supply chain.