In order to successfully scale your business, inventory management is vital. An organized inventory will prevent common problems like stock-outs, excess stock, or overselling.
Not to mention save you money. An essential component of every company’s supply chain, Inventory Management supervises the flow of goods, from manufacturers to warehouses and ultimately the point of sale.
Inventory management aims to have the right amount of stock on hand at the right time.
When businesses have too much stock, often referred to as Deadstock, goods sit in storage, and with time become unsellable, negatively affecting the company’s profit margin.
On the other hand, when companies do not have sufficient stock, stockouts occur, leading to missed sales and ultimately a negative customer- experience, increasing the risk of consumers purchasing competitor products.
To avoid these profit-sucking inefficiencies, inventory management is vital. Regardless of the company size or type of product, Inventory Management helps control product flow allowing you to operate efficiently and effectively.
As we mentioned before, for Inventory management to be successful it is crucial that it is present at each node of the product life-cycle, from purchasing to point of sale.
Below are the five nodes of the supply chain where inventory management is present:
Purchasing: The buying of raw materials or ready-to-sell products.
Production: The creation of the final product from raw materials. As not every company manufacturers this step may be irrelevant.
Holding stock: Storing your raw materials before they are manufactured (if required) and your finished goods ahead of selling.
Sales: The transfer of a good from the company to the customer.
Reporting: Inventory Management does not stop with the sale. If you cannot measure it, you cannot improve it. Reporting data is essential to understanding the real cost of inventory and the true value of inventory on hand.
Successful Inventory Management means gaining a competitive advantage in the market. To help you better identify the best Inventory Management approach for your company, we have listed the most popular techniques below.
Just-in-time inventory: Holding as little stock as possible, avoiding high costs and risks.
Bulk Shipments: A strategy used by those looking for initial cost savings per unit.
Dropshipping: Goods are shipped directly from the manufacturer to the end consumer. Eliminating the cost of holding inventory
Cross-docking: Products are delivered to a warehouse where they are unloaded from inbound carriers and directly deposited onto outbound carriers.
Cycle counting: The counting of a small amount of stock is used to provide a quick and accurate analysis of on-hand levels.
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