Only when you really know your current inventory, you can reach out to the markets in the most effective way. Every day, businesses are emerging and this is creating the need and more emphasis on inventory management and strategies. An entrepreneur or warehouse stock controller who doesn’t have accurate knowledge of inventory will cause misalignment of the business’ goals, hence spelling doom to the business. To avert such catastrophes for your business, here are the top four benefits of good inventory management strategies.
What is Inventory Management?
Inventory management is the art of handling all items, materials, and goods possessed by a business at any given time. These goods may include both raw materials and finished products ready for the market. You may consider using inventory management software that will accurately help balance things out for your business. There are also various inventory management strategies you can adopt and apply in your business, some of which include:
- Just-In-Time – This is when materials are received on an as-needed basis and manufacturing is done according to the demands
- ABC Analysis – This is a process that involves dividing an inventory into three categories – ABC – with A being the most important items with the most profits and C being the least.
- Safety Stock Inventory – materials are ordered safely above the required quantities
- Drop-Shipping – This applies when a business doesn’t have its stock but instead, buys from a third party and then ships it to the buyer.
These are just some of the good inventory management techniques that you can adopt in your warehouse. Well, enough said, let’s check out the benefits:
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1. Supply Chain Alignment
A mistake at any of the supply chain “stations” will create a subsequent failure of the whole chain. If you fail to record the accurate liters of milk and other materials for manufacturing yogurt, you risk over or understocking, or delayed manufacturing. It is inexcusable that a supply chain should fail just because you failed to implement an inventory management strategy.
2. Minimizing Wastage
Certain strategies like the Just-In-Time strategy ensure manufacturing is done based on the market demands. This ensures the raw materials match the finished product. In the end, the whole process won’t have any leftovers or overproduction that might lead to wastage. You do not want a scenario where you manufacture more luxury cars than there are drivers. In the long run, this will save on money and other production cost.
3. Proper Warehouse Management
Simple or minute mistakes in the warehouse can lead to catastrophic results. You might be feeling lazy to properly label the contents of the top shelves. In your absence, your lieutenant might take an item off that very shelf and ship it to a buyer. Imagine the anger the buyer will have after receiving a slasher after he ordered the latest lawnmower… Proper inventory management strategies will ensure all rules of the warehouse are followed to the tee.
4. Customer Relationship
Whether it’s drop shipping or the normal purchase, a new mom will most definitely appreciate it when she receives the right baby carrier from your business. Improving customer service starts by implementing proper inventory etiquette which can be as simple as attaching the correct label on that baby stroller. A happy and satisfied customer will go online and spread the word about the fantastic services your business is offering.
These top four benefits should by now convince you to implement various inventory management strategies in your business. It’s not enough that you are in business, you need to take further steps to ensure that you stay in business, otherwise, your competitors will have a field day with you. Bottom line: Don’t overlook the importance of inventory management.
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