Why Inventory Management is Important for Businesses

Every business knows that they need inventory, but the methods in which they manage their largest asset aren’t always as efficient as they need to be. Not only is an efficient and effective inventory management strategy important for taking care of your largest business asset, it also is essential for meeting consumer expectations, managing costs, lowering operating expenses and mitigating loss prevention

Here are some reasons as to why it’s important that a business start focusing on inventory management sooner rather than later:

Managing and meeting customer expectations. 

As a business, customer satisfaction is in the forefront of every operational decision. Meeting and exceeding expectations is the easiest way to foster current customers and generate new leads.

It is nearly impossible to manage a business or communicate accurately with customers if you’re not managing inventory efficiently. Consistent stockout and back-orders will send your customers to other suppliers, while holding too much inventory will be a budgeting nightmare.

Focusing on quick movers and high dollar value items will help you stay in-tune with customers, while a safety stock of certain items with longer leads times and high usage will help to make sure any orders are fulfilled without the wait.

Having an active eye on how fast and when certain items sell creates more consistent data trends. From this accurate forecasts can be developed to create projected sales and costs. Inventory is only an asset if it can and will be sold.

Along with customer demand and quantity, inventory management is used to determine the exact location of a product in the warehouse. This allows for faster picking, less handling, and a shorter delivery time. When inventory is improperly managed it can result in inaccurate orders, slow picking times, and high return volumes.

Cost management and operating expenses.

While customer satisfaction is important, no business can stay alive without managing costs and operating expenses. Efficient picking and handling can be great for shipping times, it also cuts costs by decreasing operational time.

Without a good handle on inventory and how it moves, no business can have a true account of how much capital is actually tied up in their product. Inventory management gives a business insight into what their customers are most interested in purchasing, allowing for the optimization of stock and gives the ability to maximize profits.

If there are some items not selling quickly and taking up space in inventory, it could be a good indication that those items are not in demand and decrease the amount of orders, even dropping them altogether. This could be tracked by the data trends available in an inventory management system.

Without properly managing inventory, items can end up overstocked or worse taking up space in a warehouse until discarded and considered a loss. A strategic inventory management tool can help a business minimize the amount of space needed and the cost of storage.

Why implement inventory management in your business?

Understanding what is in stock, where it is in the warehouse, and when stock will be coming in helps to lower costs by limiting stock issues and speeding up the fulfillment process. This can be implemented through spreadsheets with columns for quantities, product names, item numbers etc but this can be incredibly cumbersome to manage and inaccurate.

Tracking returns and incoming orders is a time-consuming and labour-intensive process for a growing business and human error can happen, throwing off the entire inventory management strategy. Technology can help out with mitigating human error, with a system of barcodes and scanners that tie into a central system but the cost can be overwhelming for some to implement.

Many larger companies that specifically focus on warehousing and logistics already have infrastructure in place from physical warehousing to Inventory Management tools that can be quite costly and technical to set-up.

Consider choosing a warehousing partner that can take some of the stress out of managing inventory. Many can store products, track inventory, and fulfill orders as they come in. CRWS Warehousing and Logistics Solutions has the ability to manage inventory and fulfill orders with a number of flexible solutions available. Contact us today to see how we can help with all of your business needs. 

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