24 Jan
Every business that offers products to consumers must stock up on inventory. Inventory is defined by the goods and materials that a business has on hand for the purpose of selling them to customers for profit. A successful business is one that understands how inventory can be a company’s most important asset and has a strong handle on inventory management.
What is inventory management?
Inventory management is defined by the actions taken to track the lifecycle of stock from the moment of purchase to the sale of an item. The goal of every business, no matter its size, is to have the right amount of inventory at the right time. This requires having a visible record of what is in stock in order to know exactly when to restock.
Inventory management is a critical element of the supply chain. It involves tracking products across suppliers, storing stock on hand, and selling inventory to customers. The process includes the management of raw materials, components, and finished products. It also incorporates warehousing and processing of items.
How does inventory management work?
Successful inventory management requires inventory visibility. This involves knowing exactly what stock to order, when to order it, how much of it to order, and where to store it. The basic steps of inventory management are purchasing inventory, storing inventory, and profiting from inventory.
Purchasing inventory. This is the first step in the inventory management process. Businesses purchase their ready-to-sell goods from their suppliers. The items are then delivered either to the warehouse of the company, or to its stores for direct sale. Once received in-store, the goods are put out on display for customers to browse and buy.
Storing inventory. As mentioned, inventory isn’t always delivered directly to the point of sale. In many cases, it is kept on hand in a warehouse and stored there until it is needed. When required for stocking the shelves, the goods are transported to the necessary shops for sale to the public.
Profiting from inventory. Naturally, this is the end goal for any business that sells goods and materials. Ideally, of course, a company will not order more inventory than it is capable of selling. The amount of product that is put out for sale is controlled. Finished goods are pulled to fulfill orders and those products are either sold directly or shipped to customers.
What are the benefits of successful inventory management?
There are several benefits to managing your inventory successfully. They include smart inventory tracking, accurate order management, valuable reporting and analytics and shipping automation.
Inventory tracking. By always knowing where stock is along the supply chain, it helps for businesses to steadily have goods on hand to meet the demands of their customers. As well, it helps for stores to not run out of stock and leave customers disappointed.
Order management. A company that is fully aware of how much stock it has on hand makes life easy for its customers. It is able to easily track orders and process returns.
Reporting and analytics. The best way to have a strong command of what to order, how much to order and when to order it is by way of the data a company accumulates. Strong inventory management involves reviewing patterns to help forecast future demand.
Shipping automation. This helps to reduce errors with the packages that are delivered to customers. There are e-commerce platforms that provide businesses with full control of their inventory. When managed effectively, it changes the way a business operates.
