Inventory management is critical to a business’s success since it ensures that there is never too much or too little goods on hand, reducing the danger of stockouts and erroneous records.
Curious to know what inventory management is all about?
Read on to find out everything you should know about inventory management!
You must be wondering what inventory management is, right?
Well, inventory management aids businesses in determining which goods to order and when to order it. It keeps track of merchandise from purchase to sale.
The practise monitors and reacts to trends to guarantee that there is always enough stock to satisfy client orders and that shortages are detected early.
Formulas and analysis are used in several inventory management strategies to plan stock while others would rely on standard operating procedures.
All of the strategies are designed to increase accuracy. Below are 7 inventory management terms that you should know:
1. Safety Stock
If safety stock is emphasised in your inventory management, you will find that you will always have extra stock on hand, in case the company cannot refill certain items.
2. Minimum Order Quantity
To keep costs low, a company that relies on minimum order quantities will order small amounts of inventory from wholesalers with each of their purchases.
3. Lean Manufacturing
This methodology focuses on removing waste or any item from the manufacturing system that does not bring value to the client.
Dropshipping is when the supplier ships items directly from its warehouse to the client.
5. Bulk Shipments
Unpacked supplies that suppliers load straight into ships or trucks are taken into account within this procedure.
It entails purchasing, storing, and delivering inventory in large quantities.
6. FIFO and LIFO
The term “first in, first out” (FIFO) refers to the practise of moving the oldest stock first.
Since prices always escalate, “last in, first out” (LIFO) implies that the recent purchased goods are the most costly and thus sold first.
7. Reorder Point Formula
This method is used by businesses to determine the minimum quantity of stock they should have before restocking and then organize their inventory accordingly.
Now that you know several terms associated with inventory management, we’re pretty sure you would want to know what are some of its importance, right?
We have listed 5 benefits you can check out down below:
It will always be tough to manage your inventory successfully if your warehouse is disorganised.
Several businesses choose to improve their warehouses by grouping higher-selling products in conveniently accessible sections within the warehouse.
This procedure helps to expedite order fulfilment while also ensuring client satisfaction.
Inventory management and control can help improve corporate efficiency and product quality significantly.
It is undeniable that having an effective inventory management system leads to greater success and returning customers.
If you want clients to keep coming back, you must improve the quality of your products in every manner imaginable.
To improve a company’s cash flow, it’s required that you invest in a practical inventory system that is powerful enough to satisfy your needs as well as appropriate for your industry.
Better inventory management and control can help your company construct a cost-benefit analysis in light of current financial market conditions.
Companies can then achieve greater commercial and organisational success with stronger cash flow.
It’s not rocket science: always enhance your service quality so that you can quickly respond to customers’ demands.
Inventory management helps fulfil such demands by allowing you to give proper levels of hands-on service as soon as your clients need it with the desired lead time.
That way, your loyal customers will keep coming back to buy your products and services.
In establishing a business’s competitive strength, elements such as commonalities with values, high factor loadings values, and substantial mean values are taken into account.
These reasons unquestionably highlight the necessity of inventory management and control, which increases market share and competitiveness.
What do you think? Inventory management is really something that you should know about in order to benefit from its importance.
Are you looking for a suitable software tool for that?
Fret not, with over 20 years of industry experience, KAT Solutions can help you with your needs!
KAT Solutions will provide total transparency and security across the supply chain through digital solutions for all clients.
Some of the many benefits that KAT Solutions provide for clients:
It has been proven to significantly reduce stock loss due to leakages and pilferages by up to 95%.
Having real-time and suggestive analytics with a click of a button.
It has been proven to increase sales performance by up to 20% and overall business performance by up to 30%.
It has been proven to increase overall business performance by up to 30%.
The KAT Group of Companies is unmatched in ensuring the most efficient and effective distribution of the products of its principals in the designated markets.
KAT Solutions combines applications technology, strategic planning and the deep knowledge of business processes with the drive of a highly technical professional team.
So book your consultation now with KATSys!