Five Ways Inventory Management Can Help Your Bottom Line


When it comes to supply chain management, inventory management often plays a crucial role in the overall process of increasing profit, accomplishing goals, and optimizing product flow. Whether the setting is retail, warehouse, or distribution, knowing what is for sale, what is out of stock, and what trends are being missed can provide a lot of information to the business and help increase the bottom line. Here are five ways an effective inventory management system can help any organization:

Maximize Buying Opportunities

Storing inventory costs money, and just because prices are low does not mean any product should be purchased as a forward buy. Since a number of factors go into the ordering process, having a system that accounts for truckload requirements, minimal order amount, and storage costs can benefit every business with more than one product to sell.

It’s not a matter of whether to buy or not rather than how much to buy.Having a system that can suggest ordering quantities considering the factors above can have a significant impact to your profit especially for trending or seasonal items.

Eliminate Old Inventory

Inventory that sits on the shelf and expires is a bit of a problem. Somebody has to be watching to make sure that every product is turned over on time, and having a system in place to identify products that are not moving at optimal pace is a major asset.

The key here is knowing what inventory is not moving and should be removed. Your inventory management system should be track your inventory based on the method of purchase so you are not returning inventory that was purchased as a forward buy.

Lead Time Performance

Not having a product on the sales floor or in the warehouse location means nothing moving out the door. Effective inventory management takes lead time variations into account to make sure that every product is ready for a customer at a moment’s notice by eliminating outages.

Identify Trends

When people think of trends, seasonal product cycles generally fly right to the front of the mind; however, trends can present themselves in a variety of subtle ways. Knowing what products are outpacing forecast or dropping below forecast as soon as possible can be the key to accomplishing a goal and heading back to the conference room.

Figuring Out Safety Stocks

Safety stocks sometimes kill a business. If set too low inventory runs the risk of running out on a consistent basis, and if set too high product begins to accumulate for extended periods. Often figuring out the precise safety stock level can be a mathematical nightmare, but a great inventory management system will uncover precise safety levels to perfect product flow and inventory investment.

Inventory management never really starts with the buyers and it never really ends when the products are picked or shipped. The continuous improvement of the system relies on a constant and steady stream of information. Please contact us to learn more.


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