Inventory management is one of the most important factors in the success of a business. There are costs associated with inventory, and unless a business owner can manage these costs, it is unlikely the business will come out on top.
How Does Inventory Management Help with Costs?
Regardless of whether a business is involved in retail or manufacturing, there are certain costs that are associated with inventory. Depending upon the exact nature of the business, some of these inventory costs will be more pronounced than others. Having cash tied up in inventory can be expensive because it’s money that can be used for something else. It is important to not carry any more inventory than is necessary to operate the business. Of course, it is equally important to not be caught short on inventory. When to buy inventory and at what quantities is a part of inventory control, and how a business implements inventory control can be a big factor in when inventory is acquired. There is also the issue of inventory storage costs. Keeping this cost low is a big part of inventory management.
What does inventory management software do?
Inventory management can be difficult when done manually. Good inventory management software can automate much of the inventory control, and this reduces the cost of inventory control. Inventory can be tracked using bar coding, meaning it is simply scanned into the computer when it arrives. For a retail business, inventory software can be integrated with point-of-sale data, so the inventory is taken directly out of stock. For a manufacturer, parts inventory can be taken out of stock and a finished goods inventory can be added to stock. It is easy for a manufacturer to not only know what parts are in inventory or finished goods but also what is in processing.
How does it assist business owners and companies?
By knowing what inventory is on hand and the sales figures for a product, a business owner is able to integrate this data with vender lead times and implement a Just-In-Time inventory system. Once a system is in place and operating well, inventory will arrive approximately at the time it is needed. Not every business uses a JIT inventory system; some business owners determine their inventory purchases by using previous and projected sales figures. A software program can do this analysis and alert a company buyer when an order needs to be placed.
Whether your business is a start-up or has been in business for many years, using inventory control software will reduce your costs and improve your bottom line. If your business is struggling to make a profit, inventory management is a good place to start turning your business into a profitable enterprise.
