What is inventory management? Why is it so crucial for small and large organizations to have an accurate inventory? Inventory management refers to the sourcing, storing, and selling of materials and products. The definition may sound simple, but the larger you operate, the more complicated it can become.
Your organizations’ inventory management needs will depend on the channels through which it utilizes to sell products along with the raw materials required to create the finished good. Inventory management embraces everything from tracking purchases from suppliers to maintain inventory and determine how much to sell at a specific price. The goal of inventory management is to have accurate inventory levels in the right place, time, and for the best price.
Using an inventory management system could also enhance the management process in a variety of ways. It can help monitor production and analyze lead times. It can also create forecast demand and produce reports that can improve your ROI.
Inventory accuracy involves more than simply knowing how many materials you have throughout the warehouse. Without accuracy, you could misplace materials and have the wrong number of products on hand. This makes it much easier to deliver the wrong products to your customers. Having an imbalanced inventory places a tremendous burden on your bottom line. Inventory issues are estimated to cost businesses $1.1 trillion every year. This could due to several issues such as missing sales, shrinkage, and increase risk in carrying costs. Make sure to consult the resource below to learn more information and tips about balancing your inventory.
Infographic created by WSI, a warehousing and distribution company