Inventory Management is the stock file of all the products that the organization has made for sale and the components that make the product. Every organization requires inventory for smooth running of its activities or we can say processes. An inventory is the link between the production and the distribution process. The role of inventory manager is to check the availability of material as and when required the quantity of the inventory and if it’s possible to minimize the investment in inventory.
Need for Inventory Management:
1. Inventory Management contributes critical role in costing of product.
2. It also positively affects the financial reports.
3. It helps in the undisturbed continuous and smooth production of the company.
4. In case of unwanted inventory, two major problems- money blockage and space wastage occurs.
Importance of Inventory Management:
1. Tracking- One of the massive advantages of an inventory management system is increased tracking and transparency. You are easily able to see the products that are moving and those that are selling slowly. You can see if certain inventory sells at certain times of the year. Further, you always know what the inventory worth.
2. No Overstocking or Understocking- Overstocking makes the business run out of cash for day-to-day activities and under stocking affect sales. With inventory management you figure out exactly how much inventory you need to have on-hand.
3. Increased Efficiency and productivity- With a good inventory management strategy, business eliminates manual processes of tracking and managing the products in the warehouse. Employees can therefore focus on other – more important areas of the business.
4. Happy and Repeated Customers- Inventory management helps to meet the right products on-hand as soon as the customers need them. This leads to faster and efficient services which makes the customers happy and demanding more.
Ways for managing inventory:
1. Barcode Scanners- This electronic device is of a great help in inventory management. It can read printed barcodes to a computer. It is designed to locate the items on the order list in the warehouse, it can encode shipping information like tracking numbers and delivery addresses, and it can remove these purchased items from the inventory tally to keep an accurate count of in-stock items.
2. Cloud based Software- A software with real-time sales analytics helps in inventory management. It connects directly to your point of sale, so your stock levels are automatically adjusted every time you make a sale. It can also automatically order stock that is about to finish.
3. First In, First Out (FIFO) - It is an important principle of inventory management. It means that your oldest stock (first-in) gets sold first (first-out), not your newest stock. This avoids dead stock accumulation in the warehouse.
Few key points to inventory management:
1. Make a list of critical items.
2. Find the trustworthy vendor who can provide the items within specific time.
3. Predict the future inventory items for limited period, i.e. for the near future only.
4. Place frequently used items within reach
5. Always keep an eye on threshold level of items.
6. Fix your vendors for specific products.
Conclusion:
According to a report, efficiency in the organization has been up by 20.8%. The bottom line is that inventory control is vital to the survival of the business. It’s a competitive market out there, and without a good handle on inventory, you’ll never be able to win customers.
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