Inventory management can be a challenge for all organizations. With effective inventory control, companies can make significant improvements by avoiding wastage, enhancing traceability, and maintaining compliance. In this blog, we will know how we can control inventory and why it is important! So, let us begin!
Why Inventory Control Is Crucial for Business?
Inventory is crucial for all businesses as it is helpful in generating revenue. Therefore, it is especially important to keep inventory safe and secure from theft & misplacement.
According to Compare Camp, “The small thefts combine to losses equal to 5% of annual business revenue while annual inventory loss rates come up to as high as 43% in the US”.
It can be dangerous for business as it can impact daily operations, which impacts productivity when production work is not done on time. It leads to delays in product delivery, and it can lead to customer disappointment. Most importantly, you can lose your customers.
What Are the Issues That Occur When Inventory Is Not Controlled?
Below we have discussed issues that occur when inventory is not controlled:
1. Out-of-Stock Issue
One of the most frequent problems that occur when inventory is not controlled is out-of-stock. Lots of organizations think that they have lots of stock, but they are out of stock.
Out of stock it affects retailers' shelves and benefits the most when it happens as the client is going to buy.
According to the director of Adobe Digital Insights, “With over 2 billion out-of-stock messages last month, consumers are beginning to understand the real impact of the supply chain challenges”. Now imagine how much revenue could be generated if they had stock in hand.
Avoiding stock issues is essential otherwise businesses can lose potential customers. That is why It is particularly important that you invest in inventory management software which is extremely helpful in these types of situations.
It assists in overcoming inventory-related issues and provides complete control over your inventory and lets you know inventory precise numbers in real-time.
Whenever the inventory goes below the defined level, it automatically alerts the person responsible, and the inventory is refilled in no time, and this is how you can easily avoid overstocking issues.
2. Overstocking Issue
The overstocking issue is also one of the biggest issues for inventory management. It means you purchased more inventory and are unable to sell it and now it is becoming surplus stock.
Organizations waste lots of resources by investing too much. Organizations suffer from losses because the profit margin decreases as sales are less in number and products are too much in quantity.
With effective inventory management software, you can mitigate this issue as this software enables you to plan, analyze and calculate the number how much inventory your organization can sell so that planning and purchasing stock can be done accordingly.
Inventory management software provides data history that is also helpful in avoiding overstocking issues.
3. Tracking Trends
The main reason behind inventory management issues occurrence is not having knowledge of the market or misinterpreting trends or data is not accurate.
Most importantly they make decisions based on assumptions not based on accurate numbers. Obviously when data is not accurate than making a decision based on data will be not accurate as well.
Inventory management software provides valuable insights that are helpful in tracking trends and information. This software assists in providing accurate data. It can give your business an extra edge as you can prepare and plan inventory according to the data and information.
It will boost your business. It can be helpful in boosting your business. Analytics enables organizations to make informed decisions and you do not have to rely on assumptions.
4. Inventory Tracking
Lots of organizations do not know where their inventory is located. When inventory is required, then employees waste their time as they have to look and find inventory that is required.
When your objective is to control inventory, keeping track of inventory is crucial. Lots of inventory is wasted as they are not found. Business suffers from loss. Inventory also has a life. After that, it can be wasted. Therefore, keeping track of inventory is particularly important.
Having accurate information on inventory location is significant, and you can achieve this with inventory management software. With the help of inventory tags and inventory management software, you can keep track of each and every inventory.
Furthermore, with this software, you can keep count on inventory in real-time. How much inventory is left or entered the premises of the organization!
If controlling inventory is your objective, then investing in inventory management software is essential for your organization. This software provides several benefits as we have said above.
Along with that, it provides complete visibility of your inventory so that you can utilize inventory. It makes you more efficient and productive. As employees do not have to waste their time looking for inventory.
Furthermore, with this software, you can add, move, or draw inventory from one location to another. Whenever the inventory level goes below the defined level.
It will alert you and you can do this for each item individually. Undoubtedly, when you invest in this software lots of your inventory issues will be sorted once and for all.
Frequently Asked Questions (FAQs)
Q.1 - What Is Inventory Management?
Inventory management is a strategic approach to managing, storing, control & selling inventory efficiently. Moreover, the process of keeping track of inventory and all its related information is equally important. Managing the stock level of inventory is also important. Effective inventory management leads to avoiding unnecessary expenses and reducing overselling risk.
Q.2 - What Are the Distinct Types of Inventory Tracking Techniques?
Since inventories are produced in massive amounts. Barcode technology and QR code technology are cost-effective techniques that are used for inventory tracking. However, several other options are available in the market such as NFC (Near Field Communication), GPS (Global Position System), and BLE (Bluetooth Low Energy). RFID (Radio Frequency Identification), IoT (Internet of Things).
Q.3 - What Are the Inventory Management Techniques That Are Helpful in Business Growth?
Inventory management techniques that are helpful in business growth are given below:
1. Just in time (JIT).
2. Drop shipping.
3. First-in first-out (FIFO) technique.
4. ABC analysis.
5. Set reorder value.