A Closer Look At Inventory Management
Inventory management refers to the sourcing, storing, and selling of raw materials and finished goods. It may seem simple but having the correct amount of supplies and deciding how much to order can quickly become problematic for sales.
Your company’s specific inventory management needs will depend on the medium through which it sells products as well as the types of products it sells, and the raw materials required to make them. Typical management systems focus on everything from tracking purchases you make from suppliers, maintaining stock, determining how much product you sell (and at what price), and fulfilling orders from customers. The goal of inventory management is to have an accurate amount of stock in the right place, at the right time, for the right price to you and your customers.
Having an inventory management system could enhance your business in numerous ways. It can help run end-to-end production, analyze and adjust lead times, forecast demand, and produce reports that can improve your supply chain processes. It also helps you achieve inventory accuracy.
Inventory accuracy involves more than simply knowing how many materials you have on hand. Without it, you could miss sales and increase carrying costs. Without an accurate inventory, you can’t properly manage order fulfillment, prepare for seasonality, or know when to order more supplies.
This can place a tremendous burden on your sales. Inventory issues are estimated to cost businesses $1.1 trillion every year. This is due to issues such as failures in forecasting, running out of stock, and the expenses associated with overstocking.
Perhaps even more critical, sending a customer the wrong product can harm your company’s reputation. Further, you must take on the additional expense of ensuring shipment of the correct product, as well as the time and expense of replacing the wrongly shipped one. For more information about the importance of a balanced inventory management system, see the accompanying resource.
Beau Christian is Director of Marketing at WSI, a leading third-party logistics provider that specializes in fulfillment, chemical warehousing, transloading, transportation, and more. Having the 17th-largest 3PL network in the United States, spanning more than 15 million square feet, WSI delivers tailored end-to-end supply chain solutions to customers who seek to increase efficiency, shorten lead times, deliver more reliable performance, and minimize costs.
Infographic created by WSI, an eCommerce fulfillment provider.
Brian Farrell is a coach, helping clients achieve their personal and professional goals. He's also the creator of the "QA2 Method". For more about Brian, visit bfarrell.com
