10 Goals of Good Inventory Management
What are the goals of good inventory management? Inventory management helps businesses be successful.1 That is as much of an understatement as saying the sun’s surface is warm. Of course inventory management is a crucial part of any business’ success! There is no denying that fact. After all, it is how you obtain the goods you need to fulfill orders and keep your customers happy.
With smart inventory management, your business will enjoy many benefits. The following are the top 10 positive results of good inventory management:
1. Inventory Balance
Good inventory management helps you figure out exactly how much inventory you need. This makes it easier to prevent product shortages and keep just enough inventory on hand without having too much. As a result, you will have two main benefits. First, your carrying costs will go down. Second, you can plan ahead for seasonal changes in demand. So you will always have an excellent inventory balance.
2. Inventory Turnover
You need to keep a high inventory turnover ratio. Why? Because it ensures your products aren’t spoiling, becoming obsolete, or sucking up your working capital. Calculate how many times your inventory sells in a year. Then you can see where you can make better use of your resources. For example, you may discover slow-selling goods. On the other hand, you can find which products customers often purchase together. That helps with warehouse organization, but we’ll get to that a little later.
3. Repeat Customers
Good inventory management leads to what every business owner wants – repeat customers. You want your hard-earned customers to keep coming back to your business to satisfy their needs. One way to do this is to make sure you have what they’re looking for every time they come. If your customers go away happy, they’re more likely to return. Thus, the way you manage inventory drives your business forward.
4. Accurate Planning
Using smart inventory management, you can stay ahead of the demand curve, keep the right number of products on hand, and plan ahead for seasonal changes. This goes back to keeping your customers happy all year long. Instead of ending up with too many winter items in spring, you can make smart changes. Relying on good inventory management leads to better forecasting and other positive results.
5. Warehouse Organization
When you know which products are your top sellers and what combinations of products your customers often order together, you can optimize your warehouse setup. By putting those products close together and in easily accessible places. This speeds up the picking, packing, and shipping processes of your finished goods. With the aid of barcode scanners for different types of barcodes and batch picks, you can further optimize these warehouse tasks.
6. Employee Efficiency
You can empower your employees to help you manage inventory level or stock level. Training employees to use barcode scanners, supply chain tracking systems, inventory management software, and other tools helps them make better use of their time. Additionally, it helps your business make better use of its resources, both human and technological.
7. Inventory Orders
To do a good job keeping track of how much inventory you have on hand, you need the right tools. Such as the aforementioned barcode scanners, as well as automatic reorder points. After that, you can make smarter decisions about when and what to order. Inventory management software lets you speed up the ordering process. You can simply scan product barcodes and type in some information to place orders and generate purchase orders.
8. Inventory Tracking
If you have multiple locations, then inventory management becomes even more important. That’s because you need to coordinate your supplies at each location. Depending on differences in demand, inventory turn, and other factors, each one might have different inventory needs. So you can easily transfer goods between locations to correct imbalances.
9. Time Savings
Inventory management is a great time-saving tool. By keeping track of all the products you have on hand and on order, you can save yourself the hassle of doing inventory recounts to make sure your records are accurate. Not that all counts represent wasted time. Cycle counts are easy with the right tools. This, once again, requires inventory management software.
10. Cost Cutting
While your inventory is humming along efficiently through your facilities, you can bet you’ll save a lot of money. Inventory management helps you reduce inventory costs and avoid wasting money on slow-moving finished goods. So you can put it to better use in other areas of your business.
To see how your business can enjoy these benefits, sign up for an online demo of Fishbowl. Fishbowl is the No. 1 manufacturing and warehouse management software for QuickBooks.