The Importance of Inventory Management
Inventory management is a critical business function for any business that sells a product, whether they’re a local mom and pop shop or an international franchise. Whether a business handles their inventory management in-house or relies on a trusted fulfillment partner, they understand that their success is dependent on having the right inventory available for the right customers at the right time — and that’s just what good inventory management does.
When handled properly, solid inventory management can catapult your business toward success.
Through proper inventory management, your business can:
- Maximize cash flow
- Maintain your reputation and competitive advantage
- Improve scalability
- Improve efficiencies
- Minimize storage costs
- Avoid dead or spoiled stock
Sounds great, right?
It’s important to remember, though, that this key component to your business is impressively complex, featuring a wide variety of moving parts that must all work seamlessly together in order to reap the benefits listed above. To truly take control of the process, it will require:
- Multiple departments (including a dedicated supply chain team)
- Reliable, trained staff for each department
- Sufficient warehouse space
- Accurate forecasting
- Efficient ordering
- Competitive pricing and market analysis
- Consistent auditing
- Proper equipment and software
- And much more
Inventory Management Challenges
The problem that many businesses face is that even though inventory management is key to profitability and growth, it can be difficult to get right with in-house resources — especially for businesses who aren’t experts in this area.
It’s also important to remember that mistakes in inventory management can have significant effects on your business. For example, let’s take a look at one of the most important aspects of inventory management: forecasting.
When it comes time to order new products, your business must determine how much of each item they’ll need for the next month. Based on the analysis of sales, customer behavior, and market trends, you’ll determine a number that you’re comfortable with and place the order.
If this number is off in either direction, however, you could face challenges that cause your business to stumble. After all, having too much product on hand can lead to dead stock that must be discounted or thrown away (and that means lost revenue), and having too little product can result in unsatisfied customers and missed business opportunities.
Another Option: Outsourcing Inventory Management
While there are endless tools and processes that can make the process easier and more accurate, including sophisticated software and best-practices, many businesses choose to outsource portions of their supply chain to trusted inventory management experts, like fulfillment partners and 3PLs.
The goal of fulfillment partners is to simplify your supply chain and bolster your success by offering services like:
- Inventory storage
- Installation (if necessary)
- Training and maintenance (if necessary)
- Inventory and shipment tracking
- And more
Fulfillment partners take much of the weight of inventory management off your team’s shoulders, allowing you to focus on your core competencies and grow your business. After all, since you’re the expert in your products, your time and attention should be dedicated to improving forecasting, analysis, business growth, and customer satisfaction, and a trusted fulfillment partner will give you back the time and money needed to do just that.
Whether you’re a business in the financial industry, an exciting new start up, or an established manufacturer, consider the benefits of outsourcing areas of your inventory management. You might be surprised at just how beneficial the right fulfillment partner could be for your business.