A good inventory tracking system will tell you what merchandise is in stock, what is on order, when it will arrive and what you've sold. With such a system, you can plan purchases intelligently and quickly recognize the fast-moving items you need to reorder and the slow-moving items you should mark down or specially promote.
There are countless inventory management models that are formulated by companies for their own requirements. The key to formulate really good inventory management techniques is to have really good order cost, frequency and amount of ordered material. Many companies have also programmed different inventory software that simplify the process even further.
Here are five suggestions to help entrepreneurs manage their inventory effectively:
Computerize your records. Some businesses still use a manual tracking system when they should he using an electronic system.
The inventory of a business is often defined to be a list of all items that are present in the stock of raw materials. Keeping the inventory also means keeping a tab on the realizable value, market value and the book value of all the stocks, stock in production and finished stock.
No matter what your business, however, excess inventory is something to be avoided. It costs you money in extra overhead, debt service on loans to purchase the excess inventory, additional personal property tax on unsold inventory and increased insurance costs.
Insufficient inventory means lost sales and costly, time-consuming back orders. Running out of raw materials or parts that are crucial to your production process means increased operating costs, too.
Another important component of good inventory management is creation and maintenance of a sensible, effective warehousing design. A well-organized, user-friendly warehouse layout can be of enormous benefit to small business owners, especially if they are involved in processing large volumes of goods and materials.
Automation can dramatically impact all phases of inventory management, including counting and monitoring of inventory items; recording and retrieval of item storage location; recording changes to inventory; and anticipating inventory needs, including inventory handling requirements.
business experts commonly cite inventory management as a vital element that can spell the difference between success and failure in today's keenly competitive business world.
Inventory control systems maintain information about activities within firms that ensure the delivery of products to customers. The subsystems that perform these functions include sales, manufacturing, warehousing, ordering, and receiving.
Inventory management is a collection of interdisciplinary processes that include a full circle from supply chain management to demand forecasting, through inventory control and including reverse logistics.