Inventory is typically used to refer to the total amount of goods and commodities in hand. Raw materials or finished goods that are for sale, ready-to-use components for production, or goods that are being created all fall under the category of inventory. Inventory management control exists in many forms and types in different businesses. The three common types of inventory are raw-material inventory, unfinished products, and finished products.

Inventory management control is a methodical technique to acquire, hold and dispose of inventory—both completed goods and raw resources (components).

The proper stock, at the appropriate levels, in the right location, at the right time, and at the right cost are all examples of inventory management in the business world. Moreover, inventory control and inventory planning together make the whole process of inventory management.

The minute one understands the meaning of inventory and its management he/she will always look beyond this simple concept, which arise certain questions.

The questions might look like why inventory management is important. How is inventory management done? What is the purpose of inventory management? A thoughtful brain always strives to find answers to such questions.

Hence without any further delay let’s quickly determine the answers to these questions.

Why is inventory management control important?

The sole purpose of every business is profit maximization. The right allocation of resources assists a business in maximizing profits.

Inventory is one of the most important resources of any business. So, we can say that inventory management is one of the most important factors for any business to come to terms with its purpose.

Inventory management facilitates a business in keeping a check of its incoming and outgoing inventories. Every business needs money for its operational costs. And also the more effectively a company manages its inventory, the more money it may save on operating costs.

In this way inventory management saves a company from overstocking and understocking, as both these phenomena are deadly for businesses. Overstocking locks up the money that a business may have for effective operations. This results in a budget deficit, bounded cashflows, and fewer profit margins.

Understocking affects the operations of a business and is a significant hurdle in supply chain management. It also affects the phenomena of just-in-time (JIT). A company may lose sales if its inventory is low.

For maximum effectiveness and profitability, firms can achieve the ideal balance between under and overstock using an inventory management system. They say that a perfect inventory management system doesn’t exist. Well not quite really. they do. Nvntri is an example of such software. it provides you with almost all the facilities mentioned above.  

Purpose of inventory management control

The main goal of inventory management control is to prevent overstock or excess inventory from occurring while making sure there are enough products or materials to fulfill demand. But ultimately it also serves other purposes such as:

• Effective and efficient management of inventory
• For future forecasting and product reorder
• To evaluate the market worth of the product
• To keep the stock position updated and accurate
• To continue operating efficiently
• To spend money on production

For example, Nvntri is an inventory management software that facilitates best with all of these purposes. So, for further knowledge click Nvntri.

Benefits of inventory management control

One of the main benefits of inventory management control is that it enables businesses to fulfill incoming orders and earn profit. Some other benefits of inventory management control are as follows:

Increased cash flows

With effective inventory management, money is always flowing through the company because it is spent on inventory that customers buy.

Cutting Costs

Understanding stock trends will lead a business to better utilization of stocks they already have, by seeing how much and where they have it in stock. This way a business can fill orders from anywhere, and they may keep less inventory at each location (store, warehouse).

This lowers the cost of holding inventory and reduces the chances of obsolete inventory. Also, it reduces the amount of administrative work, the demand for labor, and even labor costs.

High customer satisfaction

Making sure clients get what they want right away is one way to gain their loyalty.

Maintained production process

It helps to maintain production processes and maintain a steady flow of raw materials. It makes an effort to protect production fluctuations.

Higher Sales

Businesses that actively manage their inventories claim sales growth of 2–10%.

Better Delivery Results

The flow of goods to customers is improved through real-time inventory changes.

Exact Planning

By basing choices on inventory patterns, you can stay one step ahead of the competition and always have the proper number of products in stock.

Reduction in stock-outs

Stock-outs are said to have decreased by 10–25% in companies that carefully manage their inventory.

A higher turnover in inventory management control

By keeping fewer slow-moving items in stock and raising your stock levels to profitable items, you may maximize the value of the products you already have and boost inventory turnover.

Example

Nvntri is an inventory management software that has high customer satisfaction and it is also cost-effective. Not only this but Nvntri also provides exact analytics.

Inventory management process

Inventory management i.e. inventory control and planning is a whole complex process. In inventory management, resources are transported to a warehouse’s receiving area and placed in stock areas or on shelves.

These supplies are often in the form of raw materials or components. In smaller businesses as opposed to larger ones with more physical space, the goods could move straight to the stock area rather than a receiving spot.

In the case of wholesale distributors, the items may be finished products rather than raw materials or components. After that, unfinished goods are taken out of the storage rooms and transported to the production facilities where they are transformed into finished goods.

The final products can either be dispatched directly to clients or returned to the stock areas where they were kept before being shipped.

Inventory management employees utilize lot numbers, serial numbers, cost of goods, the number of goods, and dates to keep track of the products when they go through the process of inventory management.

In the case of wholesale distributors, the items may be finished products rather than raw materials or components.

Elements of inventory management control and process

Following are the five key elements of the inventory planning and control process.

Monitor Your Activities

As a business owner, one should be aware of any changes to its inventory. Everything must be brought to the owner’s attention, from product transfers to inventory losses like damaged items or missing products, so that when the time comes, they are in control rather than being overtaken by inefficiencies.

In addition to those, it is crucial to have comprehensive inventory management reports gathered in one location.

Recording all accessible data is crucial in order to optimize processes. Also, gathering this inventory data is crucial for finding areas for improvement.

Daily Counts

A daily inventory management task is keeping track of the stock. Even the most comprehensive reports won’t help if the state of inventory isn’t monitored regularly. Any organized retail business routine includes daily counts, which must be correct to ensure stock visibility.

Effective inventory control can simplify the use of technology by retailers who are willing to do so. If one is satisfied that the inventory management reporting is reliable, he/she can avoid physically counting every item in storage.

Control out-of-stock items

One will be able to pinpoint exactly which products are lacking and which are selling the most, thanks to the comprehensive reports.

So, what to order and when to place another order will be very obvious. Along with preventing one from going out of stock, it also allows one to act fast to remove out-of-stock items from e-commerce platforms.

Hence, saving one from marketing unavailable goods.

Precise Description

Being organized is a prime component of inventory management, therefore one should record detailed descriptions of products, including names, sizes, colors, wholesaler names, etc.

Without this specific information, complete interpretation of reports and getting the entire picture is impossible. Make sure everything is clearly tagged or labeled so products can be identified quickly.

This is essential to improve the fulfillment procedures and ensure no anomalies in stock counts. It’s advised to employ someone to complete this task for you if you cannot do it yourself.

A well-organized workplace

If the workspace is tidy, open, and clean, finding a product takes a lot less time. According to research, such a work environment may improve the effectiveness of both employee and employer.

If the warehouse or storage area isn’t already organized, taking the time to do it will be time well spent. This is just pure profit.

Article References: Poor inventory management