Inventory management deals with the things in stock, which are meant for business better prospect. Inventories are the base of a business and form the tangible part, which relates to all facets of business. It includes stock in the warehouse, raw materials, and finished product; when all these are included, it specifies the exact investment by the system. Again, unhealthy inventory can lead to brand fall and hamper the rate of customer conversion; after a failure retaining the same position in the market is a difficult job. So, always be prepared with your sales inventory analysis for a detailed record and mapping of product and sales.
Salient features of Inventory Management
- Control the capital investment by keeping a check on available stocks;
- Confirmation of availability of inventory by an uninterrupted production, to fulfill the consumer demand and satisfaction;
- Plan inventory needs by relating to a scientific estimation of demand and supply;
- Maintain safety stock to tie up the demand fluctuation;
- Plan to fight deterioration in the demand of products;
- Take safety precaution to safeguard the inventories from thefts, waste leakages and replenishment.
Benefits of Inventory Management
- Helps in understanding and improving the liquidity position of the firm in the market, by reducing excess investment of capital in inventories;
- Maintains a smooth production operation to ensure a reasonable material stocking;
- Maintain the vicious regulation cycle of finished products from the manufacturing unit to the distribution unit to the consumer’s hub;
- Takes care of time variation in the provision and supply of raw material;
- Keeps a check on production scheduling, ordering issues, and material shortage;
- Regular track on sales inventory analysis- minimizes damage, obsolescence, declination, etc.
- Influences the company to take advantage during price fluctuations of raw materials in the market and helps in saving finances.
Limitations related to Inventory Management
- Professional management of inventories can highly reduce business risk rather than eliminating it.
- On sharing the responsibilities and liabilities of inventories, the operation cycle becomes easy to handle and more functional.
Understand all the objectives, benefits and limitations of inventory management that help your business to perform well by taking care of all facets of business.
