Inventory control is the process used to increase a company’s use of stock.
The most important goal of controlling it, is to generate the maximum profit from the least amount of investment without forgetting customer satisfaction.
A main objective is to provide smooth running sales, production, and great customer service without over spending on costs. It is used so businesses can keep to a minimum cost budget but still gain a mass of success. For most companies, inventory is a large asset, so without control, even the smallest of problems can contribute to a company failing.
The importance of efficiency can be more effective than you may have thought. Not having enough inventory can run the risk of loss in sales. Whilst having too much can be very costly when it isn’t necessary. Not all businesses require an inventory, but when you do, it can be stressful to maintain a balance.
Out of stock
When your stock is running low, the last thing you want to do is turn away willing customers that want your product. Any customer wants a business they can trust, so if you can’t satisfy their wishes, will you lose sales, and loyal customers.
Organisation can prevent these mistakes. You can keep count on how much stock you have of each item based on your recent sales activity. This can improve your inventory planning as you will have a rough idea of products you will need to order for next time.
Obstacles in overstock
Planning ahead will also prevent an overstock issue occurring. If you’re not managing the process well, you might have a limited budget and unwanted items in the warehouse. If you haven’t sold the item in a while, chances are it will not sell whatsoever. Over a period of time, some products may go out of style. Which means you may have to consider discounting the item or discontinuing it completely. Resulting in a bigger loss of money and time wasted.
Although they are not involved with finished goods, they are the person that creates that product in the first place. Inventory control is not just a concern for retailers. Manufacturers must make sure they have all the supplies necessary to make a product. If materials run low and a product is not complete when needed, they will not only lose money, but valued customers. Inventory control is essential to prevent halt in production, and ensure finished goods are ready to go.
Remember inventory is extremely expensive to acquire. When you partner with a supplier, you expect the item to sell at an increased rate so you can make a profit. If an item is stuck on the shelf for months, its value is stuck with it. If this occurs often, that is money you cannot spend on other business opportunities. Inventory control is not just about managing your product, but more importantly, managing your working capital.