Inventory management helps you keep track of your inventory and how it used, bought, manufactured, stored. It controls the flow of goods, from buying to selling. It ensures that the right quantity of the correct item is always available in the right place at right time.
What is inventory?
Inventory is any goods that your company holds with the intention to sell. You might buy raw materials and make something new from them. Also you might have a bulk product you sell in its individual parts. It might even something entirely intangible like software.
Types of inventory
There are many different types of inventory. Depending on what goods you sell, the type you will deal with will vary. Here is a list of some of the most common types of inventory:
- For-sale/finished goods: Products that you sell to your clients
- Raw materials This is the inventory that you use to produce your finished goods
- Working-in-progress This is essentially unfinished goods, inventory that is only part-way through manufacturing.
- MO goods: MO stands for maintenance and repair. This is the inventory that you use in support of the manufacturing process
- Safety stock This is the additional inventory you keep in order to handle supplier shortages and surges in demand
Any venture that manages inventory will require a way to handle stock. Let’s also examine how it works in practice.
5 key stages in the inventory management process
- In inventory management app, you track and control stock from your suppliers to your warehouse. This then moves to your customers. These are the five major stages you need to follow:
- Purchasing. This could mean purchasing raw materials to be turned into products or products to buy to sell, with no assembly needed
- Manufacturing: Producing your final product from its component parts. Some companies will not be involved in manufacturing. Wholesalers, for example, may skip this step completely.
- Holding stock – Storing your raw materials prior to their manufacture (if applicable) and your finished products before they are sold
- Sales. Getting stock to customers and getting payment
- Reporting Businesses need to know what they are selling and how much each sale makes them.
Inventory management vs. inventory control
While they may seem similar, inventory control can be a crucial part of inventory management. However, it doesn’t mean the same thing .
What is inventory management?
Inventory control is how to manage stock currently in storage. This means knowing the stock in your storage, how much it is, where it is and in what condition. It is also about making sure you store stock efficiently, controlling inventory costs, and minimizing the time spent counting inventory.
Learn more about inventory Control.
Management or Control?
Inventory management is more than just control. It takes into consideration your supply chain and manufacturing, fulfilment, sales, also reporting. Before any business can control their inventory, they will need to have a system in place. Without an inventory management system, there is no way to manage sales, production, and suppliers.
Then, you can find many different ways to better store and sell your products. You can choose to focus on optimizing purchasing, control and production, as well as sales. One example is to use your past operating experience to plan improvements, such as by changing the method you count stock. Perhaps you want to modify processes to reflect customer shifts, product and order profile changes or customer losses.
How to improve your inventory management
1. Your needs are the most important
A warehouse filled with inventory can seem overwhelming. You can also make it easier to manage your warehouse by identifying the most valuable items and focusing on them first. It’s unlikely that every item you have in stock will receive the same amount of customers. Your customers will be happy if you keep the best-selling items in stock.
2. Partner with suppliers
Good supplier relations are essential for any stock-based business. Also it is vital to establish positive relationships with your key suppliers to ensure reliable supply, competitive pricing, and to learn about emerging trends that may affect your business.
3. Design an inventory management program
It’s important to know how your business deals in order quantities, replenishment times, safety stock and forecasts. Also eoperation should be modified according to the needs of your business. A dramatic improvement in just one area is better than several small ones.
4. Utilise real-time data
Information is a powerful tool. However, it should be accurate and current. Analytics and real-time data — including layered inventory tracking and forecasting data, automated ordering, individualized safety stock, and automatic ordering. Also can make a significant impact on your business. The best way to make sure you have the right information at all times is to use perpetual inventory management software.
5. Go mobile
The future of inventory management has been revolutionized by mobile technology. Barcode scanning, for instance, speeds up receipts and allows you to track your goods much faster. It also eliminates unnecessary errors. Sales apps allow salespeople to have access to inventory data from their mobile devices. Therefore there is no need to be tied down to a warehouse computer. You can monitor key business processes at your home, on vacation, or anywhere else.
6. Design an inventory management program
Your inventory management skills will not take you far. A stock management system will help you keep your inventory in check. Also each business will have different needs. It is crucial to find a system that fits your company’s requirements. Sam may be able, in the beginning, to manage her inventory with spreadsheets. Amazon is also a global stock-based company that requires a multifaceted, customized solution to handle the vast number of orders placed every day.
Ending
The first step to growing your business is deciding when you may need dedicated inventory software. is our guide to inventory software. stock.
