For every business that deals with physical products and the materials used to make them, inventory management will remain an enduring challenge. The bigger the business and the greater the variety in their product lineup, the more difficult the process of inventory management becomes.
With that said, a number of entrepreneurs think of inventory management as nothing more than a chore—without realizing it’s their ticket to optimizing business gains. In truth, having a reliable inventory management system can do more for a business than simply make ordering, warehousing, and shipping products much easier. A more updated and data-driven system can actively spur the health of the company’s cash flow and open up new opportunities for business revenue. So, if you head a business that deals in physical goods and are wondering where to improve, your inventory is a good place to start.
Below are four points that illustrate the value of an efficient inventory management system. Consider modernizing your current system and reaping these benefits for yourself.
It Shears Down the Cost of One of Your Biggest Operating Expenses
One harsh reality of managing a physical product-driven business is that stock is expensive to acquire and also expensive to store. You already have to spend money purchasing orders from suppliers. But every day that your stock stays in storage costs you money—you have to pay for a number of overhead costs daily, like warehousing.
So, how do you arrive at the ideal amounts to spend for supplies and for their storage? How can you prevent losses from overspending and avoid product shortages that affect sales? Using an accurate inventory management system will help you maximize your available space and resources, and it will also allow you to make it cheaper to buy and stock product. You’ll feel the difference when you measure the results from modernizing your inventory management system against the costs you originally had to put up with.
It Helps You Account for Your Stock Much More Accurately
In the olden days, keeping inventory involved counting each product by hand and doing the math with a pen and some paper. But that’s obviously no longer viable if you stock hundreds of items at a time. The slightly upgraded method of doing inventory—i.e., using individual spreadsheets and reconciling them one by one—may not cut it either. You and your staff could spend many hours crunching the numbers manually but still make some costly mistakes in accounting for all your items.
It doesn’t have to be the case with a more streamlined inventory management system, such as one that runs on a cloud-based platform. This kind of system can help you track items in real-time across all the facilities you operate from—from your headquarters to your warehousing facility. It can also help you manage a wide variety of data with much more ease and accuracy. The chance to free up time and labor, as well as save money from the cost of human error, should be reason enough to upgrade.
It Improves Your Order Fulfillment
A better inventory management system will also lead to more efficient order fulfillment and increased customer satisfaction. For most businesses, it’s inevitable to experience problems like product shortages, shipping delays, or shipment of the wrong product to customers from time to time. But every time such a problem transpires, you may have lost a customer for good. Your goal should be to tighten your order fulfillment capabilities so that your customers can stay happy, satisfied, and loyal.
Your new system will help you manage all pertinent inventory-related data and identify potential problems before they occur in transactions. One application for an enterprise resource planning (ERP) system with its own inventory management module is setting benchmarks for low stock. If you’re running out of supply for a popular product and it’s reached that benchmark, your system can notify you in real-time. This, in turn, will help you restock in a timely manner so that customers still have the opportunity to buy from you. Adjustments like these could improve your order fulfillment and brand your business as trustworthy and reliable to your customers.
It Allows You to Optimize Your Decision-Making for Your Supply Chain
Supply chain management for a business that sells physical products is no mean feat. There are so many decisions an entrepreneur has to make at one time. There’s the issue of managing products that have expiry dates, like food, and moving them before they get stale. There’s also the issue of dealing with suppliers and making sure they deliver in a timely manner.
A new inventory management system may prove to be of great relief to decision-makers. It can help them pinpoint the optimal amount of product to order, how often, and the ideal timeline for storing and selling it. Having a streamlined and controlled view of inventory data will also help entrepreneurs derive accurate business insight on their relationships with suppliers. While using the system, you can come to a conclusion about which suppliers are delivering on their promises and worth keeping. The ability to make quicker, more informed decisions on your inventory will truly be a boon to your business.
Conclusion: The Future Ahead with a Better Inventory Management System
The possibilities for your business will grow exponentially if you master the art of inventory management. If you have better control of your supply chain, it’ll be easier to add new products to your lineup or establish new channels for sales. Making the investment for better inventory management today will surely reward you in the future. Consider your options for upgrading your current inventory management system and learn how exactly it can contribute to your profits.
If you’re looking for a business solution for your inventory management needs, ANSI is here to help. ANSI has been the leading provider of ERP and inventory management solutions in the Philippines for more than three decades. We can help you grow your business and reach its full potential in no time.