In a globalized world where even a small firm can cater to a global clientele through digital media, proper management of inventory can have a significant impact on not just an organization's profit but its credibility and brand authority as well.
Working Capital Management
Purchase of inventory consumes a significant portion of the working capital of a firm. An organization that stocks excessive inventories is likely to suffer from working capital shortages along with higher carrying and storage costs. Such inefficiencies can have a significant impact on the revenue, profits, and operational efficiency of the firm. Inefficient allocation of scarce working capital can, in the long run, make all the difference between a growing and a stagnating business.
Zero Production Bottlenecks
Firms are using sophisticated inventory management techniques and strategies to ensure there is adequate raw material for smooth operation of the production line without unnecessarily high stock levels. Optimum inventory levels are calculated after considering variations in demand, efficiency of the production line, buffer requirements, and pace of order fulfillment by the suppliers.
Zero Delivery Issues
In the past, only firms with very large scale of operations could setup and run a global supply chain. Today, even small firms can use digital media to aggressively market their products to global markets. A firm supplying products to multiple countries cannot afford bottlenecks in the global supply chain. Apart from maintaining adequate inventory of raw materials, firms are required to manage and maintain adequate inventories of finished goods as well. This important task requiring complicated analysis requires an effective stock management strategy.
Informed Decision Making
With firms dealing in huge volumes of raw materials and finished products, the task of tracking inventory levels cannot be treated as the sole concern of the Warehouse Manager. Today, inventory-related decisions include tracking historical variations in demand, analyzing domestic and foreign macro-economic factors, identifying suppliers of quality materials at low costs, managing logistics involved in receiving raw materials and delivery finished goods, and many other decisions.
A firm’s decision to invest in a sophisticated inventory management software solution can prove to be a significant game changer. With cloud computing allowing for real-time enterprise-level exchange of data, inventory software apps allow firms enjoy the twin benefits of low-cost centralized inventory ordering along with flexible and need-oriented decentralized management of the inventory.
Improved Internal Control
Is the firm losing money due to pilferage or theft? Are inefficient production practices resulting in high inventory turnover for the organization? Does the firm require significant upgrading of inventory storage facilities to minimize spoilage and wastage? Apart from providing better internal control, inventory management will enable the organization to consider the strategic implications of routine decisions related to its stock of raw materials, work in progress, and finished goods.
Conclusion
With inventory control and management involving numerous analytics like Gross Margins, Perfect Order Fill, and Gross Margin Return on Investment, the right enterprise-level software for accurate and comprehensive management of all types of inventories has become the need of every firm seeking to boost efficiency, productivity, and profitability.
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Sanoop
