Updated: Oct 8, 2020
Having efficient inventory management is key to guarantee that the business can meet consumer demand. If inventory is not handled correctly it can result in loss of potential sales that cannot be fulfilled or the business spending too much money on managing the inefficient stock.
An inventory management system can prevent these types of errors. While managing inventory, whether a manufacturing or wholesale business, it is necessary to consider two determining factors that affect their level. First, inventories are necessary to achieve the continuity of the production or sales process, while on the other hand they cause holding costs, less cash and profits until they are sold out. Therefore, it is necessary to define the level of supplies that will enable the continuous sales and/or production process to take place, causing the least possible costs. Such a level of inventory is called the optimal level.
In summary, a well-designed workflow system implemented in the warehouse and purchasing departments, both integrated with a good Inventory control, such as an ERP system, linked to the accounting side of the business, will provide good analytical reports which are essential for a good inventory control.
Finally, the business will have a better understanding of their profitability, by product line, and can make decisions to pursue best results.