To make the most profit from the lowest amount of stock investment while meeting customer demand, businesses need optimum inventory management. The basic definition entails tracking the amount of product in stock and optimizing how to move it. But a truly effective control system goes beyond simple functionality.
When properly optimized with resource planning software, an inventory control system can unify a business’s entire supply chain. As no two businesses are alike, no single inventory management solution should be rolled out for multiple infrastructures. Supply chain management personalized for your business’s unique systems is the secret to success in an economy where only 21% of businesses believe they maintain satisfactory visibility in their supply chain management.
How is inventory management optimized?
The most profitable inventory control systems maintain visibility at every step of the supply chain, from the transport of stock to your warehouses to the storage management within them.
Successfully managing inventory levels requires keeping stock optimized for your business’s supply and demand forecast. While storing too much inventory leads to unnecessary storage costs, storing too little leads to stock outs.
Yet, inventory levels cannot be optimized without ordering and reordering systems that trigger when needed. This requires a system that tracks when stock levels near reorder points and when orders are placed, approved, shipped, and delivered, an even more significant investment in the era of online fulfillment.
Your supply chain may not react quickly to changes in supply and demand without an effective control system. Numerous businesses learned this the hard way during the pandemic, when companies lost billions of dollars in 2020 alone due to missed sales on out-of-stock items whose demand forecast shifted too quickly for most companies to react.
How does inventory control impact your business?
Poor inventory control can lead to issues on both the corporate and customer side of your supply chain. In your warehouses, excess unsold stock is costly to house, and some products may spoil when businesses fail to coordinate their supply with their consumers’ demand. In 2022 alone, inventory oversupply cost businesses more than $163 billion.
On the customer side, out-of-stock items cause your business to lose a customer 43 percent of the time, according to the Harvard Business Review. This means out-of-stock items, due to low-visibility supply chain management, can not only ruin the current sale, but decrease your overall revenue and negatively impact your customer service profile.
Actionable tips for improving inventory control
In today’s fast-paced market, it’s tempting to automate inventory control with one-size-fits-all solutions. Unfortunately, basic inventory management software can only automate the processes already in place – they cannot refine the issues that cause your supply chain problems from the start.
Optimum inventory management requires personalized control, using software solutions that can be customized for your business’s existing framework. This means reducing wasted space, improving your demand forecasting, renewing your relationships with vendors, maintaining critical stock, and using advanced analytics to consistently review and revise the processes that allow your supply chain to keep pace with your market are critical for your operational success.
Software solutions that offer full visibility of your warehousing and manufacturing workflows can optimize your inventory control system from a single platform. From keeping accurate inventory counts to efficiently tracking and managing assets, an effective control system works within your infrastructure to personalize solutions to your warehousing strategies and react to demand changes when they happen.