Do you picture a successful retail business in your head or mind? To achieve that goal, you would need Inventory Management. Because having good control of your inventory helps you to organize and handle business better. Inventory management is actually a basis for every retail business. To learn more about Inventory Management, read on.
Inventory Management simply refers to the process of storing, ordering, or using a business or company’s inventory. Which includes the management of components, raw materials, and finished goods or products. It also includes warehousing and the process of the items or goods. Inventory management can also be seen as a step in the supply chain where stock quantities are tracked in or out.
The major goal of inventory management is to actually know where the inventory is at any time and how much is left. Most organizations or companies might opt to scan in their inventory through a barcode scanner to increase efficiency.
How Does it Work
The whole inventory system works perfectly great. Inventory in a company or organization is one of the most important and valuable assets. Both in retail, manufacturing, food service, and others, the company’s input and finished goods are the core. Shortage I inventory on when and where needed can be very destructive.
Most companies take their inventory to be a liability which it oughts to be. When an inventory is too large, there will be a risk of spoilage, damage, theft, or even shifts in demand for it. This operation is important in the sense that it allows you to know when to restock goods, amounts to get, price, and also when to sell and price for it.
Accounting in Inventory
An Inventory in a company or business must be physically counted or measured before being placed in a balance sheet. Here’s what should be included in an inventory account;
- Raw Materials – the various materials or goods purchased for the production process.
- The work in process – materials that are being in the process of transformed into finished goods.
- Finished goods – are completed goods that are readily available for sale for customers.
- Lastly, merchandise – finished goods purchase for future sale.
Methods of Inventory Management
Inventory management is really important. It helps to ensure the business has enough goods or stock at hand for customers. With the inventory, you can help to prevent other mistakes. Here are some methods or techniques that will help improve your inventory and cash;
- Set Per Levels. Par levels are the minimum amount of goods that the company must have at all times.
- First In First Out.
- Manage your relationships with suppliers because it helps goes a long way.
- Emergency Planning.
- Analyze Regularly.
- ABC Analysis.
- Accurate Calculations.
These are some methods that will help to manage your inventory better and stay accurate always.
What are the Benefits of Inventory Management?
Now we know about Inventory Management, so what are the benefits of using this service? This service is actually a good practice for any company at all. So here’s why you use inventory;
- It helps to achieve efficiency and productivity in all operations.
- Used for minimizing inventory costs and then maximize profits and sales.
- It integrates the whole business.
- Manual tasks automation.
- It helps to keep your customers happy and satisfied with your services.
- Increase in information transparency.
- It helps to lower costs.
- It improves delivery performance.
- Planning will always be accurate and it will increase the loyalty of customers.
There’s more you can benefit from using inventory management. Both small, medium and large businesses can use this tool to grow their profits and sales.