Inventory Adventure Part 2: How Inventory Management Fuels Growth
In part one of our Inventory Adventure series, we took a look at a few guidelines for success in the inventory intake process. This time around, we’re tackling the topic of inventory management once goods have arrived at your warehouse.
Effective inventory management is certainly a best practice for any distribution or wholesale company. It might not sound like the most interesting of practices, but companies seeking to take the next step in operational efficiency will find it hard to grow without successful inventory management.
This, of course, begs the question: What is inventory management?
Inventory management will vary from company to company, but typically includes facets like purchasing, maintaining the storage of inventory, controlling how many goods you have for sale, and order fulfillment. It’s what provides visibility into the performance of your company. Without it, you can’t see where your product came from, where it is now, or where it’s going. Powerful inventory management systems will provide even more information, such as when to reorder an item, meaningful information about inventory costs, and more.
So what are the ways inventory management can help you tap into the unrealized growth potential of your company?
How Inventory Management Fuels Growth
Companies trying to manage inventory using only Excel spreadsheets are running the risk of input errors, shipping mistakes, and poor inventory visibility. If you’re on the fence about this whole inventory management ordeal and need some convincing, here are a few of the major benefits that it provides:
Perfected Inventory Levels
We’ve said it before and we’ll probably say it again. Overstocking is one of the costliest mistakes a business can make. Excess inventory is tied-up capital. What could have been used to boost another area of business is left sitting on the warehouse shelves.
This is where inventory management plays nicely with cash flow management — when you can predict when a product will sell, you’ll know how much to order, as well as when and how to market the product to generate revenue. Instead of products stagnating on your shelves, you’ll have cash available to invest in other areas of your business.
Speaking of better predictability, solid inventory management allows you to forecast far more accurately. Instead of planning purchasing decisions based off hunches and best-guesses, strong inventory management platforms can actually offer accurate data — how much of a product you sold during your last sale, what customers purchased it, how much these goods cost, and much more. Monitoring this data and analyzing the trends it offers will help you plan more precisely when it comes time to purchase goods from your vendors.
Time Savings through Automation
Inventory management and automation are a match made in heaven that will really allow you to maximize your efficiency. The best and most powerful inventory management programs will have automation capabilities built right into the application.
More likely than not, you’ve got certain business operations that occur on a regular, predictable basis. Maybe it’s creating an inventory audit at the end of every month, or generating a report on how many units of a certain item sold each week. Whatever the case may be, your automation solution should allow you to schedule these tasks in advance to get the ball rolling without you having to click a button or even be in the office.
Omnichannel Sales Support
Omnichannel sales is more than just selling your product on multiple marketplaces. Self-educated consumers constantly expect new levels of personalized service. They want to be able to buy online and pick up in-store, or find something in the store and have it delivered to their home. Without inventory management, streamlining the customer experience across multiple channels becomes increasingly difficult, putting customer satisfaction at risk.
To stay up-to-date with your inventory across all channels, try consolidating your sales channels. This makes inventory management a breeze — integrations allow you to stay on top of what products are selling in which channels, and they update your inventory levels across the board as goods are sold.
Increased Inventory Visibility
When goods mysteriously go missing from a warehouse, it’s known as shrinkage. Unfortunately, it’s often due to theft, but can also be a result of administrative mistakes or vendor fraud. With good inventory management practices, it’s possible to keep a closer eye on your stock levels, diminishing the chances for shrinkage of any kind to take place.
Better Customer Relationships
We know what you’re thinking. “How does keeping an eye on inventory help me better understand the needs of customers?”
Inventory management might be more about taking care of products than people, but it still helps you get to know your customers. You’ll see what they order, when they order it, how much they spend, and more. Taking this information into account can help sales and marketing teams communicate and market more effectively, as well as predict demand for product lines.
And there you have it! Managing inventory is critical to a company’s success and bottom line. It forms the basis for smooth distribution business operations, and if you’re ready for growth, it’s a must-have for taking your company to the next level.
For a look at the inventory management process in SalesPad Cloud, be sure to sign up for our upcoming webinar where SalesPad software savant Matthew Greyerbiehl will cover how to maintain visibility of in-stock inventory, how to move inventory to different facilities, and how to reconcile a stock discrepancy variance.