Effective Inventory Management
Why we cannot overlook Inventory Management
Wikipedia defines Inventory Control as Supervision of the supply, storage and accessibility of items in order to ensure an adequate supply without excessive oversupply.
It can also be referred as internal control – an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc.
Why is Inventory Management so Important?
Inventory is Money: Lost or untraceable Inventory is a major risk, let’s take an example. Assume a nominal Rs. 1000 of material is lost per week (Rs. 52000 per year), this Rs. 52,000 comes off of your bottom line. If your net profit before taxes is 4%, it takes Rs. Thirteen Lacs in new sales to make up for this loss (Rs. 13, 00,000 x .04 = Rs.52, 000)!
Inventory is Time: The time it requires to answer a customer’s question about the Availability of stock is pure loss of Productivity. Imagine each time your customer enquiries about availability of any particular stock and you have to rely on either manual files, spreadsheets or verbal information from your store manager. 10 mins per inquiry multiplied by Two enquires daily multiplied by 250 working days, comes out to be 5000 minutes or 200 hours or One Working Month!
Inventory is Customer Satisfaction tool: Accurate Inventory information makes you to do right promises and avoid false promises! If you promise material to a customer based on what your computer says is in stock, but the material isn’t actually available in your warehouse, the result is often a disappointed customer. You’ll lose your reputation as a reliable supplier. And not being a reliable supplier is the best way to increase your competitor’s sales
Importance of inventory management is often forgotten when times are busy and staff are scarce
- When times are good and business is fast we forget about inventory losses
- As seen in previous example Inventory Leakage hits our Bottom Line very hard
How Systems can help you in managing your inventory?
- Forecast the demand and supply of Inventory
- Manage JIT Inventory and reduce inventory costs
- Plan for Optimized and Cost effective Procurement by Vendor Analysis
- Get a 360 degree visibility of your Inventory
- ABC and VED analysis
- Cost Control and Cost Variance analysis
- Faster Shipments to your customer thus satisfied customer
For better information on the same, please contact Sage Software Solutions Pvt Ltd