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Why is it so important to adopt a business management software to effectively handle inventories?
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?
Be it supply chain management, pharma trading, retail or any distribution industry, inventory management forms the integral part of the process.
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 a Sales CRM Software: Accurate information makes you to do right promises and avoid pitfalls. 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
How ERP for supply Chain Management help you?
To know how Sage ERP can help you achieve higher profitability through collaboration and seamless user experience, contact us here. You can also SMS SAGE to 56767 or write to us at email@example.com for a FREE demo or ERP consultation.