Understanding the Importance of Inventory Management in Business Success

While most people think of a warehouse as a loosely organized series of crates holding inventory waiting to ship, they are the building block of a supply chain. If there are problems at a warehouse or with warehouse organization, they can slow down the entire process of the customer experience. There’s no overlooking the importance of inventory management and how that affects your business.

Here are five reasons why you need to pay attention to your inventory management.

1. Smart Ordering

The worst thing you can have as a company is inventory that only takes up space and collects dust. Depending on the industry you’re in, you could also be dealing with products that expire and that you need to replace quickly. If you’re not managing your inventory, you could be leaking money from expired products.

When you have a strong inventory management system, you’ll have what you need on hand with enough to cover in case of any spikes in sales. You don’t want shortages, as you’ll send your customers looking for another supplier. At the same time, too much is a waste of space.

When you’re balancing your inventory, you’ll have a smooth cycling in and out of a product. Your orders from distributors or suppliers will be reliable and steady, keeping you stocked without risking a waste issue.

2. Better Organization

One of the most important things about good inventory management is that it allows you to keep your warehouse organized. When you know how much space you need to give to your inventory, you can make judgments that keep your space in check.

When you’ve got a constant fluctuation of inventory and space is a guessing game, it’s hard to be efficient. When your space isn’t organized efficiently, you could fulfill orders slower and make mistakes in notifying your customers how much you have in stock.

If your warehouse remains unorganized, one of the biggest resources you’re going to lose out on is time. Since time and efficiency helps you sell products and ship them out sooner, time is your enemy in your efforts to achieve ideal fulfillment.

Order fulfillment needs to be fast and accurate to make your customers happy. If you have a disorganized warehouse, your employees will make a lot of mistakes and cause problems in the order fulfillment process. This could cause your customers to leave negative feedback and hurt how other customers view your company.

Word of mouth and customer feedback is important. When you’re well organized, your customers will be able to tell.

3. Save Money

When you keep track of what you have on hand, you don’t have to do a lot of resource heavy inventory counts. Much like any kind of accurate accounting, when you know what you have, you don’t have to check constantly.

Imagine you had a bank account with $100 in it and went out for a day with a debit card and no sense of accounting. You bought a $20 breakfast, $20 lunch, $30 on a shirt, and now if you haven’t written anything down, you don’t know who much you have left for dinner.

When you don’t write these numbers down or keep your receipts, you have to check in with your bank constantly. However, if you know what you’ve got on hand, you won’t risk overspending or over-committing, in the case of a warehouse.

If you’ve got an accurate inventory management system, your staff receives alerts when a product gets low. If an order comes in for five of one item and there are only four on the shelf, a well-integrated system will alert customers before the finish their order.

When you commit to an order that you can’t fulfill, you can’t go back and tell the customer that you don’t have the product. You’ll have to either rush ship new inventory or you’ll need to make the customer wait and hope they don’t turn their back on you.

4. Keep Customers Coming Back

When you get rid of slow-moving products at a better pace, you free up some room in your warehouse. That means that you can fill it with the items that keep your customers coming back for more again and again.

Strong inventory management practices will give you repeat customers. When you always have what they need in stock, they’ll know that they can rely on you. This is especially important if you deal with a lot of fo mail order customers.

When people buy online, they don’t always know what to expect. For a lot of customers, that can feel like a risk. Instead, they are often assured about the dependability of a company when they get their order fast, accurately, and with the quality they expect.

Customer demands change over time, so as much as you need to pay attention to what your customer needs are today, you need to be ready to pivot. Your hard earned customers could abandon you for the cool new trendy company that is nipping at your heels right now. If you’ve made room in your inventory, then you’ve got space in your budget and your warehouse for the new products that your customers are going to want.

Check out this guide for more information about how to keep things moving at your warehouse.

The Importance of Inventory Management is No Joke

If you’re starting a business or trying to make your current business grow, you can’t downplay the importance of inventory management. Whether you choose a software solution or a better employee structure, you can improve your inventory management. Even a better layout could work wonders in increasing efficiency.

If you’re looking for a software solution for increasing productivity, check out our latest guide.