Inventory management saves you money and allows you to fulfill your customers’ needs. In other words, it enables successful cost control of operations.
Inventory management helps companies identify which and how much stock to order at what time. It tracks inventory from purchase to the sale of goods. The practice identifies and responds to trends to ensure there’s always enough stock to fulfill customer orders and proper warning of a shortage. the backbone of the business. Inventory management is vital to a company’s health because it helps make sure there is rarely too much or too little stock on hand, limiting the risk of stockouts and inaccurate records.
The two main benefits of inventory management are that it ensures you’re able to fulfill incoming or open orders and raises profits. Inventory management also: One element of developing loyal customers is ensuring they receive the items they want without waiting.
The primary challenges of inventory management are having too much inventory and not being able to sell it, not having enough inventory to fulfill orders, and not understanding what items you have in inventory and where they’re located. Other obstacles include Inventory of the raw materials, components, and finished goods a company sells or uses in production. Accounting considers inventory an asset. Accountants use the information about stock levels to record the correct valuations on the balance sheet.
Keeping accurate accounting records and taking regular physical stock counts can improve your inventory management efforts. A system that provides your organization with real-time visibility into inventory can help stakeholders make critical business decisions. You should also be aware of a stock’s condition, especially if you’re dealing with perishables.