Inventory Management Best Practices- A Guide to Controlling Your Inventory
From software retailers to local hardware stores, manufacturers are among the examples of businesses that have to manage inventory. Keep reading for a guide to inventory management best practices.
The Basics of Inventory Management
Inventory management can be simply defined as having the right inventory in right quantity at the right time with right cost. Effective inventory management system tracks inventory need from the stage of purchase order till sale of goods in supply chain. Effective inventory management includes various aspects like process of order management, storing and using company's raw material and the finished products.
The inventory management best practices identify and assure to have the right demand forecasting of stock levels to fulfill customer service and also issue warning for shortage of the stock levels. Poor inventory management may lead to dead stock, or unsold stock levels reducing the cash flow for the company.
5 key stages of inventory management-
Purchasing- Purchase of raw materials to turn into final products, or buying products to sell.
Production- Preparing the final product from its constituent parts.
Stock Holding- Storage of raw materials and final products before sale.
Sales- Making your products reach out to customers, and taking payment
Reporting- Generates report on cash flow and profitability for small business.
