Why Inventory Management is So Important

There are many different reasons why inventory management is so important in today's world. One of them is being able to know exactly how many of each product you have in stock, so you know exactly how much needs to be ordered. Without proper inventory management, you may order too many of one thing, and not enough of something else. What does this translate too? Running out and having to order more, and having an over stock of other products, costing you not only money, but available storage space.

Proper inventory management also allows you to track the products you sell. You can see at a glance what items sell the most, what time of the year that more are sold, and have a chance to see what patterns develop so you can plan your buying accordingly. For an example, if you are a clothing merchandise store, and you find that you sell more coats and hats during the fall, just before Winter, or during the Spring, then you can order more of these items before then, so there is enough merchandise before hand. It also helps you track products that don't sell as often, or at all, so you can either not order as much as your would routinely do, or maybe even decide to discontinue this product line altogether.

Management

Having the right inventory management software is just as important. Today, inventory has become streamlined, with bar codes, scanning devices, and computers, so you need software that keeps up with the latest technology. You need to be able to find out at a glance if you are running out of something, rather than going in the back or having to call the warehouse to find out. Your inventory managers need to be able to quickly and easily count how many items there are, and be able to scan the bar code and have it downloaded into the computer automatically, without having to physically write down the information and then input it into their inventory computer.

Why Inventory Management is So Important

Inventory management is vital to today's businesses, especially in the retail market. In order to keep up with sales, trends, and popularity of a certain product, or line of products, the only way to do this is if you can track what sells, how much does at certain times of the year, and what products are losing ground. This really is the only way to keep up with your competition, order the right amount at the right time, and know whether to eliminate products that just aren't selling, saving you space, time, and money.

There are an abundance of different kinds of inventory management software available on the market. These are compatible with just about any type of computer operating system you have. Not all software is the same, so you really have to take the time and make sure that it is right for your needs, and for those people who are starting off small, will be able to expand and grow as you do, without having to buy new software all the time.

Why Inventory Management is So Important

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Inventory Management Report

Retailers, do you know what a power of technology blended with your inventory management system could result in? You may think you know a lot about their uses and how they may fit your needs but you could be way behind on the current technology as well. Let us see how inventory management reports can help you.

An ideal inventory management report consist of information on basic stock list, inventory turnover, product availability, back up stock, forecast, order point and order quantity.

Management Concept

Basic stock list is the list of SKUs (products) along with the description, its stock number, quantity of items on hand and sales of last specified weeks. The weeks may be for 4 weeks or 12 weeks or as per the retailers needs. These basic information about inventory helps to arrive at sales forecasts and order quantities.

Inventory Turnover is the ratio of turnover to inventory. In other words it's the total amount of SKUs sold at a given time. The main concept behind inventory turnover is to find the return of investment on each product i.e., how much amount can be generated from the amount invested on a SKU. The retailer must plan their turnover to achieve reasonable profits.

Product Availability means the product availability status when the customers' demand for it. Retailer must maintain minimum amount of inventory as well as not run out of stock. Retailer must have managerial judgment skills in order to preplan product availability.

Backup Stock, commonly known as safety stock, is used when the customer demands exceeds or forecasted demands exceeds or when there is delay in delivery of goods by vendor. It acts as lifesaver during above mentioned situations.

Forecast gives many valuable insights to retailers. Sales forecast are straightforward in nature. There are various forecasting techniques that are used to arrive at accurate forecast value. Based on these forecasted values retailers can optimize the inventory.

Order point is a point of inventory stock below which quantity available shouldn't go or the inventory would be stock out before the next order arrives. Order point equals lead time quantity plus the safety stock. Lead time is the time gap between the next orders needs to be placed and when it arrives at the retail shop.

Order Quantity, the planner should determine when the quantity available is less than the order point. The planner should order in such a manner that the sales do not dip into backup stock before the next order arrives.

For an inventory management report, the retailer must keep track their data and store them. From these stored data, required information is extracted and formatted to a report. The reports, hence, could be used to make strategic decisions.

Inventory Management Report

Thejeswini. G
Retail Consultant
www.custologix.com

CustoLogix with its wide experience in statistical analysis helps retailer to improve retail profitability through Analytics. To know more about retail services please visit CustoLogix at www.custologix.com/service

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