The essence of inventory management for a contemporary organization
The practice is needed as a part of supply chain network to protect the production system against any kind of disturbance. Moreover, it also prevents the system from running out of stock, materials and goods. Fundamentally, inventory handling focuses on asset management, replenishment lead time, inventory forecasting, inventory valuation, inventory carrying cost, forecast of future asset management prices, inventory visibility, physical inventory and the space available for its accommodation, demand forecasting as well as return of defective goods.
The primary objective of inventory handling is to strike a balance between the contending requirements for attaining optimum inventory levels. Since the process is continuous, it demands a shift from business needs. This also helps in accommodating the needs of larger environment. Inventory handling tries to maintain an extensive collection of merchandise. In addition, the practice also helps in controlling issues like shipping, ordering and handling materials. Moreover, the material management and tracking aspects of inventory handling also incorporate feature like supervision of materials which are moved in or out of warehouses and reconciliation of inventory balances. Other areas of inventory management include lot tracking and cycle counting support.
No matter what is the nature or size of your business, inventory management always offers a competitive edge. Since the practice ensures goal fulfillment, visibility and efficient management, it allows comparative pricing on a customer-to-customer basis. In addition, inventory management helps business owners in making strategic decisions about the kind of inventory that must be carried for accommodating inventory management processes.
Not only does inventory management increase the number of satisfied customers for an organization, but also aims at reducing the operating costs. Moreover, inventory handling facilitates the management of a business with inventory standards as well as costs. Companies operating in processing and manufacturing industries need complicated as well as simplified processes of management control. Inventory management helps in streamlining such concerns through efficient distribution as well as compliance for improvement of software and other procedures.
Last but not the least, inventory handling also helps in establishing a replenishment strategy for various items present in warehouses. Moreover, it also outlines specified guidelines by controlling ongoing dead stock and excess inventory. In a nutshell, it would not be unfair to state that inventory management imparts a strategic competitive advantage to businesses by providing a user-friendly stock analysis tool that offers prompt information.