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What is Inventory Management and what are its benefits?

August 22, 2019 by mark wahlbarg  

Sales inventory management system helps to track the stored goods of a company. It monitors weight, dimensions, quantity, and location. This helps business owners know when it's time to replenish products or buy more material to manufacture them.

Efficient Sales inventory management software is essential to ensure that the business has enough products stored to meet consumer demand. If it is not handled correctly it can result in the business. An inventory management system can prevent such errors from occurring.

Inventory Management System:

Business owners can create their own Sales and inventory management system from scratch. If it is a very large business with a lot of inventory, this may not be the most appropriate.

Some choose to buy an established inventory management system to make the process a bit easier. These systems usually include things like item description, item number, unit of measure and location of the item in the warehouse.

To quickly find materials and products, the numbers and descriptions should be clear and easy to understand. And their organization along with that of the system should be as logical and intuitive as possible.

Purchase Planning:

One of the goals of sales and inventory management system is to help business owners determine when to buy new merchandise so they can be one step ahead of demand. This is also known as Purchase Planning. Different businesses use different types of purchase plans depending on the needs of their industry.

For example, a small online business does not have the storage place to have a lot of merchandise at hand. In this case, they must opt for a purchase plan called “just-in-time” which ensures that they will receive the necessary “just-in-time” merchandise to meet demand.

Some businesses base their purchasing plans on old sales databases. If they know how projected sales should be, they can create an inventory replenishment agenda to meet demand. Some businesses also have some merchandise on hand in case something is defective and needs to be replaced.

Benefits of Inventory Management:

In addition to helping businesses stay organized, effective sales and inventory system can also help to:

    Keep the business profitable.

    Reduce costs.

    Reach economies of scale.

    Analyze sales patterns to predict future sales.

    Analyze behavior against competitors.

    Prepare the business for the unexpected.

With the correct inventory management system in the business, it has a better chance of survival and profitability.