Did you ever have a thought to optimize your business operation or did you already act to execute new modes to boost your business?
You should do it even if your business runs well.
Why inventory optimization is important?
Inventory flow is emphasized as being very crucial to making your business succeed or fail. In this article, Let’s talk about some facts about inventory flow and how it can impact your business.
It’s common sense that we must purchase products or raw materials if we decide to run a serious business. Inventory flow reflects the movement of the products from our suppliers to the warehouse, to the manufacturing process, then to the shipper, and finally to the customer.
If there are flaws when the customers receive the products, return management must also be considered and included in your business procedure.
The inventory flow logic is simple at first glance. We know that our competitors also know that.
To succeed, we must treat inventory flow seriously, implement and optimize the business logic and inventory management to a higher level than our competitors.
Inventory management flow varies according to the size and scope of the business operation. Large companies usually design an intense inventory management system, and for small businesses, it’s often your task as an owner to be responsible for creating inventory management rules.
How to optimize the inventory flow?
An inventory management system requires the operators to monitor the inventory state every day and to find problems and solve them in advance.
Overstocking and understocking both hurt business. Overstocking occupies your extra cash and space, which can slow down your business turnover rate and finally deteriorate your business situation.
Understocking, on the other hand, hurts your customers. They will not purchase again if you let them wait too long, and you will lose the customers.
Inventory management software is far from perfect enough to help your business grow well.
You should let your employees become familiar with the business cycle, manufacturing procedure, and characteristics of the inventory items.
If you and your employees are familiar with the business, then this can eliminate 60% of the inventory problems. You can easily know when to purchase or replenish, how much to purchase, etc.
If errors happen in warehouse management. In such a situation, the warehouse team must have flexible ways to rectify the wrongs and make the inventory data reflect the true situation.
A company is like a machine with many different parts. All departments in the company must work in harmony and coordinate well to achieve higher work efficiency.
Inventory flow also has a relationship with your business accounting procedure. For example, sometimes you not only want to know the inventory quantities, but the value of the inventory item as well. How should you calculate the inventory value accurately? Is it required to deduct the depreciation? This is the job of your accounting manager, but some good software can help you do this without a hassle.
To improve your business performance, some other measures should also be considered and implemented if you have them, such as purchasing on credit, and selling on cash, not to mention expanding the business from offline to online.
Final thoughts
Knowing these is critical to having better business performance, but it’s not enough.
You should keep your eyes open to watch your competitors and adopt new technology timely for your business when required. If you have better inventory management than your competitors, have higher efficiency than the average one, and have a more competitive marketing strategy, you can surely have a successful business, no matter how small or big it is.