Inventory Management Challenges

What is inventory management? Inventory is the goods or materials a company intends to sell to its customers to get the desired profit. Therefore, inventory management is among the most critical elements of the supply chain and contributes to the precise tracking of inventory from purchase to the sales of goods, i,e, from manufacturers to warehouses to the point of sales. The main aim of inventory management is to ensure the availability of the right product at the right place at the right time. For that purpose, inventory visibility is required, which involves conscious management of storing and ordering goods appropriately. Although inventory is recorded on the asset side of the balance sheet, it reduces the overall cash flow until the point of sale, where it generates revenue for the company. Before that, it holds up cash, therefore the precision to hold the stock parallelly to the number of sales is what defines the successful inventory management of companies in the long run. Why is Inventory Management important? In this digital age, the importance of inventory management is quite visible, especially for eCommerce and online retail brands. As a result, it has become a prerequisite for companies to have an accurate inventory tracking system to help them satiate the market demands. Also, the size of the company or its scale of operations defines its need for inventory management. Therefore, a company needs to expand its inventory management as its scale of operation grows. A company with a practical and strategic plan that optimizes the overseeing and management of inventory can have numerous benefits: Precise order fulfillment: A robust tracking system gives a comprehensive view of the in-hand stock, and it also provides insight into the amount of stock that has been sold which can be used to track the demand for products in the market. Such systems help companies fulfill market demands. Optimal use of resources: Real-time data helps you understand the type of stock in need and the one which is not. It also gives you an insight into the profitable products and the ones which are unnecessarily stored and increasing the cost of operations. Using this information, a manager can devise a way to utilize available resources efficiently. Reduces unnecessary costs: Companies store their products in warehouses. If the unsold inventory is kept for too long, the overall storage cost increases. Excess inventory is too a big concern for firms. With the help of inventory management, you get the organized detail of the inventory. It helps you understand when to add or replenish certain types of merchandise.Increased automation: Technology plays a major role in transforming the business landscape in this digital age. Businesses are thriving and becoming less dependent on manual labor. Inventory management software help businesses in creating and execute a perfect inventory plan. One of the essential tasks for a business is to fulfill customers’ needs by timely delivering their products. Having a track of your inventory and managing it helps you successfully meet market demand and generate sales. However, if there’s a lag in a company’s inventory management system, then it affects every aspect of the business. Further in this blog, we will discuss the common inventory management challenges companies should look for in their supply chains. A discrepancy in tracking: Manual inventory tracking procedures are time-consuming, redundant, and more prone to errors. Inconsistency in tracking systems can have numerous consequences, including inefficient warehouse operations that result in the weak performance of the organization. Conversely, even small businesses can flourish using centralized inventory management systems. Inaccurate data: At any given point, it is essential to have an idea of the total inventory count you have. In today’s fast-paced environment, it is impossible to manually manage such colossal data by just counting. It would help if you had accurate and less time-consuming tech-based software. It will help you avoid buying products without selling the existing goods. Dynamic demand: There is a constant shift in trends that influences demand in the market, having too much inventory stored can increase the list of unsold and obsolete inventory. On the other hand, if you don’t have sufficient inventory, you won’t be able to deliver the products timely. Therefore, a strategy for core items and technology to manage an inventory plan can help deal with changing market demand. Limited visibility: When you cannot track your inventory in the warehouse, it leads to incomplete or delayed shipments. Therefore it is essential to locate the right stock at the right time for efficient operations and fulfilled customer experience. Manual documentation: Using manual processes for inventory management is tedious and vulnerable to errors. Also, it is time-consuming, rigid, and less cost-effective than inventory management software. Lack of centralized inventory hubs: Inventory tracking becomes challenging when tracking inventory from different locations. Discrete inventory data from different locations makes it even more difficult during shipments that often result in delayed shipping. This is among the most persistent challenges enterprises face today. Bottom-line: Rather than having different approaches for different challenges, the need of the hour is to have a comprehensive solution combining all the features to reduce material waste and attain improved efficiency through complete inventory management.


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