Inventory control is essential for businesses to stay competitive and to stay profitable.
It is the cornerstone of every retail and ecommerce business. Inventory control focuses on regulating and maximizing warehouse inventory. Effective inventory control keeps the business profitable, maximizes profit margins, makes the most of the inventory on hand, and avoids costly overstocks or oversells. Implementing strategic inventory control is the key to keeping a business sustainable. Mistakes and “guesstimating” cost money and time and have far-reaching consequences to other parts of business operations.
Every business is unique and has its own targets and individual needs to meet, and managing inventory levels is a difficult, every-changing job. Business owners must be able to control stock while maintaining flexibility and making accurate predictions.
But it’s not an easy task. Ordering too much inventory equals low funds to invest in other parts of your business and dead stock getting dusty in the warehouse. Ordering too little inventory means risking losing potential sales or creating customer dissatisfaction.
How do you find the perfect balance?
The goal of inventory control is for businesses to keep only the necessary stock on hand without spending too much money upfront or sacrificing customer satisfaction. It can be a difficult balance to maintain, especially if a business does not actively maintain precise records.
Manual inventory control may work for a business to some extent, depending on its current size. However, as a business continues to grow, manual inventory control leaves a large margin for human error. Business owners need to find a structured approach to manage their inventory as they continue to grow and scale.
Inventory control starts with knowing how much stock you need and knowing the correct reorder point. By balancing ordering or manufacturing costs with holding costs and demand, business owners create the perfect equation to start solving their inventory problems. But it goes far beyond simply counting their stock. They need to be able to know the phases of a product’s lifecycle, be able to forecast sales, manage warehousing, product ordering, and customer fulfillment.
Real-time tracking systems, setting automatic reorder points, or performing regular audits are just a few practices that help business owners improve their inventory control.
What are the benefits of disciplined inventory control?
Strategic inventory control allows business owners to:
- Avoid missed order fulfillments and lost business
- Reduce costs and inventory write-offs
- Forecast customer demand and meet it
- Quantify the right amount of “safety” stock to keep
- Reorder at correct levels
- Cut number of slow-selling products
- Increase number of high-selling products
Most importantly, business owners will reap major savings, increase their bottom line, and free up more capital when they prevent their stock from deteriorating and becoming outdated. Now, with disciplined inventory control, business owners can meet seasonal spikes in demand, achieve better customer satisfaction, and overall make the right management decisions.
As your business continues to grow, you will find that structured inventory control is the key to long-term success!
How could strategic inventory control benefit your business? Contact Acadia Powell to learn more.