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Inventory Made Easy
When the phrase “inventory management” comes to mind, it’s most likely accompanied by a long sigh or some mumbled excuse, “I’ll figure it out next week.” Putting off managing your inventory, or choosing to neglect an inventory routine can hurt your business in more ways than one. Managing your inventory will save you time, money, and frustration! Inventory management is defined as “the process of efficiently overseeing the constant flow of products into and out of an existing inventory.” In simpler terms, inventory management means keeping track of what you have on hand, where it is and what needs replenished.Why Inventory Management is Important
1) Save time and money Keeping track of inventory saves time and money when replenishing stock. At eTech Parts we notice some customers prefer to place numerous orders on an as-needed basis, while others place fewer orders on a more regular basis. The business that relies on placing as-needed orders loses time and money with each shipping cost and every defective part, and most likely only offers next-day service to customers. The other business that prepares a weekly order spreads the shipping cost among all the parts in the order, and is fully prepared to offer same-day service to any customer. These differences in inventory renewal are due to differences in inventory management styles, and can make a huge difference in overall profit. 2) Never run out of the products you use most Properly tracking inventory and keeping “buffer stock” on hand prevents running out of stock of popular items. Timing is everything when it comes to inventory management; just one missing part from inventory (that you swore was still there!) can mean one missed business opportunity, which ultimately means less profit in your pocket at the end of the day. Say this happens once a week…at an estimated average of $70 profit per repair, those missed business opportunities can add up to $280 a month and over $3,000 in missed profit in a year! Having backup stock of your most popular parts can defend business against running out and the possibility of defective units. 3) Never end up with large amounts of “dead stock” Managing your inventory prevents unused products from being reordered. Running out of stock is one thing, but ending up with large amounts of “dead stock” is another. Managing inventory properly means acknowledging trends of use and only ordering what you need and what trends have suggested you will need. Paying attention to what you’re using, what you’re not using and what might need to be returned (if it’s still in warranty) is important to prevent unused stock from sitting on your shelves, losing value and gathering dust. 4) Prevent risks of theft or loss Inventory management prevents sticky fingers from sticking to your expensive parts. Having an exact idea of what parts or products are currently in your possession prevents the risk of theft or loss from affecting your business. Making employees aware that every part and product is accounted for, and notating where everything is can help the fight against sticky fingers and forgetful memories. So inventory management is clearly important, but how does a business start on the right track?