Five Reasons Why You Cannot Afford to Ignore Inventory Management, from MyTechLogy.
In a globalized world where even a small firm can cater to a global clientele through digital media, proper management of inventory can have a significant impact on not just an organization’s profit but its credibility and brand authority as well.
Working Capital Management
Purchase of inventory consumes a significant portion of the working capital of a firm. An organization that stocks excessive inventories is likely to suffer from working capital shortages along with higher carrying and storage costs. Such inefficiencies can have a significant impact on the revenue, profits, and operational efficiency of the firm. Inefficient allocation of scarce working capital can, in the long run, make all the difference between a growing and a stagnating business.
Zero Production Bottlenecks
Firms are using sophisticated inventory management techniques and strategies to ensure there is adequate raw material for smooth operation of the production line without unnecessarily high stock levels. Optimum inventory levels are calculated after considering variations in demand, efficiency of the production line, buffer requirements, and pace of order fulfillment by the suppliers.