Get inventory management basics, whenever an organization comes in to birth, its managing department is the soul for its success and mushroom growth. Big wigs can fail if there are no competent managing departments in the organization. This is why, separate branches of the management sciences have been introduced in order to increase the efficiency of the organization as management keeps all units together. In addition to risk management, performance management, employee management,etc., inventory control management is an important branch which helps in the success of an organization.
Inventory Management System
Inventory management involves admin management, categories management, staff management, customer management, invoice management, expenses management, suppliers management, warehouse management, products cataloging, loans management etc.
Functions Of Inventory Control System & Management
Inventory management is responsible for overseeing the products available in the inventory and their outward and inward flow. The inventory stock management makes sure that there is not any unit in excess nor in little amount in the storage so that the organization’s performance should not come under jeopardy. This management makes sure that the inventory always hangs in the balance when it comes to the units which a company produces and sells.
Functions of Inventory Management:
The functions of the inventory management are as follows:
- The manager of the inventory system has to take great care of time. He should be well aware that how much time a unit will take in processing and reaching the inventory so that the material does not get short in inventory.
- Inventory management is also fed with the cost of all the raw items and their subsequent costs in finished form. Inventory management makes sure that the price of an item does not get too high after including all the taxes. It has to be attentive to all costs from production to packaging so that the prices should not get higher.
- Inventory management is also responsible for observing the availability of all raw materials which to be used in completing all the orders. Managers have to make sure that all material is available so that all orders could get complete in time.
- It is also a duty of an inventory manager that he keeps account of all raw materials and makes order for their reach in time so that the processing operation does not come to halt.
- Inventory management is also liable for keeping all records of the ready products which has to be shipped. They have to be very clever in making calculation. The items for shipping should not be shorter than demanded by the clients. If it happens, inventory management can wreck the reputation of the organization.
Professional inventory management involves creating a purchasing plan that will ensure that items are available when they are needed.
An inventory can simply be defined as the goods, materials and stocks that a company or manufacturer have at hand. Inventory management is a core task in companies and business organizations concerned with the selling and manufacturing of tangible products and goods. It is concerned with the controlling of the storage, ordering and usage of the assets or stocks a company has at hand.
The company’s investment is tied up in the assets until the stock is sold, or the material that it is used in producing is sold. Inventory management is quite in a business enterprise as it saves the business a great deal of money. Companies spend much money in insuring, storing and even tracking of the assets and stocks. Thus, when properly managed, many costs can be saved.
Inventory Management Overview
What is Inventory Management?
Methods of Inventory Management
There are basically two methods :
- Just – in – time asset management method,
- Material requirement planning.
In this inventory management, companies ensure that they do not pile up stocks and maintain high level management. This method is quite simple as it involves the reception of the items when they are required. This goes a long way in order to reduce the amount spent on the insurance, tracking and storing the stock.
Material Requirement Planning
Forecasts and sales are used by the companies involved in measuring and ascertaining the amount of materials needed in the asset. Thus, this method of inventory management utilizes the past sales as well as forecasts to determine the quantity of stock to order and to purchase.
How to Ensure Effective Inventory Management
The inventory managers are responsible for the management of inventories in an organization. They are professionally trained to track the inventory and ensure that losses are minimized.
- To keep losses low, there are things to ensure and also to avoid.
- This is important to make it sure that the asset is not too much or too small. The inventory or stock at hand should be kept minimal. If the stock is too big, y one may end up selling the redundant stocks at giveaway cost.
- Tracking of the asset in companies is critical. It is important to leverage the required tools to track asset in order to avoid loss and shortage.
- In large organizations, the inventory may get too large that it becomes impractical to count all the stock at each point in time. In such cases, you need to have priorities and go by them. This simply implies giving attention to those stocks that are high selling and more important than others. Such stocks should be counted more often than other less important stocks.
- Most companies use spreadsheets in inventory management. However, spreadsheets could be easily deleted, and the changes you made could be easily lost. There are lots of advanced software that can be used in tracking and managing asset. A good example of such software is Quickbooks and Peachtree. With these pieces of software, you will get great value for your money.
- It is also important to backup your inventory. Many uncertainties exist today that might simply cause you to lose those data. By backing up your data, you will ensure that loss and mismanagement of inventory will be reduced.
How to manage your inventory? If you don’t use professional ways inventory can get some trouble for you. Inventory management is an interesting subject and is an effective process used in almost all industries, companies and organizations in every field. From manufacturing organizations to IT sectors, inventory management is used and it indeed pays an important role in the company or industry. The inventory management can be defined as the management that will help us to use the things in hand effectively by giving out the details on how to use it and by describing the end results of a finished product. Inventory management can be defined as the effective process that will help us oversee the flow of items into the inventory and the flow of the items out of the inventory. The process of inventory management is to control the transfer of the units so that we can prevent the inventory from becoming large or high which can make the operation work wrongly. Inventory management is also used to control an inventory cost which means that the total value of items and generated tax is managed.
Inventory Management Basics
A balanced inventory management is to be adopted. To do so, we need to focus on three man aspects in an inventory. Those three main aspects in an inventory are the following:
- Time: time is the first aspect in the inventory which is considered as an important factor. From the aspect of total inventory, this factor means understanding the time it takes by a supplier for processing an order and delivering it. The time aspect also considers the time taken to successfully transfer the materials put into the inventory out of it. By considering the above things, we will know when to place an order and the quantity of the order to be placed.
- Buffer stock calculation: buffer stock calculation is also a key factor of inventory management. The buffer stock represents the extra units and minimum units that are in the inventory. These are considered to maintain proper production levels. For example, we can keep two or three extra units just in case so that they can be used in emergencies.
- Operation stages: not only time and buffer stock plays an important role in inventory management, stages in which an operation is performed is also considered as an important factor in inventory management. Tracking good and bad materials in the inventory is also important factor.
All these factors and records are to be maintained accurately so that they can finish appropriate number of units and can ship them. Adding new items to inventory and deleting the shipped items from the inventory are to be monitored properly.
How to get involved proessional inventory management systems? If your business is involved in any sort of retail sales, you know how important it is to properly oversee and manage your inventory. Thanks to barcodes and computer technology, there are many inventory management systems that can streamline the process.
These systems can help you accomplish in a matter of hours what otherwise would take days or even weeks to implement. With the use of inventory management systems you can track your store’s stock from the moment it enters your place of business until it is purchased. It can help you save money and increase revenue in a number of ways.
Inventory Management System
By tracking how quickly and in what volume a particular item sells, you will gain a big picture overview of which items to keep in stock and which ones to discontinue selling. This will help you with sales forecasting, so you will be able to make more accurate projections of the potential of certain products to boost your business.
By knowing exactly how much you have sold, you will also know when to reorder popular items. Some of these programs can be set up in such a way that they will automatically reorder when your stock hits a certain number. In turn, this helps increase customer loyalty. Customers tend to return again and again to the stores that are most likely to have whatever they are looking for in stock.
In addition, this feature can assist your efforts in loss prevention through both customer and employee theft. If you can track both how many of an item you should have in stock according to sales and how many are actually on the premises, you can put security measures in place to decrease the theft of items that are the most likely to be stolen.
When an item is not selling well, you will know that this product is a waste of floor space and expenditure. By eliminating these items you will free up space for more lucrative products, and can consistently adjust the items you carry to coincide with sales trends.
Many smaller retail businesses continue to do things the way they have always done them with inventory because it is familiar. The worry is that the learning curve will be too steep, but this fear is unwarranted. Most of the newer inventory management systems are intuitive and user friendly. In a single training session, you can bring yourself and your employees up to speed on their implementation and use. Once you have learned the system, you will find that it requires very little effort comparatively, and that the positive results your business will experience are well worth the time and money spent on the new system.