Inventory management is a very important topic for all businesses irrespective of their size and format. This is the process by which any business administers its physical stock and controls the inflow and outflow of products from purchase through procurement to final sale. This will include tracking the inventory by location and choosing when to forward the purchase orders and fulfill the sales efficiently.
Defining inventory management, a CEO of an inventory management firm says, “Inventory management is the process to manage physical stock or products that you buy for sale. It includes procuring, storing, managing and ensuring that product is there when customer is ready to buy it.” Explaining the key to inventory management, CEO of one another inventory management firm says, “Being able to know where your pieces are at all times is pretty much the key.”
Inventory management is a very important process for a wide range of businesses like retail firms, logistics operations, shipping companies and manufacturing firms. The process of how exactly inventory management is done is dictated by the kind of inventory it requires. For instance, a retail business is required to keep track of the location and quantities of the goods it is selling. On the other hand, a manufacturer needs to know all about raw materials and also finished products.
For instance, let us assume you are selling a particular commodity. The first thing you must do according to a CEO of inventory management company is, “predicting how much you’re going to sell per quarter and place an order for those items.” Here are the three most important questions related to inventory management.
Where you will store the products is the first question in inventory management. The two options you can think of include a warehouse or a physical retain environment. Online businesses may explore if any separate location is needed to store the product or if there is enough room in your office.
Quantity to be stocked at a given time
At a given time, how much of the product you are going to store is the second question. An accurate projection of sales will help understand this question better. Inventory control is the process that lets you decide how much of the products you must purchase and stock at a given time. Striking the balance is the key to do this efficiently. Too much inventory known as dead stock on one hand and running out of stock to fulfill the orders on the other hand – are the two situations that you must avoid for the good of your business.
How is the inventory stored?
Storage is a big topic. It is not just arranging the space required to stock the products. It also includes setting up bins and aisles, ensuring the proper condition of the storage location for the safety of the products, and putting a quality assurance process in place to guarantee that the products that are delivered are in good condition.
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