Effectively controlling inventory will save you money. It will also provide other advantages when it comes to cash flow. Inventory is a key factor in cash flow management. It reflects money that you have spent, but you won’t get cash until the inventory has sold.
The Importance of Moving Inventory Quickly
The longer you have inventory on your shelf, the more expensive it will be. Inventory sitting on the shelf is cash frozen in space. Not only do you not get the cash from the things not sold, but you are also spending money to store inventory. Inventory control techniques can help you maximize inventory turnover and save you time and money.
The better control you have over your inventory, the more familiar you will be with the amount of inventory you have in stock. The amount of inventory you have in stock impacts sales. It determines how much you have available to sell, and it influences how much inventory management you need to purchase.
What Are Your Minimum Stock Levels?
You can maximize inventory control by setting minimum levels for all of the items you have in your inventory. Identify the items that you need to have on hand. When your inventory dips below preset levels, you know the time has come to order more products.
If you can keep your inventory to the bare minimum to meet sales requirements, you save money because you reduce the amount of inventory you have in storage. This means reduced storage costs, reduced handling expenses, and reduced insurance, depending on the product.
When you set minimum stock levels, think about how quickly an item typically sells and how long it takes to get items back in stock. Review your minimum stock levels multiple times during the year. You want to make sure that the quantities you are purchasing and holding onto are still relevant to current demand. If not, you will need to make adjustments up or down.
Forecasts Accurately
A key part of optimizing inventory control and minimizing inventory expenses is being able to predict demand accurately. There are a ton of variables that impact your ability to forecast demand accurately. For example, what are current market trends? Historically, how much do you sell of a particular product during a certain time of the year? If there are seasonal spikes or dips in sales, you will need to adjust for these accordingly.
Take Advantage of RFID Asset Tracking Systems
RFID can automate asset tracking. Active RFIDs are radiofrequency identification tags. They have a built-in power source and their own transmitter. These tags are used as support sensors that monitor conditions like temperature, humidity, and light. This makes them perfect for warehouse environments.
RFID barcode labels are used for asset tracking. They are an efficient alternative to manually looking for serial numbers. You can read multiple tags simultaneously without needing a line of sight between the tag scanner. This means that one of your employees could inventory an entire room of equipment in a matter of minutes.
RFID tags provide critical service information on inventory assets. This gives you more control over asset lifecycle management. Some organizations integrate RFID sensors with GPS technology. They have both the asset condition and the asset location.
When determining if RFID tags can help improve your inventory and reduce costs, you want to evaluate the RFID implementation cost and compare it to savings. RFID tags can remove the logistical nightmare of tracking and give you a complete view of your inventory without expensive and time-consuming manual efforts.
Supply Chain Management
Streamlining the supply chain allows businesses to improve time-to-market, reduce inventory stock, free up cash flow, reduce cycle times, and increase profits. Supply chain optimization allows your organization to make wise decisions that clearly improve customer service and reduce inventory costs.
Conclusion
If your organization needs to hold onto inventory, your inventory represents an investment of money and time. You should regularly audit inventory stock and your overall warehousing operations. Look for ways to optimize inventory control. If you can optimize supply chain management, use RFID tags, forecast accurately, and identify your minimum stock levels, your business may improve inventory efficiency and save money on inventory.
