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Inventory management consists of knowing the status of a company’s merchandise, including raw materials, semi-finished products, and finished products. Some companies simply carry out periodic management of their references. However, others require much more extensive stock management, as they have production processes, higher product turnover, and customer returns. Whatever the case, inventory management companies are a key solution to achieve greater profitability.
Today, we will see what inventory management is, why it is so necessary now that companies manage a growing number of references, and how it should be implemented.
Inventory management encompasses a set of processes and methods intended to monitor, order, store, use, and sell a company’s stock. By knowing in detail all the inventory of a company, its flows and operations can be better planned and organized.
Inventory management would include stock management, which consists of recording the acquisition and marketing of products. A company must have a minimum stock to provide a service and must determine its reorder point, which is the moment at which the replenishment order must be launched.
In this way, a balance can be made between the items that enter and leave the warehouse to know their availability. Inventory management requires taking into account fluctuations in demand, lead time, and business operations to define the number of products needed to properly serve the customer.
Why do inventory management?
What is sought with inventory management are two basic objectives: minimize the cost of storage and provide excellent service to customers.
Having the optimal stock and maintaining the correct stock balance in your warehouses is essential for the profitability of companies. The reason is that stock breaks could cause delays and complaints from customers.
On the other hand, it is not desirable to have an overstock, because it entails an additional cost and the merchandise could become obsolete.
How to do inventory management?
Inventory management is a process that can be carried out in three different ways:
Paper or manual. The operators have a list of the product catalog, they go through the warehouse checking the number of available articles of each reference, and, immediately afterward, they write down that figure on paper.
The drawback of this working method is that mistakes can be made, which is why it is only viable for small companies with minimum stock and turnover levels.
Excel. With this program, you can make lists of items in the warehouse. Unlike paper, Microsoft Excel has specific templates for taking inventories and data can even be collected directly from barcode readers. However, practically the entire data entry process is manual, so the probability of errors is quite high.
Warehouse management system. Performing inventory management manually is exhausting and the risk of error is very high. In contrast, a WMS eliminates paper, speeds up inventory management, and eradicates errors.
This software manages all the inputs and outputs of the products, so you can keep complete and safe management of the processes that each item passes. Another option which in our view is the best is to choose inventory management companies for this work and let the professionals do their job and provide you with the necessary advice whenever your business needs it.