Companies that are already established and advanced are usually able to manage inventory management to support the goods and services they sell to the company.
Sometimes if the company can’t manage its inventory whether it’s their own products or semi-finished goods and raw goods, it can hamper the process of making these goods or sometimes it can also hamper the implementation of the services offered by the company. This is why Inventory Management is important.
Inventory consists of:
Inventories of office equipment, are supplies that are needed in carrying out organizational functions and do not become part of the final product. For example stationery, paper, printer ink.
Raw material inventories are items purchased from suppliers to be used as inputs in the production process. This raw material will be processed or processed so that it becomes a finished product. For example, the furniture industry requires a supply of raw materials in the form of teak and rattan.
Work in process inventory, is part of the final product but is still in progress because it is still waiting for other items to be processed.
For example, in the bakery food industry, supplies in the process are in the form of bread dough from several ingredients which are then ready to be cooked to become bread.
Finished goods inventory, is the inventory of final products that are ready to be sold, distributed or stored which is the core process of the company. For example in the car industry it includes the car itself.
Controlling inventory or proper inventory management is not an easy thing. If the amount of inventory is too large, it will result in the emergence of funds spent too large, increased storage costs (such as employee costs, factory operating costs, building costs, etc.) and a greater risk of damage to goods.
However, if there is too little inventory, there is a risk of a shortage of inventory ( stock out ) because often inventory items cannot be brought in suddenly which indicates the cessation of the production process, delayed profits, and even loss of customers.
The main purpose of inventory management in the company is to keep the inventory of goods stored stable enough so as not to interfere with the production process. There are several other purposes of this method, including:
- Ensure that raw materials are available for production in safe quantities.
- Give the company time to manage the purchase of raw materials
- Anticipating changes in demand and supply of production goods
- Reduce the risk of raw materials arriving late
- Adjusting the production schedule of goods
- Anticipating the risk of rising raw material prices
CACs team of experts is ready and available to discuss your challenges and provide a roadmap to success.By contacting the expert team of CAC, you can avoid excessively storing those products that are seasonal or won’t give any profit to your business. The professionals of CAC will guide you throughout the process and will help you making your inventory management more efficient.