Is Inventory Management the key to your bottom line?
Is inventory management the key to your bottom line?
If you are in the business of selling products, your inventory may be your most important asset. If growing your business is your goal, then you must make inventory management your primary focus.
In merchandising, inventory is the backbone of your business, and a healthy inventory management system will keep you on top.
Take an in-depth look at how you’re handling your inventory today, if you are ready to take your business to the next level. It can make all the difference as to what shows up on your bottom line.
Here are some benefits of building a robust inventory management system for your business:
- Your cash flow will strengthen
- Your inventory turnover will instantly improve
- You will be freed up to experiment with new markets
Inventory management and cash flow
When you manage your inventory properly, you get access to hidden cash. Cash flow gets stifled when you hold on to the wrong type and amounts of stock.
To manage your inventory properly means that you will have the correct amount of inventory to meet your customers’ needs. Not too little—not too much. And certainly not the wrong kind!
This goes to say that you will have the optimal quantity of the right inventory to meet your customers’ needs. This also means you will reduce your expenditure on up-keeping of the wrong inventory.
When you maintain the right inventory in the right amount, you will not have to worry about running out of stock. Sometimes when you run short on stock, you end up having to pay for expedited shipping to meet your customers’ deadlines – not ideal.
When you know the optimal order quantity for your products, you will know where to spend your money on inventory. Remember, products with high turnover rates will lead to better cash flow than those that sell less often.
The right inventory will allow you to cut back on your expenses and free up cash that would otherwise be tied up in slow-moving inventory. With your improved cash flow, you can invest in other sales channels and products.
Consider wholesaling if you typically sell retail, and consider retail if your operation is primarily wholesale.
Using inventory management to improve your inventory turnover
The better you manage your inventory, the better your inventory turnover. The better your inventory turnover, the better your bottom line will work out for you.
A definition of inventory turnover is: “A measure of the number of times inventory is sold or used in a period such as a year.”
Start managing your inventory correctly and you will start seeing success right away.
You must improve your inventory turnover if you want to grow your business. The more you sell, the less likely your products will become obsolete or expire on you. This is to say you are running an efficient inventory management system.
Easy to say ‘Sell more,’ but how do you actually do that, you ask? One way to achieve this is to get your customers to place pre-orders. This can help you from running short on products. Most importantly, it will give you sales even before you head out to restock your warehouse. In other words, it will tell you in advance what to order and how much.
This is particularly relevant to the forecasting aspects of your inventory management system. And it serves as a guarantee to your quantity of sales and revenue.
If you take pre-orders from your customers, however, be sure to remind them that their product will take longer to get to them than if it was readily available in your stock.
How the right inventory management leads to new customers
The better your inventory turnover and cash flow, the better you will be able to create new markets and clients. With freed up cash from your fast-moving inventory you can grow your business. And with today’s Inventory Management software you will do just fine managing your new-found success and growing your business.
In the past few years, such software has come a long way. For instance, if you are selling on one platform and you want to add another, you can use simple tools like those provided by Salesorder.com to simultaneously maintain visibility across all your channels. When your customer purchases an item on one platform, your inventory levels on the other platforms will automatically adjust to reflect the change.
If you need access to business intelligence such as which channel to invest in, the information will be at your fingertips.
Inventory management software helps you track your best selling products and even provides insight into your customers’ purchasing patterns.
Proper inventory management is the key to improving your bottom line, and choosing the right inventory management system can get you there. It allows you to grow your business by strengthening your cash flow, improving your inventory turnover, and even shows you new sales channels to meet your growing customer needs.
To choose the right system, why not talk to an expert?