Businesses always want to be able to process inventory quickly to limit costs and save labor. But managing inventory effectively is not easy. This is a problem for any manager. Because in the process of inventory management, you will always have to update modern management software and machines with many features to shorten time and improve labor productivity.
The article will be the most overview picture of inventory management. It will help you gain more knowledge and answer questions that most people ask.
Inventory management is a system whereby stock and assets are tracked as the entering and leave a destination whether it be a warehouse wholesaler or final. Point-of-sale stock review is the easiest method to perform and it is most appropriate for small businesses. The advantage is its simplicity. The disadvantages are that it's a time-consuming process and it's highly dependent on the skill and know-how of the person conducting the inventory.
Important of inventory management as:
Tracking inventory levels is a crucial aspect of managing a successful business. With accurate and efficient inventory tracking, businesses can ensure that they always have the right amount of stock on hand to meet customer demand and avoid costly stockouts or overstock situations.
Implementing an effective inventory tracking system allows businesses to monitor their inventory levels in real-time, ensuring that they have visibility into what products are in stock, what products are running low, and when it's time to reorder. This not only helps streamline operations but also improves customer satisfaction by minimizing delays and ensuring timely fulfillment of orders.
Setting optimal inventory levels involves determining the right amount of inventory to maintain in order to meet customer demand while minimizing holding costs. Businesses aim to have enough inventory on hand to meet demand without overstocking. To achieve this, they set:
Other considerations include lead times, safety stock buffers, seasonality, and trends. Inventory optimization models can help determine ideal stock levels.
Placing and receiving orders are integral components of the procurement and inventory management processes in businesses. Purchase orders need to be placed with suppliers to replenish stock. A receiving process should validate shipments against orders before stock is added to inventory.
Costing inventory involves assigning and tracking the costs associated with the goods that a business holds in its inventory
There are various methods for costing inventory, and the choice of method can influence how a company reports its financial performance. Here are some common inventory costing methods:
Reporting in inventory management involves the generation and analysis of various reports that provide insights into the status, movement, and valuation of a company's inventory. These reports are essential for making informed business decisions, optimizing stock levels, and ensuring efficient supply chain management.
Key inventory management reports might include:
Proper inventory management provides visibility and control to optimize overall working capital for a business.
Inventory is always stored for business use under certain circumstances. Although there is always a tendency to want to sell out of stock and not want to have inventory for a long time, they still have to keep a certain amount of inventory for the following purpose:
In general, there are several types of inventory management as:
Some types of the inventory we can categorize inventory as raw materials, work in progress and finished goods.
There are 4 mistakes when managing inventory that, if you don't pay attention, you can lose hundreds of millions of your business.
If you do not regularly schedule inventory and do not have periodic inventory reports, this will lead to serious consequences. Typically, when a business needs a number of goods to supply to a partner, it will not have enough supply or do not know all the expired items. At this point, the business will have to cancel that shipment. This will cost your company a great deal of money.
While the minimum amount of inventory cannot be determined, a business may hold more than required or less than it needs. If storing a number of goods in the warehouse but the enterprise does not have the norm, when customers or sales staff need a large number of goods to export according to market requirements, the company will not have enough goods to supply them. This will lead to your business losing credibility with partners and losing sales opportunities for the sales team.
Items that are frequently needed by businesses, if not arranged properly, will take a long time in the process of exporting. Typically, if you leave the goods inside, it takes a lot of manpower to move inside when needed. Such arrangements of goods will take time to pick up and unload. In addition, it can cause the goods to be crushed, the goods are dented or damaged unsatisfactorily. In the end, the business has to take it out and destroy it, which costs money.
If the management software or warehouse machinery is not upgraded, it can pose great risks to the goods in our warehouse. Therefore, it is necessary to update regularly to upgrade the warehouse management tool for your business. This will help you optimize the company's time and money.
👉 Read More: Top 20 Inventory Management Software (Free And Paid)
In fact, you will have to face many problems in the process of managing the warehouse of your business as: Typical secure excel file, easy to repair, difficult to expand, accounting software is relatively difficult to use, requires technical skills in accounting….
Therefore, there should be many people who are warehouse managers, warehouse accountants or business owners who are still having a headache: How to synchronize warehouse data or software data in files with each other?
For software warehouse management, there are two common types: accounting software and management software. Regarding software accounting, it will work according to accounting principles.
So, it is necessary to have professional and experienced accountants to be able to check all transactions in warehouse management. That's why accounting software is for accountants. Left with managers who do not have much accounting skills, they often use sales management software or specialized warehouse management software to solve problems.
In sales management software, it is one of the easiest to use because sales managers will often be interested in how many businesses sell, how much revenue they have, rather than the sales. enterprise specialized profession.
Inventory management is normally entrusted to an inventory manager. The inventory manager must have the following characteristics:
In Vietnam, an inventory manager has a salary of 9-10 million VND depending on the workload, working location, and the size of the warehouse. The current warehouse manager has a salary of 10-15 million depending on the workload, the size of the warehouse, the industry, the commodity segment, the business or the location.
In the US, an inventory manager can achieve a salary of up to 10,0000 USD.
The key to inventory management is finding the right inventory range to balance customer satisfaction and business costs. You need to have enough inventory but not too much. The inventory manager must be focused on defining the right inventory level and constantly checking it. To meet customer demand and its fluctuations, you should keep a level of extra inventory. On the other hand, the money spent on maintaining this extra inventory represents an additional cost.