Importance of Inventory in a Manufacturing Unit

Before I delve into the generics of Inventory a policy of inventories has to be made. First on receipt side by ABC, VED, and relevant analysis and see that inventory is maintained at that level with few exceptions. This has to be controlled by Chief of Materials. The Marketing Manager has to make a policy for finished goods and he has to control the same. To facilitate the inventory control the suitable Market available Software can be used and the data can be fed into the software as per the policy decided.

Manage your store smartly and earn higher revenue, no matter how big or small the business is, it is very important to keep track of all the activities including stock status that took place at the store and make decisions wisely. The changing and fast nature of business has made it more crucial to keep track of stocks and act accordingly. Inventory is a deciding factor of return on assets which provides stability to your business with good inventory management system. It will not be an exaggeration to call inventory the heart of any business. All business relies on inventory system for proper running of the business. Inventories are the real assets of small business. Inventory system play crucial role in managing all goods or products it also shows the flow of sales.

Inventory management techniques will improve your inventory turnover ratio and transform frozen assets into cash

Benefits of inventory management

  • Reduce your cost of inventory obsolescence
  • Become truly responsive to your customers’ real needs
  • Make your scheduling and shop loading more efficient
  • Narrow the gap between sales and stock replacement
  • Fine-tune your record-keeping accuracy for better inventory management
  • Determine your exact material status and inventory dollar burden

The application of inventory system helps in managing control operating cost with the tools like forecasting based sales trend.

The cost of selling goods is determined at the close of the inventory. Starting off the inventory mark purchase of the products and ending determines sales of the products.

Managing business and tracking stock is easier at the initial stage of a business but once the business starts expanding managing the inventory on a regular basis becomes a tough task. Inventory management is must for full utilization of available resources. Many business organizations are relying on inventory management software.

Though managing inventory is necessary for all kinds of business, but it is more crucial for those who are involved in retail businesses. Inventory helps in assessing exact status of the production and helps in timely delivery of the products. A proper management of inventory makes big business easily manageable.

A manufacturing inventory contains all the data about raw materials, finished goods and production goods. Tracking inventory on a regular basis could save you from loss and it helps in saving money as well.

It is a good idea to install inventory management software it will gradually increase the turnover of the business and will earn more revenue for the business. An unorganized or poorly managed inventory can harm the future of the business resulting in great loss. Inventory is the best friend of your business so handle it carefully and run your business smoothly, even a little bit of mismanagement could cause you a fortune.

The best thing about inventory software is that it keeps you updated about the stock. Check the status of goods that are running out of stocks or mark the goods which are over-stocked and book the order accordingly.  It continuously monitors the stock and removes the chances of delay in realizing the demand of the manufacturing unit.

The dynamics of businesses keeps changing and managing the figures of sales and purchase is a tricky task especially for the big stores. Instead of hiring big staff for keeping track and updating calculations it is better to choose a good software and keep track of earnings and expenditures at your finger tips. The best thing about inventory software is that it provides error free data.

The use of inventory system helps management control operation cost with the use of tools like forecasting based on sales trends.

The benefits of inventory management are worth considering but if you find the initial set-up cost high it is better to go for a bank loan and automate the inventory. The inventory software not only keeps the track of stocks but it also takes care of various other aspects of the manufacturing department.

There are several inventory softwares search it on the internet and learn about all the available options and choose the one that suits your business and organizational needs .

  • Munusamy Janaki

    Thanks for sharing

  • Patricia Kanyemba

    I it possible for someone to share me an inventory policy.

  • Chander M D

    This is so easy to understand the importance of inventory in a manufacturing set up. I am a retired Materials Management professional and Mr.V.S.Rama Rao’s article is in a simple language to understand , practice and teach others on the subject. Thanks to the great work of  VSRR. It is a learning even after 40 years of my professional experience in Stores.

  • Precisely!  Since it
    is important to keep track of your inventory, it would be important to have an
    inventory management system. It simplifies workload and minimizes inaccuracy in
    inventory records. Whether you are running a small or big business, this system
    will help maintain losses and errors at a minimum, while helping make the
    workflow even more efficient.