With rising inflation, businesses are finding new ways to manage the impact of higher costs for goods, services, and staff. More than ever, leaders need to closely monitor their inventory management to minimise unnecessary costs and maximise efficiency.
The primary purpose of inventory management is to ensure there are enough goods or materials to meet demand without creating excess stock, which leads to higher expenses. Businesses that effectively manage inventory can ensure maximum return without affecting customer satisfaction, largely enabled by making the right investment in stock.
Business owners can also take better charge of their costs if they have access to detailed historical financial data, much of which is readily available from inventory management systems.
Those that integrate inventory management functionality into their enterprise resource planning (ERP) system can unlock a competitive advantage during times of economic challenge. It can predict future cash flow requirements, provide a better idea of how much to order and when, and avoid wasting money or lines of credit on a stock that won’t sell until the next quarter or later.
Here are three ways inventory planning and management can benefit businesses in times of inflation:
Freeing up cash
Ordering the right amount of stock means less money will be tied up in inventory when it isn’t needed. Insight into real-time inventory can help ensure businesses are not over-ordering stock, which saves money on excess storage and frees up capital for more timely or pressing investments if needed.
By adopting financial forecasting strategies to help guide price point adjustments, managing staff or overhead costs, tracking credit and managing stock levels, business leaders will be in a better position to sustain operations, even in a challenging economic climate successfully.
Maintaining better terms with vendors and suppliers
Having real-time visibility into inventory management can provide businesses with insights into which products to sell and in what volume. Having this knowledge can be leveraged to negotiate better prices and terms with suppliers. With costs of goods increasing, these savings are particularly valuable to a business’s cash flow.
An ERP system with inventory management capabilities can provide an end-to-end view of orders through all departments, from sales to accounting to fulfilment. Centralised purchasing reduces duplication when replenishing stock, and having the ability to purchase in bulk can often save money.
Retaining customers
In an era where customers expect orders by the next day, and the nearest competitor is one click away, businesses need to do everything they can to avoid out-of-stock situations. This means businesses must keep their existing customers satisfied by ensuring their inventory is well-stocked and goods are received on time.
Having good inventory control means that businesses have visibility across stock levels, which also increases efficiency as a time to fulfil orders stays low. Using inventory management software that handles data collection and analytics can provide insight into business trends. This can help inform what stock is in demand, a necessary step to improve stock forecasting. By making data-driven stock decisions, businesses can reduce inventory and carrying costs.
By using an inventory tracking system’s automatic reorder point, purchase orders can be automatically generated as soon as a business hits the ‘reorder point’ on any product. This can result in more consistent stock levels to meet the demands of customers while also providing cost savings over time.
Saving critical time and money through inventory management
In times of inflation, inventory management is critical for businesses to stay on top of their cash flow while staying ahead of the competition. Having an inventory management system that integrates with a business cloud ERP system can benefit the business by freeing up cash, helping create better terms with vendors and suppliers, and supporting customer retention.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
