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inventory_managementDistributors around the globe face similar challenges with inventory. These common problems put distributors at a competitive disadvantage as customer expectations rise.

Common challenges include:

  • Too much of some products – excess inventory and dead stock lead to decreased turnover and profitability.
  • Stock-outs of other products – resulting in backorders, lost sales, and dissatisfied customers.
  • Knowing what is in stock – the on-hand quantity in the computer system does not agree with what is actually on the shelf in the warehouse.
  • Material misplaced in the warehouse – material is “out there somewhere” but can’t be found when it’s needed.

Effective inventory management
A systematic plan to achieve effective inventory management will allow you to meet and exceed customers’ expectations of product availability. In addition, effective inventory management will maximize net profit by minimizing total inventory investment. Effective inventory management results from the balance of inventory control and inventory management.

Inventory control is managing the inventory that is already in your warehouse, stockroom, or store, including:

  • Knowing what products are “out there” and how much you have of each item.
  • Knowing exactly where each piece of each product is located in your warehouse.
  • Ensuring that all inventory remains in salable or usable condition.
  • Storing products to minimize the cost of filling customer orders.

Inventory management is determining when to order products, how much to order, and the most effective source of supply for each item in each warehouse – that is, ensuring that you have the right quantity of the right item in the right location at the right time. Inventory management includes all of the activities involved in forecasting and replenishment.

Customers expect you to know what is in stock and when you can ship. Let us help you find the right balance of effective inventory management with a financial management system that helps you deliver on time and on budget.

Published on 2nd February 2012 by Jeanne DeWitt.

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