Business inventory management is the stock management that takes place in a firm. It means knowing what goods you have stored in what numbers. It involves basically two primary questions when to order and how much to order. Business inventory management also includes checking the time in between stock deliveries, seeing when the stock is low, needs to be reordered, costs of delivery, forecasting future needs, stock valuation, returning damaged goods and more.
Stock management is necessary for minimizing business costs. Having surplus stock available wastes precious space and heightens cost. Identifying and controlling stock levels enables a business to operate smoothly and keep storage costs in check.
Managing stocks and inventory is not a new phenomenon in the business world. indeed it has always been a necessity for sellers. Previously shopkeepers used to write down orders and purchases to keep track of their stocks and forecast requirements. In spite of all the skill and intuition of the seller the method was hardly accurate. The Industrial Revolution shifted focus to skill and efficiency. The modern checking out system used for inventory management was developed in Harvard during the 1930s, however at the time it proved to be too expensive to use.
The forerunner of the barcode system was developed in the 1940s. It used to ultraviolet light sensitive ink and a reading device to mark sale items. As technology has evolved and is more readily available business inventory management systems have evolved. One of the most popular methods used along with bar-coding is vendor managed inventory. In this method the vendor is made aware of their product leaving the shelf of a retail store via computers, at the end of the given time period the vendor knows what sales have taken place and is in charge of sending the new stock over to the retail outlet.
Business inventory management is necessary for the smooth workflow of a business. For successful management, a business can use market research to find out which products customers want and in what quantity. Analyze sales data from previous years in order to anticipate future demand. Experience from previous years also comes in handy to predict the sales of stock. Suppliers are the key for the smooth management of inventory, make sure that your supplier is reliable and doesn’t cause unwanted delays in delivery. Study lead times (times in between the stock ending and stock delivery) in order to measure the time most effective for ordering. Establish stock levels, the maximum, minimum and the point where it needs to be re-ordered.
Tips and comments
For better business inventory management, verify at the time of delivery the count of cartons, making sure the same number that was ordered has been developed. Check cartons for any visible damage if there is any note it on the delivery receipt and ask the driver to sign the copy. After delivery check for damages, any damaged goods should be retained at the point received. Do not return the damaged items with the consent of the supplier, or dispose of them without the carrier’s permission.