Posted by Jonathan Crowell
| Even successful distribution and manufacturing companies say that inventory control is among the top reasons why they struggle with growth. The balancing act between having too little or too much inventory has always been a moving target. Seasonality and changing trends over the course of several years, make it difficult to know how much inventory is “just right” . Finding that balance requires you to utilize the “best of breed” in technology and inventory systems to retain your customers in a highly competitive market. The Not So Obvious Effects of Inadequate Inventory Control When you can’t quickly fill customer orders because of stock-outs, even your loyal customers will start to look elsewhere. The loss in revenue is obvious, but there are more long-term effects that aren’t as immediately noticeable. Your competition can quickly wiggle in the door when you fail to deliver, your employees (especially your best salespeople) will get frustrated and could consider looking elsewhere, and it hurts your image as a reliable source for your customers. Customers will continue to give you their business until you give them a reason not to. When that happens, most people won’t tell you that they are looking to find someone else that can better fill their orders until it’s too late. If these customers are lured elsewhere because of repeated stock-outs you also lose their recurring business. Every one of these lost customers is a lost source of recurring revenue. |  |
The Hidden Costs of Excess Inventory
Inventory that doesn’t move is cash that should have been put to better use. It is money that could reduce debts, purchase more fast-moving inventory, and boost marketing and sales to expand your business.
All inventory has a limited shelf life because of changing consumer trends, spoilage, obsolescence, and material degradation. When your inventory exceeds its shelf life, it’s like hauling cash out to the dumpster, it’s not coming back.
Storing excess inventory is expensive too. You are paying rent on oversized warehouses, it uses up space that would be better used for faster moving items, and excess inventory gets in the way of optimizing your warehouse operations plus it adds an unnecessary labor cost.
Steps in the Right Direction
- Identify the strengths and weaknesses within your company by working with a specialist in current technology and inventory systems.
- Then find the hidden opportunities to make improvements.
- Know exactly how much inventory you have, its accurate location, and the turn rate for each item and each product line.
- Conduct timely reordering scientifically, based not only on sales history but on upward and downward trends.
Call us at 704-846-6750 or email at info@interdynartis.com.
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