Inventory management is a chain of processes and on-going tasks that depend on many factors. This is why inventory management is considered to be one of the most complex processes of a business.
Below listed are 6 main factors that affect inventory management.
Consumer demand
Maintaining the right stock levels accordance with the consumer demand is a key factor directly affect inventory management flow.
To give you an example, you might receive a higher demand for item B than item A during the holiday season and experience a high demand for item A than item B during Summer. Thus, there is no point of ordering the same amount from each item when ordering stocks throughout the year as one or the other will always overstock or stockout all the time.
To always have the items in the right amount in your stocks, you can use data collected from sales to identify user behaviours and patterns so you can predict future consumer demands.
Financials
Getting your financials right is crucial when it comes to inventory management as every step of the process involves a great deal of financial risk. Spending too much on inventory can cause money problems and spending too little can create unhappy customer reviews online.
By planning the spending of each inventory management task such as item ordering, tax costs associated with stocks, transportation, storage…etc strategically you’ll be able to handle your inventory management process smoothly reducing major cashflow problems. Additionally, it’s also important to pay attention to fluctuations in the economy that affects the financial factor of inventory management process.
Suppliers
Having a reliable group of suppliers is an essential factor to maintain a seamless inventory management without comprising the customer satisfaction. It is huge in order to minimize delays and shortages of stocks which can directly affect on production and then on order fulfillment. No matter how reliable your suppliers are, having a backup supplier will always give you that extra guarantee of a delay-free manufacturing process.
Products Amounts
Having the right item in the right quantity in your inventory will enhance not only the smoothness of inventory management but also of the entire supply chain management process.
Having a good understanding of your inventory item levels, consumer demand, item shelf life…etc will help you always maintain all the necessary items in the necessary level. For an example, it’s better to order items that are shortly perishable in short amounts more frequently so you can avoid wastes.
Managing tools and technology
Introducing modern technology to your inventory can save you both time and money while improving the efficiency and effectiveness of inventory management processes. With the right tools and systems in place, you’ll be able to streamline your inventory management process further.
Thus, the productivity and the efficiency will get improved drastically. Tools like barcode scanners, label printers, mobile computers…etc along with a good inventory management software can double or even triple the speed of your inventory processes, as the new technology involved with these will help you do the counting, recounting, receiving, picking…etc more efficiently.
The smoothness of the supply chain process
Inventory management is a part of the supply chain process of a company. Therefore, any issue or delay in the supply chain management process will affect your inventory management.
For an example supplier delay in raw material orders or a delay in logistics will cause delays in stocks and productions. Thus, the seamlessness in your supply chain management process is another main factor that affects inventory management.
Wrap Up
When it comes to inventory management, the number of variables that can affect is numerous. Some of them are internal while others are external factors. So, it’s always important to be aware of these factors in order to maintain a smooth and seamless inventory management all the time.
