Inventory means raw materials that are applied in production and the goods which originated for sale. A company's stock represents one of the most necessary belongings it has due to the fact the turnover of stock represents one of the important sources of income technology and subsequent profits for the company's shareholders.
Uncooked materials, work-in-progress, and completed goods, these three are the main types of inventory which are categorized as a cutting-edge asset on a company's stability sheet.
What is Inventory Management?
In short, inventory management is a technique or an overall process of monitoring inventories from raw materials to finished products. The technique mainly deals with ordering, storing, and selling a company's inventory such as management of raw materials and the depository and processing of it. However, inventory management comes with its pros and cons as well but it relies on a company’s needs and requirements.
Commonly Used Inventory Management Methods
As above we have familiarized with three main kinds of inventory and when it comes to inventory management methods so there are plenty of methods to manage inventory which depend on the variety of business or product which are going to be analyzed. However, a company uses its appropriate inventory methods after a relevant research.
Let’s talk about four commonly used inventory management methods including just-in-time (JIT) manufacturing, materials requirement planning (MRP), economic order quantity (EOQ), and day’s sales of inventory (DSI).
1. Just-in-Time (JIT) Manufacturing
Just-in-Time manufacturing is quite an aged type of management method that was developed by Japan in the 1960s and 1970s. When this method was introduced to companies and businesses it had a great impact and from that old time to this modern era, this is one of the most popular manufacturing methods in the world. It saves a lot of time. In addition, this method is very helpful to save a high amount of money and reduce waste by keeping only the inventory which are needed to withdraw and sell products. The method is really helpful in reducing storage,insurance costs, as well as the value of liquidating.
2.Materials Requirement Planning (MRP)
Material requirements planning (MRP) is a supply management system which is designed for businesses. It is a software-based integrated inventory. It helps companies to estimate the quantities of raw materials, maintain inventory levels, and schedule production and deliveries.
3. Economic Order Quantity (EOQ)
Economic order quantity (EOQ) is the appropriate number of units of a company that reduce its total costs related to ordering, receiving, and holding inventory. The economic order quantity formula is suitable for the situations where demand, ordering, and holding costs remain constant over time.
4. Day’s Sales of Inventory (DSI)
Days sales of inventory (DSI) is a financial ratio and metric that helps to determine the efficiency of sales. It helps the company to turn its inventory into enough time. A high DSI means a firm is not properly managing its inventory.
Benefits of Inventory Management
Ideal inventory management plays an important role in running a successful business. Let’s talk about some benefits of an ideal inventory management:
1. Improved Efficiency
By using an ideal inventory management method in your solution means your business can greatly track your inventory metrics and it would be helpful to avoid stockouts and overstocking as well. Ends-up it will help to improve efficiency and save costs.
2. Enhance Profits
When the good inventory method is applied to track the inventory levels. It helps to ensure the right products in stock and meets customer demand. In The End, it increases sales and comes with higher profits.
3. Increased Customer Satisfaction
Inventory management solutions help to have the products in the system which customers want in stock. It helps to keep remaining with the customer's expectations.
4. Better Planning
It is obvious that everyone wants to implement an inventory management system so that it can better plan for the business. Thus, you can make better decisions for the future and help to improve the forecasting in your business.
Top 5 Inventory Management Software in the USA
In this time, in order to have smooth operations and customer satisfaction in the business. It is important to manage inventory. In the USA, there are a variety of inventory management systems but it is hard to get the best for the business. So here is the list of the top 5 Inventory Management Software in the USA:
1. Fishbowl Inventory
This system is specifically designed for small to medium-sized businesses, and it offers a wide range of features, including inventory tracking, barcoding, and manufacturing management.
2. TradeGecko
This system is geared towards small businesses and e-commerce companies and it offers a variety of features including inventory tracking, order management, and sales reporting.
3. InventoryLab
This system is good when you want to get proper insight for your online sell. The solution comes with features including inventory management, listing tools and profit analysis.
4. Zoho Inventory
This system is designed for small to medium-sized businesses and offers inventory tracking, purchase order management, and sales reports.
5. DEAR Inventory
This system is designed for small to medium-sized businesses and offers inventory tracking, purchase order management, and sales reports.
All of these inventory management systems offer a range of features to help businesses keep track of their inventory, but the best choice will depend on the specific needs of the business. For example, a business that sells products online may benefit more from a system like InventoryLab, while a small retail store may perfect Fishbowl Inventory.
Conclusion
Inventory management is a crucial aspect of running a business; many different systems are available to help businesses keep track of their inventory. So it’s important to do appropriate research before choosing the right one for your business.
