Every business knows the importance of properly managing inventory. However, statistics are showing that many businesses are still making costly inventory errors. It’s easy to look at inventory levels as only a small part of your business. However, there are many different problems that can arise from improper inventory management. Having too little or too much inventory becomes a small fraction of the damage that can be done without accurate inventory tracking. Not having an optimal inventory level can wreak havoc on a business very quickly. Both small and large business can benefit from tracking their inventory, property inventory management software has seen a large increase in popularity. While many business owners believe that their business is being ran properly, certain statistics tell a much different story. According to iBenchmarking Warehouse Performance data, it is reported that less than 30% of warehouses are truly efficient. Here are three important benefits of using a form of inventory tracking software.
- Increased Profits – Statistics present data that shows, on average, a warehouse management system can reduce errors by as much as 70%. Not knowing details about the inventory that your business has can become extremely costly. If your business isn’t fully aware of which products are selling well and which ones are not, you could end up wasting money on production costs. In addition, overstocking of certain products can lead to enormous amounts of company funds tied up in inventory that is just sitting in a warehouse. Making matters worse, companies that don’t have proper inventory tracking software are likely making this mistake repeatedly which stacks up these costs over time. Use of warehouse management software can reduce the operating expenses of your business by as much as 35%. Imagine what could be done if your business had an extra 35% of its yearly income to spend towards growth measures!
- Accuracy of Financial Reports – Having financial reports that are both accurate and factual is an extremely important concern for any business owner. If you ever run into a situation where your business is audited having inaccurate financial reports can be catastrophic for a business. Having an inventory tracking system in place for your business ensures you have peace of mind each time you file taxes for your company. Shareholders don’t ever want to find out that a business they are involved with has misleading or inaccurate financial information. Many business owners without an accurate inventory management system are making this mistake every single day, often without realizing it. Knowing that your finances are not built from estimates but rather accurate data measurements can be quite a relief.
- Better Supply Chain Relationships – When considering implementing inventory tracking into your business, you’re also helping out your supply partners. A supply chain can require businesses sharing their inventory data with their supply partners. However, if you don’t have accurate inventory, you could wind up hurting the future of your business relationship with these suppliers. Frustration can easily set in when your inaccurate inventory levels cause suppliers to not deliver what you actually need. Having improper inventory delivered can greatly impact the future partnership of a business and its suppliers, it’s best to keep those relationships more positive.
In summary, a business can greatly improve their bottom line by implementing an inventory management system. Continued implementation of a government inventory system shows that the most respected buildings across the country are realizing the importance of proper inventory management. Knowing the sales figures behind each and every item in your inventory will help you make better purchasing decisions. In addition, when your business is utilizing optimal inventory levels, you will save large amounts of money that would normally be wasted on overstocking costs. Inventory management software will also ensure the financial information of your business is accurate. When you know that your financial reporting is accurate, you’ll never have to worry about audits or preparing taxes with the danger of using falsified information. Lastly, tracking your inventory accurately means that suppliers that work with your business will be aware of your exact inventory needs, further reducing wasteful spending.