In this article, we will discuss the meaning, benefits and steps involved in the Inventory Management Process (IMP).
Meaning of Inventory Management Process
A way in which an entity handles or manages its inventory from one process to another process along with minimising intermediate costs is called the inventory management process. And the software that is used to manage it, is called inventory management software.
Inventory management covers the following aspects:
- Control over each & every inventory item
- Optimising inventory storage cost, i.e. storage management
- Tracking the delivery of goods to the customer
Benefits of following Inventory Management Process
Inventory is a very important component of the business. Hence handling inventory is an utmost priority for the business. An incompetent approach in handling inventory may be fatal to the business. It may lead to an increase in idle time in production or ruin the customer experience by producing late deliveries.
1. Reduction in Cost
An effective process notifies the re-order levels of every inventory item. This ensures that none of the inventory items is out of stock, hindering any process and enabling optimum storage capacity utilisation.
2. Importance of Inventory Items
An inventory management process will always tell the fast & slow moving stocks for the company, showing how an inventory item contributes to the company’s success. Based on this information, a company can increase or decrease production/sales.
3. Streamline in Process
A streamlined process is helpful to a company in many ways. There are lesser doubts among the workforce. Less time will be required for teaching new members about the process.
Steps involved in the Inventory Management Process
Inventory management is a complex process, so creating a structured process can be time and resource consuming and incur some experiments that can decide the best process suitable to the company.
Steps in the inventory management process:
1. Perform demand forecasting and future planning for every inventory item
2. An order is placed with the vendor for delivery
3. Goods arrive at business premises (office or warehouse)
4. Above goods are inspected or verified and placed appropriately for further consumption
5. Customer orders are accepted and approved
6. Goods are taken from stock for their delivery
7. Automatic updation of stocks level on inward & outward movement
8. Setting an appropriate reorder point to meet demand
Inventory management should be an utmost priority for the business. As explained above, a fluent inventory management process is always advantageous to the business.
ClearOne, invoicing and payment collections app, allows you to manage and monitor inventory levels with a click of a button! You can add all your items, set low stock reminders and track every edit done on stock via Stock history report. We exclusively allow your inventory record to automatically get adjusted for every invoice generated!
