Why is inventory management so important? You might have had it drilled into your head that it’s one of those necessary nuisances of running a business, but are you aware of the many ways it can affect your business? Making sure you don’t lose money on sales that you can’t fill and avoiding wasting money by overstocking are rightly the top reasons to carry out this dreaded task, but there are three other important ways it can impact your bottom line.
Avoiding Dead Stock
Sometimes you get stuck with stock you can’t sell. It may not be expired, but perhaps it has gone out of style, or is out of season and is simply no longer relevant to your customer base. Good inventory management can help you avoid accumulating dead stock.
Saving on Storage Expenses
In many cases, warehousing is going to be a variable cost that depends how much product you need to store. Naturally, the more you store, the more you’re going to have to pay—which is why having to store too much product at one time or being stuck with something you’re having trouble selling can see your storage costs climb. Inventory management can keep this problem to a minimum.
Avoiding Product Spoilage
Selling products in a timely manner is never more essential than when you’re selling something that has an expiration date. Whether it’s food that can go bad rapidly or something with a slightly longer shelf life like makeup, you want to ensure you get it out the door before time runs out. Inventory management can help you keep spoilage to a minimum.
There are plenty of other advantages to implementing an effective inventory management system, such as being able to analyze sales patterns, predict future sales, and prepare for the unexpected. Taking the time to ensure your method covers all the bases is an investment that will pay off generously in terms of keeping costs down and profits up.
This blog post was based off of an article by Shopify. Read the full article here.