There are a lot of business owners looking to their supply chain for cost savings in the current economy. With the price of oil so low, this is a great time to realize cost savings. However, there is much more to supply chain management than just fuel costs. One of the biggest cost areas for many companies is in inventory management. By carrying too much inventory, companies use too much of their capital with inventory. However, having too little inventory hurts sales. This balance is delicate and difficult to manage over time. However, this is an essential part of the overall supply chain for any company. Why Does Inventory Matter? There is a cost to carrying too much inventory within a company. Over time, these costs really add up. Too much inventory usually results in marking down the retail price of the products. This is often essential to get the inventory to customers. However, lowering the retail price just erodes the gross margin on the products a business sells. This goes straight to the net income of a business and hurts profits over time. In addition, there is a holding cost to carrying inventory that many people do not realize. Reducing these costs is a great way to increase profits in the business. Improving Inventory Management The good news is that there are several ways to improve inventory management in your business. First of all, investing in forecasting software helps to predict future sales. Over time, this helps to smooth out the swings in total inventory for your business. Not only will this maximize sales, but it also reduces chances of marking down product after a seasonal shift in sales. Many companies realize proper inventory management is essential and are investing a lot of time and money into this area of their business. If you have interest in using our services with technology and inventory management, contact us today.
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