Inventory control and planning are actions that are involved in the inventory management process. As with all management processes, planning and controlling are key to the successful management. The reason that such a focus is given to inventory is that inventory usually represents the largest cash-flow part of the business. This is both in relation to purchasing inventory and selling inventory. For this reason, management of inventory will in turn have a knock on effect on the finances of the business.
Inventory control and planning offer the following benefits to small businesses:
- Cash Flow — Inventory control and planning allows small business to manage their cash flow opportunities. Small businesses aren’t always able to purchase large amounts of inventory, as the capital simply isn’t available to them to do so. By having better control of their inventory, they are able to know exactly how much inventory they will need and when they need it. This can free up other capital to re-invest in other areas of the business.
- Business Intelligence — An inventory control and planning solution allows small business to gain insight into what products are selling more than others. This allows them to adjust their product line and to make intelligent business decisions.
- Maximize Profits — By being able to make better business decisions the inevitable outcome for a small business will be an increase in profits. This is because the stock in their inventory will only be stock that’s actually selling. Other stock that doesn’t grab customer’s attention can be deemed obsolete and can be abandoned. This makes the general business practice more efficient.
- Limits Employee Mishandling — Inventory planning and control limits the ability of employees to steal from the inventory. Often employees use items from a businesses inventory for personal use. Without inventory control, the business owner would be none-the-wiser. This practice ultimately reduces the profitability of the business. By limiting the ability of the employee to steal, the employer is reducing potential ‘hidden’ costs.
- Reduce Labor Costs — Improved inventory planning and control techniques allow small businesses to reduce labor costs associated with inventory. These include the time spent counting stock and the transportation of stock. Employing anÂ intelligent inventory planning and control solutionÂ can significantly reduce all these labor-intensive activities.