Effective Management of Inventory

Inventory management describes the efficient method of controlling stock and functions and making sure that they arrive in the right place at the right time all within a cost and profit scenarios. Identifying effective inventory management can be easy if certain issues are taken into consideration.

Stock and Inventory Control

Effective inventory management covers many things as it relates tostock control. It is vital to order enough stock of a product that sells well. On the flipside it is also very easy to over order superior selling items. The key is to reduce additional costs in the form of insurance, stock control and storage. Be careful not to over order products that just don't sell well, or that sell slowly. Products such as these can sometimes be shifted with concerted sales promotions and marketing efforts. Try to reduce products sold at a loss, sometimes even disposed of as this option works out cheaper than storing it.

Inventory Storage Costs

For more effective inventory management work out the costs of storing products. Compare this to the costs of storage for a year - this will give you better insight into the number of items that should be purchased and how long you should look at storing them. Inventory management data can be used to determine whether goods should be destroyed and how this affects your inventory costs. You should be able to analyze your product shift and you should have a good idea of whether a product should be kept or destroyed.

Ineffective Inventory Management

Ultimately bad or ineffective inventory management is when retail stores start losing money. Poor inventory that is stored for a long period of time not only ties up money, increases insurance but also affects cash flow and your ability to buy better selling product.