Inventory Management can be simply defined as maintaining the right balance between the demand and the production of goods. It has become more diverse, where various other different prospects related to inventory are also taken care of. So here are some common misconceptions about inventory management:-
- Inventory management can be done after the business has started:- Inventory management is important for running a successful business. It is something that has to be taken care of before starting the business because as the business grows managing inventory becomes difficult.
- Maintaining high stock of finished goods is equivalent to better services:-Often sellers think that storing up a lot of goods from beforehand is good, it avoids canceling of orders because of out of stock situations. But that is not true. Product trends keep on changing every day. It is very necessary to learn the continuously changing product trendsand then order good. Otherwise, goods tend to go obsolete or remain unsold.
- Maintaining high stock of finished goods is equivalent to saving money:-We get disappointed when we go to buy something from a shop and it is out of stock. And sometimes we even avoid going to that shop again. You don’t want to do that with your customers. Planning out an efficient inventory forecasting, using that maintaining optimum inventory in is the solution to this and for the above point as well.
- Inventory management should be done by finance department:- We think that inventory should be managed for the financial target. That is very mistake! Inventory should be managed using a logical approach, keeping in mind customer requirements and supply chain strategy. If we order goods just for the sake of higher profit values, we will never be successful. But if we order goods according to the need of the customers and maintain optimum levels, it will automatically result in higher profit values.
- There is no need for technology in Inventory Management:-As mentioned above, as the business keeps growing inventory field becomes huge. Technology always makes the work easier, speeds up the time taking processes and removes the scope of human error. Using inventory management solutions like EMERGE App can take you long way.
- Inventory management is not connected to sales and inventory forecasting:- To maintain optimum levels of inventory accurate inventory planning is necessary. And for accurate inventory planning, you have to plan out everything, keeping in mind sales and inventory trends.
- Locally managing inventory:-Usually, companies follow localized inventory management approach, which causes irregularity. Some places have a high stock of inventory, some have low stock. It is important to determine the health of the entire supply chain and then forecast inventory.
Having these misconceptions in mind regarding inventory management can have a lot of adverse effects on the business. Investing money in the right Inventory Management software helps to gain a competitive edge and also increases profit margin.