Controlling inventory management to optimize costs

Whether it is a commercial enterprise or an industry, inventory management is an essential task for the smooth running of operations. Insufficient inventory can lead to significant revenue shortfalls, while too much inventory results in an unsuccessful capital tie-up. In addition, it is important to be aware that inventory management entails a variety of costs. Therefore, it is very important to control it in order to optimize the costs associated with it. For this, several measures can be taken, depending on the situation and the environment of each company.

The various costs related to inventory management

There are several types of costs associated with inventory management. First of all, there are those relating to human resources, such as the remuneration of employees who take care of this branch, such as storekeepers, handlers, vehicle drivers and many others. Then come the costs relating to materials, such as transport vehicles for supply or delivery, handling equipment or packaging if any. Another cost category is administrative tasks, such as communication costs for orders, costs related to stock security, or even possible bank charges for borrowing to build up stocks. Given the plurality of these expenses, it is very important to control inventory management in order to optimize these costs, and thus improve the profits of the activities.

Negotiations to control inventory management

The control of stock management must first of all start with a good negotiation with the suppliers concerning the various supply conditions, in particular concerning the price, the means and the payment deadlines or the deliveries. Negotiating with all the players who have an influence on stock management will also help to optimise costs. These are mainly service providers such as transporters, security agencies and banks.

Strategic resources

For a good stock management, the use of powerful software can be of great help. In addition, a good market study, as well as a permanent monitoring of consumer purchasing behaviour will allow to correctly locate the level of stock to be maintained. Another strategy to adopt is to maintain a privileged relationship with customers. Thus, you will be able to forecast with them the purchases they will make for the next weeks or months, which will allow you to anticipate your needs in terms of stock.

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