Whether you are a manufacturer, distributor or retailer in the steel and metals industry, maintaining the right inventory at the right time is an obvious priority. You know strong inventory management is important for your customers and your profit margins. Buy why? Here are four reasons why inventory management is important and what you need to do to gain control and insight over your inventory.
Strong Inventory Management Is Good for Profits
In today’s fast-paced marketplace, inventory management is key to protecting thinning profit margins. It’s easy to track small quantities and types of inventory, but when your business (and inventory) grows—it can become extremely complicated and inefficient.
Here are four reasons why efficient, accurate inventory management is critical to your bottom line:
- Stock-outs and backorders: The ‘Amazon Effect’ has had a notable influence in the current marketplace. When a customer places an order, they expect a fast response or will easily find another more responsive company who can fulfill their needs quickly. Stock-outs and backorders have become the proverbial black eye for businesses. Without the proper inventory in place, you risk the ability to deliver products to customers on time and this could cost you a long-term customer relationship.
- Overstock: A common knee-jerk reaction to avoid stock-outs is maintaining higher levels of inventory. This only leads to another set of problems. The longer items sit around the warehouse, the higher the risk for damage or theft. Inventory has to be counted and handled on a regular basis, which wastes time for items that are stored too long. This inventory may never be sold or must be sold at a deeply discounted price, which eats into profits.
- Stress on capital: Every dollar spent on inventory is a dollar you can’t use to invest in your business. New equipment, expansions, new hires and other capital expenditures are greatly limited if you maintain too much inventory at any given time. While you might have the products customers want, you can’t focus on expanding business operations to meet new customer needs. There is a very fine line with managing working capital and managing inventory.
- Customer satisfaction: Which brings us full circle to the most important asset you have—your customers. For manufacturers and distributors, running out of raw materials needed for a finished product will halt production, which will frustrate customers. Similarly, retailers that run out of finished goods will also frustrate customers. No matter what type of business you operate, effective inventory management is essential to keeping products moving out the door and keeping customers satisfied.
Gain Control and Insight Over Inventory
Inventory management is important for every business to maintain profit margins, improve customer service and support long-term growth. It might be time to explore today’s business technology designed to help you get real-time inventory insight across your supply chain. Contact us to learn more about modern inventory solutions for the steel and metals industry.