E-commerce sites account for more than 14% of retail sales around the world. That number will continue to grow as shoppers are turning to the internet for everything from groceries to perfume.
What is inventory management? It the one thing that you can do to ensure you have happy customers.
Are you ready to find out what inventory management is? Keep reading to learn all about it.
What Is Inventory Management?
Inventory management is a system that you create to manage the availability of raw products for manufacturing and the finished product for sales.
A basic example is a coffee roasting business. The business owner needs to make sure that they have enough coffee beans to roast, and the right types of coffee beans. They also have to keep enough roasted coffee on the shelves to keep up with customer demand.
Any missteps in tracking inventory can lead to an out-of-stock product. That out of stock product leads to lost sales.
Types of Inventory Management
There are three basic types of inventory management.
MRO is maintenance, repair, and operations inventory management. This is about tracking various business assets, such as manufacturing equipment and warehouse space.
This type of inventory system makes sure that the equipment is properly maintained.
Periodic inventory management is more common in e-commerce businesses. You keep track of your physical inventory by manually counting what’s on your shelves.
While this is commonly used, it doesn’t mean that this is the best one. You still leave a lot of room for error, especially if you wait a long time between counting inventory.
In complex businesses where you need to manage every part of your supply chain, the perpetual inventory management system is likely to be used.
You’re tracking every item throughout the supply chain in real-time.
How to Create a Basic Inventory Management System
Are you ready to track your business inventory? You start to create a system by knowing what you need to track.
How many SKUs do you have? Do you have to track raw materials? Do you always have more in stock in case of supply chain issues?
These are basic questions to ask so you can find the right inventory management system to use. Once you have your system down, you can get help to manage it all.
Don’t rely on spreadsheets to manage your inventory. They can be useful, but they take up too much time. Inventory management software like NetSuite has an ERP that handles inventory management, project management, and many other aspects of your business. You can take a look at NetSuite pricing to learn more.
Inventory Management Basics
What is inventory management? It’s a must for any business that sells products. Inventory management is an organized way to track your products through the supply chain.
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