3 - Inventory management

Inventory management comprises the processes and activities that take place between the moment you obtain your inventory and the moment you sell it to the final customer. Small tweaks to inventory management can have a big impact on your bottom line—for better or for worse. Done well, inventory management can boost sales. Missed opportunities, on the other hand, can mean lost revenue.

What is inventory management?
Inventory is the product stock you own and plan to sell through your business. Inventory management is the process of tracking and storing products to meet customer demand quickly and efficiently. It applies to how you source, store, and process products to get them ready for sale.

Inventory is an investment. The results of poor inventory management may not show up for weeks or months. When they do become apparent, it can be ugly: spoiled products, dead stock, high storage costs—or worse, depleted stock and unfulfilled customer orders. Additionally, storage fees and holding costs can decrease your profitability.

What are inventory management systems?
Inventory management systems track products from procurement to shipment. An inventory management system can help you make critical business decisions such as how many units you need, your optimal inventory levels, when to reorder items, and which products to liquidate or remove.

The right inventory system can give you a realistic picture of what you have available and help you run your business efficiently. An inventory system can be a manual count and ledger combination, a spreadsheet, or an automated digital solution.

Choosing the right solution for your needs will depend on:

• The size of your business
• The nature of the products you sell
• The industry you serve
• Your selling channels

When the system works correctly, you know what products you have available, along with important metrics like available shelf space, the amount of units in stock, and the precise storage location of individual products.