Jeff Dossett is the Chief Revenue Officer at Impinj.
In today’s rapidly evolving business world, the difference between thriving and merely surviving often boils down to effective inventory management.
Imagine an eager customer ready to make an online purchase, only to find that the item is out of stock. Or a warehouse overloaded with excess inventory tying up valuable capital and space. Effective inventory management is important before products even reach the warehouse. For manufacturers, too, closely managing the stock of components ensures production lines run quickly and efficiently to meet tight schedules.
These scenarios highlight why getting inventory right is not just a back-office function but a strategic imperative for any business. Critical to a strong supply chain is an in-depth insight into inventory levels and the movement of goods: from production to the moment items move from supplier to retailer to the time they are sold to the end customer. This ensures that the right products are available when they’re needed, in the right place and in the right quantity to meet customer demand.
Inventory management can be tricky, but proper inventory visibility has a direct impact on topline growth in a number of ways.
Better Cash Flow
Cash flow and inventory are like a balance scale. Too much of one means too little of the other. Low inventory makes keeping up with demand challenging, resulting in lost sales and revenue. In turn, excess inventory leaves cash tied up and unavailable for reducing debt or reinvesting in the business.
With effective inventory management, businesses can maintain an optimal inventory level to boost revenue, which is vital for business growth.
Smooth Scaling
Inventory precision becomes more complicated as a business grows, but it’s a critical factor in reducing headaches for businesses as they scale, whether expanding an existing line, entering new markets, or opening new locations.
Ultimately, businesses can scale more effectively and efficiently by automating inventory procedures, integrating with other business systems (such as sales and accounting), and driving real-time inventory visibility.
Happier Customers
Inventory plays a crucial role in customer satisfaction. No one wants to place an order only to find it’s out of stock. And businesses that struggle to fulfill orders risk losing customers to competitors and poor reputations.
Timely, accurate order processing and delivery go hand in hand with effective inventory management. Getting it right is critical for favorable sentiment, greater loyalty from satisfied customers and repeat business. Beyond happy customers, effective inventory visibility allows businesses to nimbly pivot and effectively address shifting customer needs and market trends.
Slimmed-Down Operating Costs
Inventory storage and handling can be costly. Strong inventory visibility ensures accuracy in predicting demand and managing stock levels, which can reduce the cost of everything from warehousing to insurance to spoiled goods. By preventing overstocking and streamlining operations, businesses can also reduce labor costs, emergency shipments and losses—all of which can be a drag on the bottom line.
Crystal Ball Clarity For Demand Forecasting
Demand forecasting helps companies accurately predict demand based on historical sales data, market trends and seasonal changes. With poor inventory visibility, these predictions are unreliable and lead to over- or under-stocking.
Right-sizing inventory levels improves turnover and reduces waste. With accurate demand forecasting, businesses can also more effectively plan for busy seasons and new product launches to meet customer demand without straining resources.
Strong Supplier Relationships
With access to accurate, reliable inventory insights, businesses can give their suppliers earlier, more accurate forecasts. Accurate inventory also helps when it’s time to negotiate better terms with suppliers, including discounts or better payment terms. In turn, suppliers can more effectively plan production when they know what to expect. Everybody wins.
Technology Allows For Greater Inventory Visibility
Success in today’s business world hinges on more than just great products, like understanding the complex web that connects suppliers, inventory and customers. Technologies like AI and machine learning can help streamline and scale inventory operations. However, these technologies can only be effective with accurate, real-time, item-level data. Organizations with dynamic inventory operations must ensure they have the tools and systems in place to capture the data these technologies need to drive stronger inventory accuracy and insights. By embracing innovative technologies and taking a strategic approach to tracking and managing inventory levels, businesses can turn a once mundane operational task into a powerful competitive advantage.
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