This can only be achieved if you have proper inventory control measures followed up in your organization. Then how could you be different and attract customers to your product? The answer here is plain, it’s only through proper customer service.Ĭustomer service means having the right goods available in the right quantity in the right place at the right time. In an open market, there are so many manufactures who may produce the same goods as you may. Why do you produce goods? The answer is simple it is to sell the goods at a good price. Inventory control has two key objectives: Customer service level Thus, it ensures that enough stocks are maintained to meet customer needs, at any point in time. Inventory control helps the business in knowing the shortfall and quantities to be ordered considering the net stock available. On the other hand, understocking leads to loss of sale due to non-availability of stock at the right time.Īs a result, a business needs to implement inventory control so that the right product at the right place and the right time is available. Overstocking will lead to cash flow blockage and the additional cost for managing excess stock. Managing adequate stock is key for managing inventory successfully. Here is why inventory control plays an important role. In this process, how much to stock is an important question that needs to be answered. In some cases, more stocks are held to create demand for the product and get a high price for the product.įrom the above, it’s quite clear that for various reason, you need to hold inventories in the business. In such a situation, it becomes necessary for the company to hold stock of those readymade inventories which are required in the production of the final product.Ī company stocks the finished goods during the waiting period until it finds its customer. Sometimes they buy readymade components available in the market. Let’s say if any batch order which requires the same kind of raw material, it can be diverted from the batch order that has been postponed by the management for certain time thereby not affecting the production flow.Ī company usually does not produce every component that goes into the product. The reason is to balance the production flow. The reason for holding raw materials is to reap the price advantage available on purchase of bulk or on any seasonal raw materials which can be procured only during the harvest seasons. The below table explains different inventory types and the reason why such inventories are held by the business. In simple words, inventory control is a process of ensuring that a business maintains the adequate quantity of stock to meet the forecasted demand with minimum holding cost. Inventory control is an activity of checking a shop’s stock and to maintain the inventory at desired levels, keeping in view the best economic interest of an organization.
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