Inventory management is the backbone of a successful business. It ensures that you have the right products available at the right time, optimizing both sales and customer satisfaction. On the other side of the coin, poor inventory management can lead to numerous issues such as lost sales, cash-flow problems, and operational inefficiencies.
Inventory management failures cost businesses, big and small, every day. According to a study by IHL Group, retailers alone worldwide lose a staggering $1.75 trillion annually due to out-of-stock items, overstocks, and returns. Taking that number to an individual level, it averages out to approximately $36,000 per year in lost revenue. I don’t know about you, but that’s a big number that I would like to make smaller.
How does poor inventory management affect sales? There are 3 main ways.
- Lost Sales: When products are out of stock, customers are forced to turn to competitors, potentially resulting in lost sales and long-term customer loyalty. An out-of-stock situation not only affects immediate revenue but can also damage a brand’s reputation down the road.
- Cash-Flow Issues: Holding too much inventory ties up capital that could be used elsewhere in the business. What could you do in your own business with an extra $10,000? Excess inventory also incurs additional storage costs and increases the risk of obsolescence, which in turn can further strain cash flow.
- Operational Inefficiencies: Poor inventory management could lead to inefficiencies in your warehouse and storage operations. This might look like increased labor costs due to unnecessary handling and movement of stock. A disjointed and disorganized warehouse can also lead to fulfillment issues causing your customers to wait for their products longer than they should.
The Benefits of Good Inventory Management
We’ve seen what bad inventory management can do, but what about good and effective inventory management. What benefits does it bring? Handling inventory well can transform a business, providing numerous competitive advantages that facilitate growth and profitability. Let’s take a look.
- Better Cash Flow: By optimizing inventory levels, businesses can free up capital for other critical areas, such as marketing and product development. Remember that $10,000 I mentioned earlier. This is what you do with it.
- Increased Sales: Having the right products available when customers need them enhances sales and boosts customer satisfaction. Even better, when you have the product a customer wants, and your competitor does not (because they don’t manage their inventory well) you get the chance to create a lifelong customer.
- Growth Opportunities: Growth takes money. Sometimes money comes from outside sources, like a loan. Lenders often consider the type of inventory you have, how quickly it moves, and how quickly it depreciates when giving you a loan. If your inventory management is sound and you can show it to your lender, you may be able to secure more money or better terms. Inventory management is one crucial way to grow your business.
Stride Retail’s Inventory Management Features
Stride Retail offers a robust inventory management module designed to address the unique needs of various retail and manufacturing businesses. Leveraging the powerful capabilities of our platform, we provide several key features that set us apart:
- Automated Re-Order Rules: Stride Retail allows you to set automated re-order rules to ensure that you never run out of essential stock. By defining minimum and maximum stock levels, the system can automatically generate purchase orders when inventory falls below a certain threshold, reducing the risk of stockouts.
- Customizable Units of Measure: Our system supports customizable units of measure, allowing you to buy and sell items in the way that best suits your business needs. Whether you deal in units, boxes, pounds, or yards, Stride Retail adapts to your requirements, ensuring accurate inventory tracking.
- Fractional Inventory: Stride Retail understands the importance of selling in less than whole units for certain industries. Our fractional inventory feature enables businesses to sell products in fractions of pounds or yards (or whatever measure you use), providing flexibility that many other software solutions lack or charge extra for.
Final thoughts
Effective inventory management is crucial for maintaining a healthy, profitable business. It ensures better cash flow, increased sales, and provides opportunities for growth. Poor inventory management, on the other hand, can lead to lost sales, cash-flow issues, and operational inefficiencies. Stride Retail’s comprehensive inventory management module offers the tools and features necessary to optimize your inventory processes and drive business success.
By leveraging a comprehensive and detailed inventory management system, Stride Retail helps you stay ahead of inventory challenges and focus on what matters most – growing your business. Embrace the power of good inventory management with Stride Retail and take confident steps towards a more profitable future.