What is the importance of inventory management?
Quick Answer
Inventory management helps make a business more profitable by reducing the cost of goods sold and increasing the sales. It helps increase speed, accuracy, accountability and mobility in all the operations and processes within a business. Both small and large business can benefit from inventory management by boosting efficiency in the supply chain and reducing costs and waste.
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Inventory can be defined as the objects or goods that are sold, distributed or used by a company. For example, a business may have 150 boxes of plan papers in an inventory. When one box is used, the quantity reduces by one. Inventory management, therefore, helps determine how the papers were used, the number of boxes remaining and when to place another order. This allows a company or business to keep track on the inventory usage to improve efficiency and make any necessary changes.
The whole process can be made easier by using an inventory management software that allows a business to get a detailed visibility of its inventory. The software must have a tracking system to determine the usage of an inventory. Having a mobile computer allows one to move easily from one point to another while checking the inventory and making updates.
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