You’ve heard the phrase used by retailers: Get more for less. I would like to suggest an even better phrase for businesses: Do more with less. Inventory management is all about doing more with less, e.g. making better use of resources, saving money and increasing your inventory turnover ratio. Let’s talk about each of these in detail to show how small businesses can benefit from using inventory management software.
Businesses have a certain amount of capital to work with. The better they can use that capital, the more opportunities they can find to grow. Keeping too much inventory on hand ties up capital and keeps companies from investing in more employees, new locations, innovative products and other things that could lead to more success.
Inventory management software helps companies run more efficiently and eliminate wasteful spending and redundancies. Employees’ time is freed up to spend on improving customer service and other important tasks when they don’t have to spend hours updating an outdated inventory management system.
Increasing Inventory Turnover Ratio
Businesses should have a high inventory turnover ratio. The inventory turnover ratio is the number of times in a year that a company sells all of the products in its warehouse(s). The reason businesses want this ratio to be high is because it means their products aren’t sitting idly for months on end, waiting to be sold. Idle inventory doesn’t do them any good.
Using inventory management software, companies can increase their inventory turnover ratio. The important thing is to find a balance between too much and too little inventory. If companies can manage to keep enough inventory in stock to meet demand without going overboard, then they’ll see their turnover ratio increase and their financial health improve.
Good inventory management lets businesses do more with less. See how your company can grow faster by using your resources more wisely by signing up for an inventory software demo.