The current pandemic has created several supply chain disruptions for many industries. More specifically, 56% of retailers have experienced disruptions. This may require retailers to restock more products in warehousing facilities to have backup materials. That being said, having too much inventory on hand can increase carrying costs.
On the other hand, having too few products can lead to missed sales and harm to your reputation. Many potential customers may go elsewhere and simply order from a competitor. Keep in mind about seven out of 10 online shoppers admit that they will shop elsewhere instead of waiting for it to be back in stock. One way to prevent this issue is by using an inventory management system to help balance inventory. An inventory management system will also help businesses have enough products at the right times.
Why Are Inventory Management Systems Important?
Using an inventory management system will allow your organization to gather data to improve operations in the warehouse. This includes inventory levels, transaction history, and other product information. After collecting all this data the inventory management system will automatically gather insights so you can generate reports regarding seasonality, demand, and overall warehouse efficiencies.
Correctly forecasting when demand peaks and dips allow your business to order an efficient amount of raw materials and goods at a specific period. An inventory management system can also track the entire movement of materials through the supply chain. This, in turn, allows businesses to predict sales curves, manage production lines, and optimize inventory levels.
Predicting customer demand is not always the easiest task, especially during a major disruption such as a natural disaster. Demand could become so high that you miss sales and other times you may have too much that it causes a waste in capital. With an inventory management system, you can have the most efficient and accurate inventory levels. Consult the accompanying guide below for more information on effective inventory management.
Infographic created by WSI, a warehousing and distribution company