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How Can Better Inventory Management Result In Increased Revenue?

Inventory Management is very significant for small businesses that sell any kind of product. This becomes even more important in businesses where the product has an expiry date. Therefore, inventory management must be taken seriously. When inventory is handled well in a systematic and organised way, it benefits the business in the form of increased profits. In fact, many high-end companies invest in artificial intelligence-based market research methods to ensure that they end up with the right amount of items in their inventory. Here are four ways that better inventory management results in increased revenue.

1. Reduction Of Wastage

A well-managed inventory implies that the buffer items are added in the warehouse in the right amount. This means that the wastage of items is reduced drastically. This is especially convenient if the items have a limited shelf life.

2. Reduced Overheads

Inventory management is an expensive and time-consuming task. You have to hire warehouse workers and spend money on storage, electricity and other equipment. When inventory is managed well, these overhead costs reduce drastically. You require less storage. Moreover, this leads to better utilisation of company resources.

3. Better Availability of Products

Inventory must be managed well for another important reason. When items in the warehouse are cluttered, it becomes difficult to track the items that are out of stock, and whether or not the bestselling products are available. This directly results in loss of business. Therefore, better inventory management helps in sales by making the products more visible and easier to keep track of.

4. Improved Workflow In The Warehouse

Inventory storage requires a flow. Warehouse workers do not store a consignment in the first vacant space that they find. They store these packages based on the standard organisational system and the directions of their supervisor. When the inventory is managed properly, the spaces on the shelves become available more quickly. This drastically improves the workflow in the warehouse. Also, you save on labour costs as the required number of people on the job decreases. Inventory management requires organisational skills, sales analysis and a storage facility. While investing in inventory management may seem costly initially, it will definitely have good returns. You can discuss this in detail with your accountant to know the pros and cons of inventory management for your business.

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