Inventory management is vital for proper supply chain management, especially in the food industry.
This process involves having a reliable system in place that helps you determine the right amount of produce to order, understand production timelines, and ensure effective tracking for product management. This way, you can confidently bring your products to market.
For your learning, this article will focus on the significance of inventory management and explore insights to improve operations.
What is inventory management?
Inventory management is the business process of overseeing and tracking products from warehouses to the point of sale. Typically, supply chain businesses will use an inventory management system (or sometimes even software) to help with organization, track product location, and ensure all commodities are delivered to the correct location.
Proper inventory management means knowing when and how much to order and stock. It’s a business process that requires detailed tracking to meet product demands and prevent oversupply or shortages.
In essence, it involves fulfilling customer orders, managing flight or freight transport delays, meeting delivery requirements, and planning for buyouts and markdowns.
It’s a multi-step process that involves a sales department buying the right quantities and types of products from a supplier, as well as retail staff ensuring customer satisfaction and delivery to maintain cash flow.
The importance of inventory management
Inventory management is a crucial aspect of running a successful supply chain business, as it not only helps meet consumer supply and demand, but in the United States, it’s also mandatory for public companies to track their inventory, as per guidelines set out by the Securities and Exchange Commission.
Inventory management also helps with risk management in terms of finances and allows businesses to maximize profit. When a business has a good understanding of the price and quantity of products needed without excess waste, it becomes easier to make financial decisions related to transportation, storage, and sales.
Having a consistent supply of goods and products is crucial for ensuring order fulfillment in a timely manner. Sufficiently meeting the needs of customers fosters a strong sense of customer loyalty. Frequent back orders due to poor inventory management and service create the risk of driving away customers, lowering the value of your produce and damaging your business’ reputation.
Why is inventory management challenging?
Inventory management can be challenging without a proper system in place.
A common challenge that supply chain businesses often deal with is changes in customer demand. Consumer needs vary based on the season, economic shifts, and trends. An inventory management system can track trends so that you can better identify patterns and act accordingly.
Another challenge is sufficient storage and safety. Proper product storage is vital to avoid spoilage, damage, or delays, and safety practices must be put in place to accommodate the types of products sold. This can prove to be incredibly difficult due to the perishability and brief shelf life of produce and food products.
How to improve your inventory management
Packaging and labeling are important in inventory management. Proper labeling ensures that products are easily identifiable and reduces the risk of spoilage or damage due to incorrect storage handling.
Implementing the right strategy with the employment of technology can also greatly improve methodology. Technology can be a great asset and can optimize the flow of information in your supply chain. Built-in tracking systems allow you to know where products are at all times. Meanwhile, automation can track trends to help manage supply and meet consumer demand.
Looking for an inventory management solution? Choose Silo
Needless to say, managing inventory is crucial for any business to succeed.
Silo offers the best solution on the market to help you take control of your inventory, increase profits, and keep costs low. Those who have used Silo’s Enterprise Resource Planning solution have benefited greatly from increased efficiency and more accurate forecasting.
Our solution allows you to monitor updates and manage various facets of your business—all in one easy-to-use platform. Track inventory performance and gain insight into historical data trends for full visibility into your business operations. Comparing data allows your team to make more informed decisions for your business and save you money over time.
Looking for funding to implement new inventory management measures? Consider Silo Capital, an alternative funding solution for small and medium-sized businesses. With banks often favoring large corporations and imposing time-consuming red tape, businesses that haven’t met a certain revenue threshold may struggle with accessing the funds necessary to grow. Silo Capital allows for fast and easy access to the funding you need and provides flexible repayment terms.
Silo Capital offers several solutions that provide users with fast, flexible capital. Silo Cash Advance provides users with a lump sum of funding to be used at their discretion and it is often leveraged for larger investments. Silo Instant Pay on the other hand, provides users with funds immediately after a sale so that they can skip the period of waiting for their customers to pay post sale.
Book a demo with Silo today to learn more about our inventory management and capital solutions to help your business grow.