The benefits of inventory control
Computerization is the key to maintaining proper inventory levels
Corporate Detroit (reprinted with permission)
By Donald Reimer, CMC & Ravi Nayar, CMC
Today, maintaining the right inventory levels is a tough challenge. If not properly managed, your inventory can result in a significant expense. Looking over your shoulder is the lender who is concerned about the cost of carrying too much inventory - which can affect profitability.
Fortunately, there are management information systems that exist which use microcomputers and a variety of industry specific software. The cost of carrying inventory today has become a major expenditure and requires immediate attention. The benefits of inventory control far outweigh the costs. Any reduction in inventories, whether it is raw material, work-in-process, finished goods or supplies, can have a dramatic impact on your bottom line.
Industry averages suggest that a 20 percent reduction in inventory is achievable with a computerized inventory control system. For a company with a yearly sales volume of $1 million, such a reduction would result in savings of $14,400 per year and would free up $48,000 of new dollars for reinvestment. For a company with a yearly sales volume of $10 million, the figures are proportionately higher: $144,000 per year in savings and $480,000 in new dollars for reinvestment. | "The benefits of inventory control far outweigh the costs." | | |
A computerized inventory control system can also help a company with new inventory management techniques such as Just-in-time (‘JIT’). Such techniques cut the use of company resources such as warehousing, equipment and personnel. However, these techniques require error-free environments and better control over inventory since the buffer zone to compensate for the errors is less.
How do you go about selecting a