After studying the inventory last week, we can say that it is the place where we manage our products to potentially make money when we sell them. For most companies, managing the inventory is also a troublesome activity. It seems that in the management of inventory, we are always left with disappointing choices:
In fact, in order to make the optimal amount of money, a business needs to satisfy 100% of its customers 100% of the time with 100% of the offered inventory. Therefore, many companies plan to bear the cost of excess inventory. It’s part of the cost of doing business. They are willing to absorb, within certain limits, the cost of holding excessive inventories to make sure they are always reactive to sales opportunities.
A business aims to satisfy 100% of its customers 100% of the time with 100% of the offered inventory…
However, operating a business with excess inventory is a huge and painful burden, requiring markdowns, margin-loss, and most of the time, liquidation of the excess inventory.
Despite years of developing new methods to manage inventory and the implementation of sophisticated ERP systems, many challenges still persist because of the dynamic nature of markets. Therefore, to optimize the inventory management and to get closer to the 100% figures stated above, a company needs to align the best technology, the best processes, and the greatest people to operate in this dynamic environment.