At the time of managing your business, you will come across the need to pay extra attention towards inventory management as well. That’s because optimum inventory management can provide you with a large number of benefits.
If you are still not convinced, let’s go ahead and take a look at the reasons as explained by Sunil Kilaru, which have created the need for inventory optimization in today’s market.
- You can receive the benefits associated with quantity discounts and price increases
If you are expecting a price increase in the next few months, due to changes that take place in supply and demand within the international or local market, you will come across the need to have a better understanding about the impact that it can create on your company. Along with that, you will also come across the need to understand the impact created by budgets and taxes.
- You can cater to the seasonal and cyclical demand
With the help of inventory optimization, you can cater to the seasonal and cyclical demand in an effective manner. Some of the external factors, such as seasons can create an impact on your demand. For example, the demand for your products will increase during the seasonal times and you should make sure that your inventory is ready to cater the demand.
- You can meet the variations that take place in product demand
As per Sunil Kilaru, Your production plan would change according to the estimates, sales, stocking patterns and orders. As per the changes in the demand for raw materials, the supply for production would vary. When you keep inventories needed in the nearby warehouses, you will be able to overcome the issue linked with production and catering the demand in a timely manner.
- You can reduce the transit times and expenses
In case if you are importing raw materials from another country, or from a vendor that is based in another geographical region, inventory optimization can help you to save a lot of money on the transportation expenses. That’s because you can purchase in bulk and transport all of them in a full truck or a container.
- You can hold the high demand and long lead items within your inventory
The supply of raw materials from vendors is usually associated with a long lead time. It can even be few months.