As per predictions, India’s GDP is expected to reach US$ 6 trillion by FY 2027 and achieve upper-middle income status owing to its reforms across the business sector. While the nation boasts of its start-up base with over 4,750 technology firms, endeavours are being made to introduce convenient options to run a business. It includes curtailing the cost of production.
While Goods and Services Tax has already eliminated the cascading impact of taxes and hence, controlled cost of products and services, there are multiple other internal initiatives to increase the profit margin with the reduced price of production.
One such measure is efficient inventory management that subsequently leads to considerable saving of money and wastage in a business. A flexible management system of inventory has multiple benefits –
- Increased sales
- Improved delivery performance
- Shorter lead time
- Lower charges
- Increased transparency in business information
- Increased employee efficiency
- Decreased chances of stock-outs
- High inventory turnover ratio
There are several other inventory management techniques to save money that can help prevent:
- Excessive inventories that put unnecessary pressure on one’s working capital
- Under stocked inventories that may lead to reduced sales
Here is a business owner’s complete guide on inventory management to help maintain an optimum stock –
- Go for FIFO (First In First Out)
Individuals in charge of overseeing the stock management should ensure that the oldest inventories are utilised first. It is imperative in case of both perishable and non-perishable items since older stocks either tend to wear out or become unsellable because of crossing their expiry date. It requires that one sets up an organised warehouse where the inventories are categorised date wise and a systematic cataloguing that tracks the utilisation of the stocks.
- Streamline the supply chain management
Streamlining supply chain management (SCM) can help business
- Reduce their inventory stock to an adequate level
- Bring in transparency in the customer service performance
- Improve time to market
- Reduce cycle time
Additionally, with an organised SCM, one can help maintain better communication among manufacturers and retailers. It helps businesses have a better idea about the demand and supply of products and services in the market and restock accordingly.
In an attempt to ensure smooth functioning of operations across a business, multiple NBFCs now offer their advances that come with a hefty credit amount to maintain positive cash flow. The funding so availed can be used to fund the boost of –
- Source or suppliers
- Production of services and goods
- Return of goods
However, considering that multiple financial institutions now offer their lending options, borrowers should compare them before settling for one. Approaching reputed NBFCs like Bajaj Finserv and availing their Business Loan helps individuals enjoy the benefits of features like –
- High-value loan amount of up to Rs. 30 Lakh.
- No collateral required.
- Convenient access to the loan account.
- Hassle-free application process.
- Easy-to-meet eligibility criteria.
Availing such advances help one invest it in streamlining the supply chain and hence acting upon improving inventory management.
- Opt for ‘par level’ product manufacturing
Stocking up to the minimum level or ‘par level’ ensures one to have considerable time to judge the popularity of goods in the market and restock accordingly. When the inventory dips below the predetermined level, one can always order for more. It prevents the chances of either being stocked-out or facing financial crunch due to overstocked below-demand products.
Therefore, knowing what is inventory management and having an in-depth idea about the techniques to maintain them ensures the smooth functioning of a business. It also has a positive impact on the profit margin of the same.