- Carry too little inventory, and you forfeit potential sales. Worse still, those customers may become lifelong clients of your direct competitors.
- Hold too much inventory, and you're wasting money on storage, employee hours and even insurance.
The True Impact of Insufficient Inventory Management
Many businesses ignore (or underestimate) the importance of inventory management, making it difficult for them to assess what impact slack capacity has on their bottom lines.
However, below are some inventory management statistics that may shock you:
- Retailers Sit on a Lot of Unused Product
Unused inventory ties up an estimated $1.1 trillion in capital nationwide — a figure that represents nearly 7 percent of America's gross domestic product (GDP).
At the micro level, the average U.S. retailer holds about $1.43 in inventory for every $1 in actual sales. What’s more, the number of "days inventory outstanding" has risen over 8 percent in just the past five years alone.
This problem exists throughout the supply chain. Thus, even if you manage your inventory efficiently, you may still be overpaying due to poor management by your vendors.
- Smaller Retailers Are Often Unaware of the Problem
The above figures exist across the board, but it is especially pronounced among small to medium businesses; nearly 50 percent of those track inventory by hand — or not at all.
This explains why new positions for logisticians — such as those who handle inventory management statistics for supply chains — are growing at only 2 percent, which is well below the national average for most other occupations.
- More Storage Is Not the Answer
To better handle inventory, many businesses invest in additional warehouse storage. At roughly $5 per square foot, most consider it an affordable investment that allows them to dramatically reduce out-of-stock inventory and boost sales.
Yet it’s still an expense — one made worse as businesses increasingly carry products and services for very niche needs. In fact, the total number of warehouses has increased almost 7 percent over the previous half decade, and 54 percent of warehouses expect to expand the number of SKUs over the next five years.
- Better Technology Should Be the Goal
Investing in more storage may provide temporary and modest gains. Though a better solution involves incorporating mobile and interactive inventory management tools — a fact borne out by the 87 percent of top performers that consistently manage their inventory well.
A full 67 percent of warehouses plan on incorporating mobile technology in the future. Although some hurdles still exist since 70 percent of smart devices can’t carry enough battery power to last an entire floor shift.
NCR Counterpoint POS specializes in inventory management software that integrates directly with the desktops, laptops and smart devices your team already uses. With this powerful platform, you’re able to automate inventory purchasing to create more streamlined storage and delivery flows within your business.
Key benefits of our inventory control system include the ability to:
- Only hold what you need, allowing you to maximize storage space and remove unnecessary expenses.
- Track sales and returns, making it easier to forecast, eliminate and optimize inventory stockpiles.
- Print detailed reports that provide real-time snapshots of how your business is performing.
To learn how our inventory tracking system can help your business, contact us today for a live demonstration or free consultation. Read More