Inventory is crucial to almost any business. Even if you’re not in the industry of making or selling products, you still most likely have inventory that’s crucial to the business. Digital technology, vocational tools, even documents can have a lot of worth. But when something is worth that much to a business, it’s not just an asset. It’s a liability. Which means that if you lose it or misuse it, your whole business can suffer.
It dictates your cash flow
Your reliance on your products and the various materials and resources used to power the business have a huge impact on your cash flow. You can use supply chain consultancy to ensure that you’re reading the demands of the business right and always in supply. But reading the demands right also means that you’re paying attention to when demand for certain products drop in retail. Many businesses make the mistake of taking on surplus inventory. It might seem like a small problem until you consider the cost that it takes to store that inventory until it can be shifted again. Just as you stand to lose potential profit when you don’t supply yourself adequately, you lose profit when you stock too much as well.
It’s easily targeted
Of course, the only thing worse than managing your stock wrong is having it taken out of your hands entirely. If your business relies on the sale of inventory, then you also have to take the protection of it seriously. Businesses are amongst the prime targets for most street-level criminals. Most opportunistic people realise that businesses have stock that could be worth a lot to them if they were willing to take it. Securing your business premises is just the start, as well. Security guards serve not only to stop and report any intrusions on your property. They are also a visible show of protection. They can serve as the deterrence that makes your business look like less of any easy target, meaning it’s less likely to get targeted in the first place.
It can lead to damning assumptions
Without paying attention to the macro trends of inventory and making sure that stock movement is calculated in a data-driven system, you can make some bad assumptions about the value of inventory and the habits of your consumers. For instance, when it comes to the end-of-the-year accounting, inventory is a big factor to consider when determining the standing value of the business. Existing records of current inventory can make it a lot easier to do an accurate inventory count, crucial to your year-end financial statements. For this reason, it’s also crucial to make sure that any inventory is constantly organized and checked for damage or outdated stock that shouldn’t be factored into the count.
The sooner you take the protection of your inventory seriously, the less likely you are to suffer a catastrophic loss when it’s taken from you. The sooner you track it and take a data-driven approach to managing it, the sooner you can stop spending money unnecessarily and the sooner you can better understand your customer.