9 Ways Inventory Management Can Improve Business Performance for Manufacturers

9 Ways Inventory Management Can Improve Business Performance for Manufacturers

There are not a lot of business-related processes that can be seen as more important than proper inventory management. Reasons behind this are numerous and they hold true in virtually every industry. This is especially true in the manufacturing industry, seeing as how you’ll depend on large quantities of raw materials that will have to be transformed into equally large quantities of end products. Needless to say, all of this has to be done in a certain amount of time, which is often so tight that no delays can be tolerated. With all of this in mind, here are nine ways in which inventory management can improve business performance for manufacturers.

1. Inventory organization

The first thing that inventory management can help you with is the organization of your stock. In the manufacturing process, a proper organization can determine the efficiency and speed at which your staff is able to perform. Placing items that you constantly need in easy-to-reach spots is just one way of enhancing the overall productivity in the workplace. Moreover, it helps you avoid unnecessary downtime, thus further boosting efficiency and productivity. Placing items that aren’t as frequently used in the back will allow you to utilize every last inch of your storage space.

2. Conducting regular audits

Even with all the inventory organization, regular audits are more than necessary. Why? Well, mostly because things such as materials getting damaged during the manufacturing process happens all the time and sometimes, your staff won’t be able to keep up with this while updating the ledger. Also, you can’t fully rule out the probability of employee theft, which is a figure that definitely wouldn’t appear on the ledger. Needless to say, by being diligent with your inventory management, you’ll be able to notice some of these anomalies straight away.

3. Reducing cost and improving cash flow

The relationship between efficient inventory control and cash flow is a delicate one and it is something that can determine the entire future course of your business. If we were to oversimplify this issue, we would say that by controlling your inventory, you can avoid overspending on unnecessary items. In theory, this would allow you to safely ride the curve of spending a minimal amount of resources in order to be fully stocked (minimal operational capacities) at every time. While bulk purchases may seem like a safer idea, the immediate investment of cash to do so is not something that a small business can afford.

4. Importance of time-sensitive delivery

Sometimes time is of the essence and adequate inventory management tools like CartonCloud can allow you to control your inventory and manage your fleet at the same time. This means that your company has a chance to handle all of its most complicated logistical issues on a simple platform, thus drastically increasing its efficiency. Keep in mind that streamlining your business tasks gives you a chance to do more by automating tasks like allocating and filing. This also means that you would be able to handle an increase in workload without any excessive investments.

5. Product and production storage management

Previously, we’ve mentioned the issue of material storage; however, what about the issue of product and production storage? First of all, production is a process which involves the transformation of raw material into desired products. From the very start, it becomes clear that both of these item types need to be stored and managed in a specialized facility. The management of these tasks is incredibly complex and it is nearly impossible for you to pull it off without proper inventory management techniques and mechanisms on your side. Needless to say, this would also allow you to properly automate your warehouse and keep track of all inventory changes that you encounter.

6. Improvement of forecasting

Ability to be proactive instead of being reactive is what separates the top dogs of the industry from everyone else in the field. The biggest problem with this lies in the fact that forecasting in the business world tends to be a double-edged sword. The most reliable way to do so is to track previous records and try to analyze certain patterns. Inventory management can provide you with one of the most reliable metrics out there and give you all the tools necessary to make this assessment.

7. Identifying low-turn stocks

The truth is that not all of the items in your inventory are as relevant to the production process. Sometimes, even though you need an item in low quantity, you’ll find it more affordable to make a bulk order. In theory, this would mean that a certain item doesn’t have to be re-ordered in weeks and months to come. These are the so-called low-turn stocks. On the other hand, there are certain items that you can’t afford to run out of and great inventory management can give you a chance to identify both.

8. Reducing equipment repair times

In production, the equipment you use may have an expiration date that is measured in the number of work hours or in the number of units produced. If the latter is the case, proper inventory management can warn you of a critical period approaching, which can give you a chance to prepare for the incoming repair. Needless to say, this can lower the repair time, thus causing less downtime in your manufacturing process. This is one of the best examples of how inventory management can directly save you large quantities of money. Of course, these forecasts aren’t always 100 percent reliable.

9. Honoring your clients

Lastly, it’s incredibly important that you understand how inventory management may help boost your relationship with your clients. First of all, it’s much easier to know the exact delivery date if you know the current status of your inventory. Also, by knowing whether you can meet the quantity ordered or not, you’ll know exactly which large-quantity orders to accept and which to outright decline. Sure, turning down work never sounds like a good idea, yet, it’s far better than making a promise that you know you can’t keep.


As you can see, it’s nearly impossible to even imagine a successful manufacturing business without an efficient inventory management strategy. This rests on proper plan, techniques and use of adequate tools. In the future, warehouse automation will play a larger role in the process, yet, even now, it’s impossible to imagine it without adequate inventory management.

Carolin Petterson

Carolin Petterson is a businesswoman and content marketer with years of experience under her belt. She has had the opportunity to contribute to a number of popular business and marketing websites.

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