Three Reasons Inventory Management Is Important For Your Online Business
If you manage your own retail business then you already know the importance of accurately managing your inventory. After all, it’s a soul of your business. Automated online inventory management system is a must-have for every retail operation as it is very vital to any business that deals with inventory in the long-run. Once you understand the importance of inventory tracking, you’ll recognize the benefits of it which will indeed be fruitful for your business. In big businesses, inventory tracking and management is essential to accurately calculate the cost of good sold and to identify the problems associated with profit margins. In small businesses, people often don’t see the importance of inventory tracking. The loss of inventory or waste of perishable goods becomes pretty evident when the profit margins are drastically dropped. In this article, we will highlight the three major reasons as to why inventory tracking and management is essential for retail business – may be small or large. 1 Inventory tracking to accurately calculate the cost of goods sold Every business must keep a track of total goods sold in order to have an accurate statement of the profit margin. Inventory tracking will make it easier to calculate the cost of goods sold without maintaining a physical inventory of your merchandise each and every month. But if you move a lot of inventory, it is advisable to do a physical inventory check periodically.
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To calculate the cost of good sold, you must take your beginning inventory, add your inventory purchases and then deduct your ending inventory. The figure you’ll get will indicate the cost of goods sold. To calculate the gross profit, your gross revenue less your cost of good sold is your gross profit and when you divide your gross profit by your gross revenue you’ll get your profit margin. Today most businesses identify an ideal profit margin of around 40% and if there are fluctuations in your profit margin then there is a problem with your inventory system which needs to be rectified soon.
2 Inventory Management for maintaining and managing inventory levels Inventory management and tracking of your inventory levels will simplify your ordering process. If you know many of a certain item is available in the stock then you will easily determine how many more you need to order to replenish the inventory. Inventory tracking and management can easily be incorporated within your sales system so that your inventory levels are always up-to-date all the time. 3 Inventory Management to ensure exceptional customer service Having a good inventory management system that is well integrated with an automated sales system will inform you right away whether or not an item they are ordering is in stock. With such a system, customers will be immediately informed of the latest inventory status which will add a special touch to your customer service program. Such kind of service will make your customers feel better when dealing with you impersonally via Internet. These are three major reasons why inventory tracking and management is important for your business. There are number of softwares available in the market that will help you simplify the process of inventory tracking. You can also avail the advantage of
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integrating your inventory system with your sales and order processing system in order to improve your inventory levels and enhance the experience of your customer. What’s your opinion on these? Leave your replies in the comment box below‌!
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