Inventory refers to materials and goods that a business holds for the ultimate goal of selling or using them. Inventory management refers to ordering, storing, and using a company’s inventory. It is essential for all businesses, irrespective of industry and size.
In this blog post, you will learn about the importance of inventory management.
Understanding the Importance of Inventory Management
Inventory and its related components are important assets for an organisation. However, maintenance of inventory leads to the blocking of funds. Hence, organisations need to maintain enough inventory, but there is no unnecessary funds blockage. It means you should not have excess inventory at any given time.
Many organisations borrow funds to maintain inventory. It means they have to pay interest on borrowed funds and spend funds to store the inventory properly. Experts mention organisations need to consider costs like storage, insurance, cost of movement of goods, and costs during inventory management. You can also learn more here about the importance of inventory management.
Now let’s understand how inventory management affects customer relationships.
How Does Inventory Management Affect Customer Relationships?
Inventory management is not about preventing disruption of business activities and preventing loss of opportunities. Instead, it has a deep relationship with the end-customer.
When customers order a product online, they want to know the estimated delivery time. Many eCommerce retailers work to get that “Wow”reaction from customers by delivering products before the scheduled date. If you check positive reviews on eCommerce websites, you will find customers thanking online retailers for prompt deliveries.
A PwC report mentions that customers are ready to pay extra for same-day delivery. In contrast, some customers are ready to pay even more to receive the product within a one or two-hour window after ordering a product.
However, experts mention faster deliveries are only possible if you have a robust approach to inventory management. For example, inventory management solutions ensure that stocks are maintained in warehouses near fulfilment centres.
It will allow retailers to dispatch the products as quickly as possible, which will make customers happy. When customers are delighted by your fast service, they are more likely to do more business with your store and share their experience with family and friends, boosting your brand image.
Make Returns Smooth
As per recent data, around 5% to 15% of online purchases are returned. While returns are costly pain points for retailers, making the product’s returns as smooth as possible will boost customer satisfaction and loyalty.
A good inventory management solution can streamline and speed up returns operations and improve reverse logistics efficiency. And, with comprehensive visibility provided by inventory management software, you can track returning items’ status in real-time and improve communication.
With robust inventory management and complete insights into returns, you can make smarter decisions for purchasing and suppliers to reduce the return rate. For example, if the number of returns for a particular product is high due to quality issues, you can reduce the orders and communicate with the supplier about customer complaints.
Inventory management is a crucial aspect that affects the start and end-points of your business. Hence you should invest in good inventory management software to streamline business processes critical for growth and customer loyalty.
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