Executives are investing in inventory management technology
Did you know that the global cost of inventory distortion is estimated to be $1.7 trillion annually (1)? This astronomical loss is shocking because inventory is the heart of any FMCG company! To reduce costs and maximize profits, optimum inventory management is essential for small and medium-sized manufacturers. Finance executives invest in inventory management technology to adopt best practices that reduce waste, reduce storage costs, reduce labor costs, and enhance customer satisfaction.
Reduce costly waste
Excess raw materials and products can lead to large amounts of waste. This is especially true for products and materials with a short shelf life, such as in the food and beverage space. Technology that helps simplify material requirements planning (MRP) helps financial leaders determine the right amount of inventory so that warehouses maintain sufficient inventory to meet orders and reduce waste. Furthermore, consumers and legislation want to buy from environmentally responsible companies, so implementing sustainable inventory management practices can increase your sales.
Reduce overstocking and warehousing costs
Excess inventory is not only costly due to the actual cost of the materials and goods themselves, but excess inventory can also cause additional storage costs. Reducing out-of-stock and excess inventory can lower overall inventory costs by 10% (1) and result in a 10-20% increase in space usage (2). With proper inventory management, financial executives can help reduce the size of warehouses or reallocate space to other income-generating activities. Storage savings are most important for perishable items such as foods, beverages or medicinal products.
Reduce labor costs
How much does your warehouse labor cost? Consider this… Walk and choose order accounts manually more than 50% From the time associated with picking (2). Finance executives need to increase the efficiency of the workforce to reduce costs. Warehouse automation technology combined with powerful inventory tracking technology enables workers to work more efficiently. Humans and bots together can increase productivity by a whopping 85% compared to either of these two processes alone (3)! The ability to locate inventory through real-time updates to mobile devices means warehouse workers no longer need to hunt for out-of-reach inventory and can perform picking and packing activities quickly and efficiently, reducing overall labor costs.
Keep customers coming back
In today’s digital age, customers expect to fulfill orders quickly and easily. Having a real-time view of your inventory is essential when it comes to fulfilling orders on time. 34% of businesses shipped an order late because they inadvertently sold a product that was out of stock (1). Given one bad experience can deter a loyal customer, inventory accuracy is essential to keep customers coming back! Inventory management software that provides up-to-date and accurate inventory information not only means you can avoid promising products that are out of stock, but also helps reduce out-of-stock situations by allowing manufacturers to use demand forecasting to schedule production and purchase orders.
The financial implications of improving inventory management are clear, so it’s no wonder why 54% of companies plan to invest more in inventory and network optimization technologies. Finance executives are responsible for evaluating the return on investment for any type of investment, and the case for financing an investment in inventory management technology is a strong one. By reducing waste, reducing storage costs, reducing labor cost and increasing customer retention, optimal inventory management can greatly increase profits!
Read the white paper on how modern manufacturers and distributors are increasing warehouse automation.
Read the white paper on how food and beverage companies can improve inventory management with technology.