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Inventory management – a key operation in the development of SMEs

The importance of inventory management

Inventory management is an operation that Small and Medium Enterprises (SMEs) should not exclude from its sales strategy if you want to generate profits and avoid economic losses.

Inventory management is the efficient handling of raw materials, manufacturing phase items and finished products. This process requires the involvement of the entire corporate structure, in order to perform specific actions and to facilitate proper handling of the goods.

Here are the kinds of tasks that each corporate division must run to meet that goal:

1. Procurement. This sector is responsible for relations with suppliers. The duties are:

a) Check the availability of delivery agents by type of manufactured item.
b) Manage the delivery time of the requested orders.
c) Negotiate the price of inputs.
d) To process credit with suppliers and define their terms.
e) Report the difference between the prices of inputs to cash and credit.

2. Production. The request for purposes of inventory management is to provide information on the number of items that can be manufactured every day and spending inputs required for that process. This area is also responsible for recommending the use of racks or shelves for storage of merchandise.

3. Storage. This segment must be designed and the necessary space to store supplies and products to be installed, depending on the goals and production requirements.

4. Finance and Accounting. The objectives of this department are:

a) Valuing inventory, determining production costs and defining sales prices.
b) Determining the prices of finished goods on credit.
c) Assess the availability of resources to purchase inputs and store all types of inventories.
d) Define the right time to hire financial solutions such as Credit Card Working Capital, designed to meet operational needs as inventory management.
e) Calculate inventory turnover and create strategies for managing surplus or missing supplies.
f) To establish the balance between revenues and expenditures associated with the handling of goods.

5. Administration. This division is responsible for plotting escape routes to the unexpected, such as the absence of a supplier, the lack of key inputs, production equipment failure, reduction or the occasional increase in productive capacity.

6. Sales. This department is responsible for establishing direct contact with consumers and implementing strategies for placing manufactured products and even agree to acquire items in progress.

Read more helpful and insightful articles brought to you by Robert Carter from Your Virtual Office London on our startup and business blog.

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