Significance of Inventory planning for Every Organization (1)

Significance of Inventory planning for Every Organization

Any organization that is involved in production, sales or trading of products must have a good hold on inventory in one form or another. The production companies hold raw, material inventories, finished good and spare parts. While the trading companies only hold finished goods inventories. When it comes to dealing with inventory management function, then it is also essential to deal with inventory planning as well as inventory tracking.  The primary job of inventory planner is to analyze the demand and take a decision when to order and how much to order new inventories.

Inventory management model includes:

EOQ(Economic Order Quantity): It is a method that determines the maximum order quantity that will reduce the total inventory cost. It is a basic model and other models are based on this model.

Continuous Order Model:  It works with fixed order quantity and it is used to determine the order size as well as the production lot for an item to be produced at one stage of production. It is kept as work in progress inventory that may be supplied to the next stage of production or the customer.

Periodic System Model: It works by placing the order after a fixed period.

Inventory planning is the process that any business adapt to know the optimal quantity and timing with the aim of coordinating such plans with the organization’s capacity to produce as well as make a sale. It has a direct impact on the company. For instance, It can determine the cash flow and profit margin of the company. It is considered to be the important aspect of any organization’s success.

Well, you may be thinking about whether adopting inventory planning will be fruitful for your business or not. The answer is yes! There are many advantages of inventory planning. Any organization having optimal inventory planning solution may bring a lot of profit margin and cash flow. Below are some of the benefits of Inventory planning:

Cash Flow: In any organization, many internal policies and procedures assure better planning and control of production as well as sales.  This type of strategies apply to everyone and hence such policies assist the companies to order, maintain inventory flow etc. These policies and strategies help in the betterment of the cash flow in any organization.

Higher flow: Inventory planning act as a bridge to higher profits. With the right control on Inventory, any business can increase its profit. However, if any organization ignores the requirement of the proper inventory system, then it is likely to cripple them from increasing on its operational efficiency.

Prevent Stealing:

The strategies, as well as the policies of the organizations, prohibits employees from abusing inventory.

From above it is clear that Inventory planning plays a significant role in any organization or business. Adexa is a right platform from where you can get all business solutions like inventory planning solutions, sales and operations planning(S&OP) solution, demand planning solution and many more.

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