Managing the Capital Investment
Inventory: Carrying cost is one of the major components in any inventory optimisation, for any organisation. Inventory carrying costs influences many decisions in the strategic, analytical and operational success of the logistics enterprise.
These decisions have three elements
- Break-even Analysis
- Total Landed Cost
- Acquisition Cost
- Make-to-Stock or
- Inventory Positioning
- Adjusted profit margin
- Sourcing strategy
- Make or buy
How inventory is managed in a warehouse is about understanding what there is, and where it is in the warehouse. The effective and efficient stock storage locations can help lower costs, speed up fulfilment, and prevent fraud. The organisation may also rely on inventory control systems to assess current assets, balance accounts, and provide financial reporting.
Inventory control is also important in maintaining the right balance of stock in the warehouse. Organisations do not want to lose a sale because of insufficient inventory was available to fulfil an order. Constant inventory issues (frequent backorders, etc.) can drive customers to other suppliers entirely. The bottom line? When there is control over inventory, customer service levels are managed. Good inventory management should provide the organisation of real-time understanding of what’s selling and what is not.