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Top 7 Benefits of Inventory Management You Should Know

4 min read

Do you know the benefits of inventory management? 

I am sure most of you will say yes! But do you know the full range of benefits.  

Inventory management enhances business operations with the effective flow of goods and services. Inventory Management and control implies the controlling of business stock or controlling the movement of products and services following their demand. Inventory Management and control are highly beneficial in today’s business world as it makes a vital part in any business success/failure having intense competition within its industry. The benefits of inventory management and the knowledge about its usage are vital for enhancing product quality, improving competitive ability, reducing inventory carrying costs by reducing inventories, service enhancement, and operational flexibility through pull systems. Inventory Management and control provide actions &

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strategies that are integrated into all management controlling, planning, and processes which are crucial to enhancing and making successful management.  

Every business inventory requires a lot of focus, and such attention is provided through Inventory Management and control. The list usually involves the most considerable cash-flow in any business, both concerning purchasing and selling stock. That’s why Inventory Management and control would, in turn, have a massive effect on business finance. Aside from adding competitive ability and profitability, the benefits of inventory management are, and it fosters growth leading to economic and business efficiency. Applying several analyses to business who make use of Inventory Management and control,  

7 Benefits of Inventory Management and Control: 

  1. Inventory planning improves service level 
  2. Inventory planning and management reduces storage cost  
  3. High inventory turnover brings revenues 
  4. You can utilise warehouse space better 
  5. Effective inventory control enhances market share 
  6. Inventory control improves product quality 
  7. Inventory control avoids costly interruptions in operation 

Inventory Planning Improves Service Level 

It remains the fact that good Inventory Management and power leads to what all business strive for continuity, the repeat clients. If you desire your hard-earned clients to come back to purchase your products and services, it is necessary always to improve your service level enough to be able to match customer request swiftly. Inventory Management and control aid businesses in meeting such demand by permitting you to provide the right levels of hands-on service immediately your customers require them with the desired lead time, highlighting the importance of inventory management, 

Inventory Planning and Management Reduces Storage Cost  

These benefits of inventory management envisage on focusing upon Inventory planning and reducing storage costs as you maintain adequate inventories. The central values feature significant factor loadings and commonalities exhibited through proper Inventory Management and control. The factor lowers storage costs and increases revenue by using adequate inventory management and control emphasising the importance of inventory management.  

High Inventory Turnover Brings Revenues 

Applying Inventory planning to any business can serve as a bridge to bring in higher revenues. Through proper Inventory Management and control, a company is capable of increasing its profitability. If a business overlooks the benefits of inventory management in its trade, sales, and production, it is possible to hamper maximisation of its operational efficiency. Intrinsically, the inventory’s cost of purchase and production has a substantial effect on gross profit. Using lessened cost of production, a business raises its gross profit. That is why proper inventory planning is required. And with all accounts placed as equal, such company would record superior revenues, which in effect, leads to more profitsagain substantiating importance of inventory management. 

You Can Utilize Warehouse Space Better 

Proper Inventory Management and control involve accounting for all production, purchase, and sale of goods that meets customers demand. These benefits of inventory management affect management strategy that supports organisational warehouse in attaining better space management.  

If you have an unorganised warehouse, you would always find it difficult to handle your inventory effectively. Several businesses elect to enhance their warehouses by arranging higher selling products together in areas that are easily accessible within the warehouse. Performing this process aids in speeding up the order fulfilment and preserves customers happiness. 

Effective Inventory Control Enhances Market Share 

For companies whose scale of operations does not permit the running of several inventories by product line or SKU, the usage of Proper Inventory Management and control solves it. Nevertheless, in some situations, your business size does not matter since roles and policies have to be set up irrespective of the size of the business.  Such procedures and set up will help govern inventory spending and Enhance Market Share.  

As we already established Inventory Management and control allows business to be able to handle all cash flow prospects. Companies are not continuously able to procure large amounts of inventory, as capital remains a significant factor in doing so. By having proper Inventory Management and control, businesses can recognise precisely what inventory size is needed and when to deploy them. This step can Enhances Market Share and free up other capitals for re-investment. 

Inventory Control Enhances Product Quality 

The use of Inventory Management and control can assist in remarkably improving business efficiency and product quality. These benefits of inventory management would aid in eliminating waste, and enhances focus on producing Right First Time or Six Sigma Quality 

It remains a fact that having a good inventory management system leads to better success and repetitive customers. If you desire your hard-earned customers always to keep coming, you have to enhance your product quality in the best ways possible.  

Inventory Control Avoids Costly Interruptions in Operation 

Inventory Management and control are beneficial in limiting the employee’s ability to steal or disrupt your operations.  Often costly interruptions in service in businesses can be averted with proper planning. Deprived of inventory control, companies may be none-the-wiser to such disruption. These benefits of inventory management ultimately improve business profitability. By avoiding costly interruptions, businesses can reduce any ‘hidden’ costs. 


These benefits of inventory management and control are beneficial and good practice for all business types. It is always important to keep a watchful eye on your inventory, and it is still best to do it properly. With these benefits attached to proper inventory management and control, you can regularly, identify and avert any potential inventory challenges and errors. Keep the listed benefits in mind whenever you plan to enhance your business inventory management strategy. 

Please share if you think I have missed out any benefits to emphasis the importance of inventory management 

About Us

Dr. Muddassir Ahmed is a global speaker, blogger and supply chain industry expert. Dr. Muddassir Ahmed has received a Ph.D. in Management Science from Lancaster University Management school. Muddassir is a Six Sigma black belt and has founded scmdojo.com with the intention to enable supply chain professionals and supply chain teams to solve the problems they face in their jobs & business 

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