Consider a firm an orchestra, with an asset monitoring system conducting the delicate balance between supply and demand. Inventory planning involves strategic decisions regarding what to stock, how much, and when. This complex process underpins operational efficiency, customer happiness, and financial health, not just stockroom maintenance.
Consider how a miscalculated inventory decision affects an organisation: stockouts cost firms more than sales. Frustrated customers switch to competitors, and emergency replenishment orders consume resources due to faster shipment and high supplier charges. The domino effect of stockouts can damage brand relationships and market position.
However, excess inventory in warehouses traps enterprises in a distinct financial quicksand. Unsold goods freeze capital, warehouse space fills up at premium rates, and products deteriorate. Inventory bloat restricts storage capacity and costs money in holding expenses, insurance, and unsold goods write-offs.
Inventory planning is essential in today’s fast-paced economy. This financial lever affects cash flow, operational costs, and the bottom line.
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