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Ways to Help Cash Flow by Controlling Your Inventory

 

  1. Value


    Before you make any serious changes to your business, ask yourself whether or not applying inventory techniques will generate the business value you’re looking to achieve. Going through with changing your current practices will definitely be a significant time and effort investment. Will that investment bring your business a return or will your change happen without you seeing results you were after? You need to evaluate what your business does well and what it does poorly to answer these questions. A thorough understanding of how you handle your inventory will help tremendously with implementing new processes.

    2. Flow


    Evaluate the flow of your business’s inventory and make note of what you need to improve on.  Implementing a new inventory model can and will eliminate the following areas of inventory waste:

  • How is your inventory being transported? To achieve a smooth flow, you shouldn’t transport products between processes. Eliminating unnecessary movement of your products might require you to adjust how the products are being produced or from which suppliers you purchase materials.

 

  • If goods are being bought in anticipation of possible demand, overproduction can quickly happen. This causes you to not only waste materials, but also money you will then spend on storing the extra inventory.

  • Assess how you store your inventory. If it’s cluttered or causes unnecessary searching, that wasted time looking for your products can add up.

  1. Responsiveness


    Continuously evaluating your inventory flow while managing demand efficiently will allow your business to respond quickly to any changes that in the market that might happen. This responsiveness will keep your inventory levels at a happy medium. You can prevent unnecessary costs for storage of excess product as well as write-offs of unused and unneeded inventory.

If you’re seeing problems with your business’s cash flow, inventory control can make a great positive impact. If controlling your inventory more intensely than before isn’t giving you the results you and your business need, contact us today to learn about other options you have to better your cash flow.