Inventory Management- An important managerial function

Any product-based organization runs with non-capitalized assets or stock which is generally termed as inventory. Also, the management of all the inventory inputs, warehouse arrivals, and departures come under head inventory management. In other words, the overall supervision of stock items & maintaining a detailed record of each new product entry and exit is in general referred to as inventory management.

Stages of Inventory

When the stock is finally out for sale, it has gone through a number of stages before reaching to the POS (Point of Sale). Well, in the entire inventory cycle, majorly there are three stages:

Procurement of Raw materials

The very first stage is the procurement of raw materials that consist of the acquisition of raw items that’ll be converted into the final product for sale.

Work-in-progress

This stage is also referred to as the stage of the semi-finished product wherein the product is in the processing stage but not in the final stage.

Finished goods

When the product is processed and becomes ready for taking to POS, it reaches the final stage. Therefore, the product now becomes finished. The finished product actually reaches the customer and is consumed by the ultimate consumer.

Essentials of an effective inventory management

The efficiency of business on a major part depends on the level of effectiveness with which the inventory is managed. An ideal inventory management system ensures the following key points:

Reduction of cost and accelerates business cycle

The inventory is said to be managed best when it leads the production at the desired level at the minimal cost. The inventory cost can be reduced by placing bulk orders that catch larger discounts and this way, the overall cost of production goes down increasing the pace of business scale.

Easy demand forecasting

An effective inventory management system ensures accurate demand estimates. The demand forecasting basically depends on the market forces i.e, demand and supply. The intersection of both curves gives the equilibrium market demand and an ideal inventory management system keeps the stock updated as per the current market demand.

Application of the FIFO approach

The FIFO approach is very popular in the accounting criteria of inventory management. It stands for First In, First Out approach wherein the goods are sold in the same order as they’re purchased or manufactured. It’s an ideal system for perishable goods.

Timely audit of the inventory

It is very important for a good inventory management system to envisage a regular audit of the business stock. It clarifies that you possess the same inventory matches as you think you have in the warehouses.

Keeping a tight quality check on inventory

Mere maintenance of inventory level doesn’t work at all. Quality maintenance is equally important. The inventory management department should take care of the raw material quality while making purchases. This way, you can keep a quality check on the stock.

Track your Sales and Purchases via TallyDekho mobile app

Now, just think of managing and keeping watch on every single sale and purchase of inventory on your mobile phone. Isn’t it sound so satisfying? TallyDekho is a mobile app for business people who want to keep every single detail of the inventory flow on fingertips. You can manage the inventory level by checking the inventory sales and purchases status by integrating the app into your business. The application uses your Google Drive for storing the data wherein you own the data and the access to you only. Be it an iPhone user or android one, the TallyDekho app is a pocket tally for android and iOS users designed for all business types out there.

With TallyDekho app, you can also check:

• Sales
• Purchases
• Expenses
• Outstanding Payable
• Outstanding Receivable
• Bank Balance
• Cash in hand
• The ledger of various parties
• Regular reports through graphs
• Outstanding dues & get regular payment reminders

Keeping the track of every minute detail was never this easy wherein you can also analyze the inputs with charts and graphs providing a more clear view. Also, you enjoy an additional feature wherein you can share the GST invoices from your mobile to the interested parties in just a single go. Step ahead and integrate your Tally ERP9 and give your business new heights with TallyDekho. Stay connected for more interesting articles. Feel free to share your feedback.