October 5, 2011

Arguments for and against maintaining inventory

Many companies struggle with the subject of inventory. And it’s a subject that constantly needs to be monitored to ensure that you’re making the right decision for your business. Here are three arguments to consider in favor of maintaining inventory:

Time
For some companies the lead time from order to delivery is crucial. If you stock the items required, you can ensure delivery is prompt and avoid some third-party delivery charges, too.

Demand
In certain industries or retail sectors, demand for products ebbs and flows—perhaps due to seasonal or economic fluctuations. Maintaining inventory ensures you always have product available when demand increases—ensuring your customers stay happy.

Costs Savings
For companies that have the space to store inventory, and deal in products that do not have a shelf life, maintaining inventory allows the opportunity to bulk buy at a reduced cost. This can offer significant savings.

Now here are three arguments to consider against maintaining inventory:

Space
Maintaining inventory requires the space in which the inventory can be properly managed. Usually, this means a warehouse with adequate loading and unloading facilities and racking for efficient storage. For some products, care must also be taken to control temperature and humidity of the warehouse to maintain the products in optimum condition. A good example of this is wood furniture components, which are susceptible to warping if stored incorrectly.

Stock control
To effectively manage inventory, a high-tech computerized system must be installed and maintained. And staff must be trained to use it properly.

Cost
The expenses incurred for maintaining inventory can quickly mount up: Rent, insurance, equipment, labor, shrinkage and the value of the stored goods themselves. The costs of maintaining inventory can amount to a third of the value of the product.

On balance, we would suggest that if you can avoid maintaining inventory, then do so. Or, if you can find ways to reduce the inventory you maintain, then do this, too.

Complete chair manufacturing
For the past five years, Newport Furniture Parts has been saving money for its client base by supplying complete chairs, as opposed to chair parts. Depending on your needs, you can decide how much or how little you would like Newport Furniture Parts to do for you. With over 45 years of experience, commitment and quality in the wood-furniture industry, Newport Furniture Parts has the ability to help you provide the best quality products to your customers. Newport Furniture Parts are the complete manufacturer.

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