Order cycles have a big impact on your inventory management. Developing a complete understanding of order cycles can help you reduce your inventory costs and improve your customer satisfaction levels.
A typical business has 45 to 90 percent of its capital tied up in inventory. When you can improve inventory control, you can free up more capital to invest in other products or in expanding your company’s operations, sales, or marketing.
When you have hundreds or thousands of inventory items and customers are on different order cycles, it can be difficult to manage inventory well. Using inventory control software can help you maximize your profitability in the warehouse.
Let’s take a look at the impact that order cycles have on inventory control, and how understanding this impact can help you with inventory levels.
Assess Demand for Your Products
No two products sell exactly the same in a given period. Evaluating the demand for your products can help you establish order cycles. When you know the times of highest demand for each product, you can ensure that you have enough on hand to meet orders. Conversely, you can also control stock levels during downtimes in the order cycle to prevent waste.
Negotiate Terms to Improve Profit
Another way in which understanding order cycles can benefit your business is by examining the relationship between order cycles, inventory management, shipping, and cost of goods. If you know your order cycles, you may be able to negotiate better terms with your vendors to reduce cost of goods ahead of time. Not only will you have less items in your warehouse during slow times, but during business times you may be able to order in bulk with a negotiated price.
Emphasize the Products that Matter
Consider whether or not inventory control efforts are worthwhile for all products in your warehouse. Some high-cost products may justify the effort of tight management, while others cost so little or take up so little space that spending time on ordering cycles and inventory management isn’t worthwhile. You must balance the costs versus the benefits on every aspect of inventory control.
Avoid Out of Stock Messages That Frustrate Customers
Sometimes, improved inventory control methods are helpful simply to reduce the number of “sorry, we’re out of stock” messages your customers see online or hear from their sales representatives. Nothing is so frustrating for your customers as learning that a part or product is out of stock just when they need it. “But you know that I always order that in January!” they may say, and they’re right. If you know your order cycles, you can have that item in stock and avoid too many frustrating “out of stock” messages.
Invest in Inventory Control Software
Many inventory control products can help businesses control costs and maximize profits.
Sage Inventory Advisor works with Sage 100 and provides a software solution for inventory control that can help you with order cycles, product stock status, and more. With the data display dashboard, you can see instantly what stock levels need replenishing. Order cycles can be calculated and new items ordered quickly to ensure that you’ll rarely give customers that frustrating “out of stock” message.
Acumatica Cloud ERP offers the Distribution Management Suite that can be fully integrated with CRM, Financials, Manufacturing and Project Management. Acumatica’s distribution software was recently recognized by COdiE as the “Best Supply Chain Management Solution.” With this award-winning solution, you can gain real-time access to available inventory, inventory in transit, reorder quantities, and inventory costs. You can also manage multiple warehouses, lots, inventory sub-items, expiration dates, and bin locations.
Learn More with Accounting Systems, Inc. (ASI)
If you’re looking for expert insights into inventory control products, ASI can help. With years of experience helping many types of businesses resolve their inventory control issues, we can recommend the best software solutions for all of your inventory management needs. If you would like a demo, contact us or give us a call at (803) 252-6154. Our distribution experts can help you reap the benefits of an inventory control system.