A quick look at five reasons why great inventory management has a positive impact on supply chain performance.




Inventory; the term for inanimate materials which don’t actually do anything except sit in one place until technology, people, vehicles and equipment are deployed to move it somewhere.

Why then, is so much written about inventory in the context of supply chain performance?


It’s the Management that Matters

Of course in reality, it’s not the inventory itself which impacts performance, but the way in which it’s managed on its course through the supply chain. That’s why every supply chain and logistics professional should aspire to top-rate, truly great inventory management.

To be a little more specific, let’s take a quick look at five reasons why great inventory management has such a notably positive impact on supply chain performance,

  1. Never too little, never too much: When your company practices great inventory management, your customers won’t suffer as a result of stock shortages. At the same time, you don’t tie up excess capital in inventory or risk losses caused by obsolescence or perishability.
  2. Customer satisfaction and retention: Since great inventory management means you always have available products to satisfy incoming orders; your customers will keep coming back and hopefully help you earn new business by way of referrals.
  3. Improved cycle times: Well-managed inventory means a well-organised warehouse. This promotes faster response and overall cycle times—an important competitive advantage for logistics enterprises.
  4. Reduced labor costs: A well-organised warehouse, achieved through great inventory management, means fewer man-hours are spent on fulfilment processes and stock counting. The ultimate result is a gain in efficiency and an improvement in supply chain cost performance.
  5. Improved supplier relationships: If your operation practices great inventory management, you’ll be a model customer for your suppliers, which promotes close relationships—further oiling the wheels and contributing to high performance throughout the supply chain.


Manage Your Materials—Perfect Your Performance

For something that doesn’t do much, material inventory takes some managing. It also plays a huge role in the success of your company’s supply chain. That’s why you should care about your organisation’s inventory and make sure its management is not just nearly great, but really great.