Best Practices for Lowering Your Cost of Carrying Inventory

As one of the biggest expenses for your company, inventory should be a constant focal point for cost reduction. Luckily, there are several ways to bring down the cost of carrying inventory.

Following are several of the proven inventory cost reduction methods that could potentially yield savings in your organization.

Vendor-managed Inventory 

Vendor-managed inventory is a great way to reduce the amount of money your company ties up in the costs of keeping stock. In a vendor-managed inventory scenario, you put the responsibility of placing purchase orders in the hands of the supplier. The supplier receives sales and inventory data from your organization via electronic data interface (EDI), then uses the information to make orders on your company’s behalf and deliver goods to your manufacturing plant or distribution center.

Inventory Management Software

First and foremost among these best practices is the use of inventory management software. Inventory management software is frequently divided into industry solutions such as:

• Process manufacturing software
• Chemical manufacturing software
• Discrete manufacturing software
• Food and beverage distribution software

Other solutions, such as enterprise resource planning (ERP) systems, are available across all industries. Such inventory management software greatly improves the visibility of inventory flow through your supply chain, enabling you identify and resolve inefficiencies and reduce the amount of “safety stock” you carry.

Inventory management software also helps you optimize your warehouse, improving productivity and thereby reducing the labor hours spent on inventory handling.

Investing in a good software solution opens up multiple opportunities to reduce the costs involved with inventory. You’ll need an enterprise resource planning (ERP) system like Sage 100 or Sage X3 to take advantage of vendor-managed inventory using EDI; similarly, software with a customer relationship management (CRM) module can help you collaborate with customers to reduce your safety stock levels.

In short, you can directly generate inventory cost savings with business management software. If you’d like to evaluate your business management software options, Southeast Computer Solutions can help. We offer IT consulting services, implementation, and project management, as well as being a vendor for Sage software platforms. You can learn more by contacting us today.

About Southeast Computer Solutions Southeast Computer Solutions is based in Miami, Florida, and has additional operations in Mexico. For over 30 years, we have positively impacted the success of small and mid-sized businesses with effective business management implementations that improve our clients’ operations. We listen, we are accessible, and we care. Learn more by visiting our website or calling 305-556-4697.

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