In a time of rising costs and shrinking profits, companies are scrutinizing every aspect of their inventory control process. While minimizing inventory costs may seem straightforward —given that high costs can significantly affect the bottom line—it’s crucial to recognize that “optimized inventory levels can enhance profitability.” Achieving this balance requires a strategic approach beyond cutting inventory spending. Businesses must learn how to invest intently in inventory to drive overall success.

Our partners at RFgen dive into the details of inventory expenses and how companies can look to minimize costs at various stages with the help of automated technology along the way. When companies look at the cost of inventory, they can break it into 4 areas:

1. Ordering Costs: includes the price of raw materials or products, shipping and handling, and managing supplier relationships.
2. Carrying Costs: the cost of holding on to the inventory in the warehouse. Inventory excess is never a good thing when looking to minimize either from an inventory optimization or warehouse reduction standpoint.
3. Stockout Costs: not having the right items in stock when needed can cause customer dissatisfaction and potential loss of customer loyalty. Automated inventory control can help proactively manage inventory levels to avoid this by creating re-stocking levels and automated re-order points.
4. Inventory Management Costs: handling the items affects cost as well. The more manual processes, the higher the cost impact. Some of the more laborious costs are order picking accuracy, speed of task completion, time spent looking for inventory, correcting errors and re-work, and training new associates.

Whenever a company can leverage automation over manual processes, it stands to benefit considerably. Though the initial investment may seem significant, the realized savings through increased efficiency and reduced resource strain will quickly justify the cost. Automation in labeling solutions and mobile inventory management solutions can seamlessly integrate with your ERP system, delivering up-to-the-minute data updates.  This empowers you to make informed decisions that positively impact the business and enable you to be more agile as market conditions change.