Inventory Cost Reduction
Inventory cost reduction is at the top of the priority list of any wholesaler or retailer. Companies use a lot of resources making sure that they have the right Inventory levels. Having too much inventory is very costly as it is cash sitting in the warehouse, having too little Inventory will result in loss of sales and eventually loss of consumer confidence.
Some companies invest heavily in inventory thinking that is it a good investment. It could be if the inventory turns are adequate which means you are selling and making money. If the tide changes and there is no demand for the items in stock, then the company might have to liquidate inventory to avoid larger losses and convert inventory to cash. This is part of the inventory control process.
Inventory Cost Reduction and 3PL companies.
With the cost of warehousing so high, having the right product mix and the right quantity is key to selling. Meeting the demands of customers is the goal of any company. When you are spending too much money of warehousing and operations, that will take away from the resources needed to purchasing inventory. That is where 3PL Companies come into play. You can use a 3Pl company to handle the warehousing and distribution for your business at huge savings while you as a company can focus on your core business of buying and selling.
As some companies practice buying huge amounts of inventory to satisfy the demand, other base their purchases on sales forecasts from their sales force which many times is not an accurate one. The sales people are either too conservative with their projections in order not to be held accountable for the actual sales or just too aggressive thinking that they will be able to sell what comes in. Other companies use complex computer software to handle the forecasting part of the business.
Whatever the inventory forecasting method used, the issue at hand is having the right levels of inventory because too much inventory will choke the cash flow and to little will turn customers away.
This is where Third Party Logistics Companies come into play. They can offer warehousing, Distribution and inventory control all in one package no to mentions Ocean freight Services and other shipping methods.
Having the right amount of inventory coming in at all times is key to Inventory cost reduction.
Inventory Cost reduction is a Science
Inventory Control is a science, it involves a lot of variables which includes cooperation from your shipping company, your vendor and other logistics Providers.
Having the right logistics partner is important to the success of your operations. Some “3PL Companies” offer Contract Logistics Services which in addition to the normal services include inventory control at the production facility, making sure cargo ships on time and is delivered on time.
Third party logistics providers are a great asset to many importers as they possess the tools necessary to make sure the inventory keeps flowing into the distribution channels without incurring so much cost.
The usually hire expert staff and utilize state of the art software. One such company is International 3PL
Resources:
International freight Forwarders
