Explain Benefits Or Importance Of Inventory Control

Explain Benefits or Importance of Inventory Control

Following icon briefly explains benefits or importance of inventory control.

The benefits or importance of inventory command is listed inwards next points:

1. Inventory command protects a fellowship from fluctuations inwards demand of its products.
2. It enables a fellowship to provide improve services to its customers.
3. It keeps a polish menses of raw-materials together with aids inwards continuing production operations.
4. It checks together with maintains the correct stock together with reduces the jeopardy of loss.
5. It helps to minimise administrative workload, manpower requirement together with fifty-fifty labour cost.
6. It tries to protect fluctuation inwards output.
7. It makes effective move of working capital yesteryear avoiding over-stocking.
8. It helps to maintain a banking venture check on loss of materials due to carelessness or pilferage (stealing).
9. It facilitates cost accounting activities.
10. It avoids duplication inwards ordering of stock.

The next tidings briefly together with lucidly covers all the above-mentioned objectives, benefits or importance of inventory control.

1. Protects from fluctuations inwards demand

Many a times, the need forecast of a production is non accurate. There is ever a modest divergence betwixt the need forecast together with actual demand. However, sometimes, at that topographic point is a big divergence betwixt the need forecast together with actual-demand.

So, at that topographic point are ever chances of fluctuations inwards the need of a material. These fluctuations tin live on adjusted if at that topographic point are sufficient items inwards the stock of inventory. Therefore, proper inventory command protects the fellowship from fluctuations inwards demand.

2. Better services to customers

If the fellowship maintains a proper inventory of raw-materials, hence it tin consummate its production inwards time. So, it tin deliver the finished goods to the customers inwards time.

Similarly, if the fellowship has a proper inventory of finished goods, hence it tin satisfy the additional need of the customers. So, inventory command helps the fellowship to deliver goods at the correct fourth dimension every bit demanded yesteryear the customers.

After making timely delivery, the fellowship tin concentrate on giving other services to the customers.

3. Continuity of production operations

Proper inventory command helps to maintain continuity of production operations. This is because it maintains a polish menses of raw materials. So, at that topographic point are no shortages of raw-materials required for production process.

4. Reduces the jeopardy of loss

Proper inventory command helps to trim back the jeopardy of loss due to obsolescence (outdated) or deterioration of items. This is because it checks all the items regularly.

Furthermore, it sells all the slow-moving items, inwards time, at the marketplace prices. It exclusively maintains the correct stock at all times. So, the chances of whatever detail getting outdated is reduced.

5. Minimizes the administrative workload

Proper inventory command helps to minimize the administrative piece of occupation charge of purchasing, inspection, warehousing, etc. This volition trim back the manpower requirement together with volition minimize the labour cost too.

6. Protects fluctuation inwards output

Inventory command tries to trim back the gap betwixt planned production together with actual production. There are cases where the production schedule cannot live on followed because of:

1. Sudden breakdown of machines,
2. Problems inwards render of materials,
3. Sudden labour strikes,
4. Loss due to failure of ability supply, etc.

In such cases, the divergence betwixt planned production together with actual production tin live on bridged yesteryear inventories held inwards stock.

7. Effective move of working capital

Proper inventory command helps to brand effective move of working capital. Inventory command helps inwards maintaining the correct amount of stocks of materials, components, etc. Over stocking is avoided. Therefore, the working upper-case missive of the alphabet volition non live on blocked inwards excess inventory.

8. Check on loss of materials

Inventory command helps to maintain a banking venture check on the loss of materials due to carelessness or pilferage (stealing).

If at that topographic point is no proper inventory control, hence at that topographic point are to a greater extent than chances of carelessness together with pilferage yesteryear the employees, particularly inwards the store-keeping department.

9. Facilitates cost accounting activities

Inventory command facilitates cost accounting activities. This is because, inventory command provides a agency of allocating materials cost of products, departments or other operating accounts.

10. Avoids duplication inwards ordering

Inventory command avoids duplication inwards ordering of stock. This is done yesteryear maintaining a split buy department. This subdivision volition exercise all the purchasing for the total organisation. No other subdivision is allowed to exercise purchasing. So at that topographic point volition non live on whatever duplication inwards ordering of stock.