Operational advantages of inventory classification
Some manufacturing businesses have thousands of items they need to keep track of and forecast demand for. If a business doesn’t know what items are essential for turning a profit, they could be wasting precious time with inessential inventory instead of their most profitable products or burning time and cash with other inefficient operations.
Accurate classification also saves employees time by simplifying inventory audits and spot checks, freeing them up for higher level tasks. With optimized inventory operations, stockouts are reduced, which is essential for earning customer loyalty. A study by GT Nexus found 63% of shoppers buy from a competitor or don’t buy at all when faced with a stockout.
On the other side of the coin, classification helps businesses identify essential inventory and enables a business to go leaner with less important items, which frees up working capital for other needs.
This post first appeared on QuckBooks Blog