You can unlock cash in your inventory when you increase visibility across your supply chain. Inventory optimization will improve profitability and operational efficiency. Meeting demand with supply is crucial. But you can have a lot of money tied up in slow-moving inventory. It’s always a balancing act for distributors. So, how can you be sure to have what you need while not stockpiling what you don’t? Inventory optimization.
The importance of inventory optimization
Optimizing inventory involves putting the right amount of capital into the products that will meet present and future demand while avoiding overstocks or backorders.
Reducing excess stock frees up resources and improves cash flow. Money saved can be used strategically elsewhere.
Inventory Optimization will:
- Increase profitability: Successfully managed inventory will reduce inventory carrying costs.
- Minimize stock-outs: Stock-outs lead to lost sales, frustration, and decreased customer loyalty. Inventory optimization helps prevent stock-outs by ensuring you have the most efficient level of inventory on hand.
- Enhance supply chain efficiency: Reduce the risk of stock-outs, minimize fulfillment times, and improve supplier relationships by always knowing where your inventory stands.
Unlock cash tied up in inventory
Optimizing inventory not only makes your business more efficient but will also improve its financial health. Access to more working capital will allow you to drive business growth by expanding product lines or investing more in high-performing, profitable products.
Three effective strategies for freeing cash:
1. ABC Classification
categorizes inventory based on its value and importance. It allows companies to optimize their inventory by focusing on items that generate the most revenue. A-items are the best sellers and fastest movers. By prioritizing A-items, you can optimize your inventory and reduce the cost of carrying less profitable or slower-moving items. Doing so can free up cash for other business needs.
2. Using Dynamics 365 Eliminate obsolete, discontinued, or damaged goods
Unlock cash in your inventory by selling off dead stock items. They may be outdated, discontinued, damaged, or spoiled. Liquidating them, even at lower prices, allow you to recoup some cash and free up space in your warehouse. You can use online markets, liquidation sales, discounts, etc. to unload dead stock.
With dashboard, you quickly see existing and potential stock-outs. That data allows for productive conversations with your sales team to determine your best moves.
3. Dynamics 365 ERP can help to Re-evaluate supply chain relationships
Examining supplier relationships will help you identify roadblocks in your company’s cash flow. Perhaps you can negotiate better terms, reduce lead times, or improve delivery. Supply-chain financing involves using your relationships with your suppliers to secure financing. Negotiating longer payment terms with your suppliers can help free up cash in the short term. Or you can engage a third-party financing provider that will provide funding based on your purchase orders or invoices.
The benefits of unlocking cash
Redistribution of cash unlocked from inventory allows you to invest in other business areas, such as marketing and product development.
Understanding your inventory equips you to make better business decisions and boost operational performance. Knowing your inventory levels and turnover rates, you can make more informed decisions about purchasing, pricing, and product development. You’ll be more competitive and improve your profits.
is crucial for unlocking hidden cash. A comprehensive view of your inventory allows you to make informed decisions about procurement, production, and fulfillment. You’ll be better positioned to reduce costs, improve efficiency, and deliver superior customer service.
What else can you do with Netstock’s Predictive Planning Suite for Dynamics 365?
Netstock allows you to work with a dashboard where you can see what’s happening with your inventory in real-time. Make informed decisions about which items to order and when to order them.
Forecast customer demand. You can predict inventory requirements and plan for future demand. Using historical sales data and market trends, you can predict which items are likely to sell and adjust your inventory levels accordingly. You can reduce overstock and stock-outs, improve inventory turnover, and optimize inventory levels.
Centralize all your inventory data with a cloud-based inventory management system for improved visibility. This ensures everyone in the company can access the same up-to-date information, reducing errors and enabling real-time decision-making.
Improve collaboration and the sharing of data and insights between departments.
With Netstock and Dynamics 365 ERP, companies can achieve better inventory visibility, collaborate more effectively with suppliers and their finance departments, and implement strategies that unlock hidden cash. Choose Netstock to optimize your company’s inventory and improve your financial performance, to give you a competitive edge.
Learn how to optimize your inventory further by accessing our new guide or The Ultimate Guide to Inventory Management.
Then our experts to learn how Netstock and Microsoft Dynamics 365 can help you optimize your inventory operations for better cash flow.
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