As in the production company inventory management is the greatest challenge, every company should appoint effective people who can manage the inventory well. You know what in a production company most of the amounts of loss occur due to the overstock inventory. If the materials are perishable, then you can’t even recover the losses happen due to the excess inventory. And if you have everything except the sufficient amount of inventory, the loss still can occur. The only solution to these problems is appointing an effective management system. Who is an expert in inventory management can minimize the loss of the overstock inventory in a zero amount?
If you are an owner of the company you should not rely on your employee only to do all the things. You also should know how to manage the inventory well. Then you can find out the reason of overstock or less inventory if there is any.
However, the inventory management is not always easy. There are plenty of reasons for why you are running short and excessive amount of stocks. These are described below:
Lower production than the required:
If you are failed to produce some products to the requirement, you will run short of inventory, and you will not be able to supply the products to the customer as it required. If this happened, you would lose your goodwill in the market. So you should always monitor how the production is running. The calculation must be clear all the time.
Slow motion work:
If your worker has no speed in work, it is very difficult to get your works done by them. So you have to make them understand the necessity of getting works done by the time. If you are a leader, you should know how to motivate them in their work.
Spending idle time more:
If your workers are spending the more idle time, you will run short on the production. You need to know how you can make your works done by the workers in the targeted time. You should give them the training to upgrade their skills. Your management team should be strong enough to deal with the workers.
Purchase of more material than required:
If you purchase more inventory than it is required, you will face the problem of overstock inventory. However sometimes having more inventory in the stock than it is required may bring you trouble and it could be a waste of money as well. Though, these kinds of inventory have some resale value. But no one wants to have more inventory in the stock than it is required.
Having more labor than the requirement:
If you appoint more labor than the requirement, you will have to make them work. The more labor will produce the more quantity of products. These more quantity will remain unsold sometime.
So having more inventory or less do not bring any benefit to your company. It is your duty to appoint a strong management to monitor it all.