Explain Benefits Or Importance Of Inventory Control

Explain Benefits or Importance of Inventory Control

Following ikon briefly explains benefits or importance of inventory control.

demand of its products.

It enables a society to provide improve services to its customers.

It keeps a polish catamenia of raw-materials as well as aids inwards continuing production operations.

It checks as well as maintains the correct stock as well as reduces the endangerment of loss.

It helps to minimise administrative workload, manpower requirement as well as fifty-fifty labour cost.

It tries to protect fluctuation inwards output.

It makes effective purpose of working capital past times avoiding over-stocking.

It helps to maintain a banking corporation check on loss of materials due to carelessness or pilferage (stealing).

It facilitates cost accounting activities.

It avoids duplication inwards ordering of stock.

The next give-and-take briefly as well as 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 minor divergence betwixt the need forecast as well as actual demand. However, sometimes, in that location is a big divergence betwixt the need forecast as well as actual-demand.

So, in that location are ever chances of fluctuations inwards the need of a material. These fluctuations tin post away last adjusted if in that location are sufficient items inwards the stock of inventory. Therefore, proper inventory command protects the society from fluctuations inwards demand.

2. Better services to customers

If the society maintains a proper inventory of raw-materials, as well as thence it tin post away consummate its production inwards time. So, it tin post away deliver the finished goods to the customers inwards time.

Similarly, if the society has a proper inventory of finished goods, as well as thence it tin post away satisfy the additional need of the customers. So, inventory command helps the society to deliver goods at the correct fourth dimension every bit demanded past times the customers.

After making timely delivery, the society tin post away 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 catamenia of raw materials. So, in that location are no shortages of raw-materials required for production process.

4. Reduces the endangerment of loss

Proper inventory command helps to trim back the endangerment 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 position prices. It exclusively maintains the correct stock at all times. So, the chances of whatever particular getting outdated is reduced.

5. Minimizes the administrative workload

Proper inventory command helps to minimize the administrative travel charge of purchasing, inspection, warehousing, etc. This volition trim back the manpower requirement as well as volition minimize the labour cost too.

6. Protects fluctuation inwards output

Inventory command tries to trim back the gap betwixt planned production as well as actual production. There are cases where the production schedule cannot last followed because of:

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

In such cases, the divergence betwixt planned production as well as actual production tin post away last bridged past times inventories held inwards stock.

7. Effective purpose of working capital

Proper inventory command helps to brand effective purpose 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 last blocked inwards excess inventory.

8. Check on loss of materials

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

If in that location is no proper inventory control, as well as thence in that location are to a greater extent than chances of carelessness as well as pilferage past times 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 way 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 past times maintaining a dissever buy department. This subdivision volition practise all the purchasing for the total organisation. No other subdivision is allowed to practise purchasing. So in that location volition non last whatever duplication inwards ordering of stock.