How Managing Inventory and Business Growth Go Hand in Hand

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If your business doesn’t have an effective inventory management process, you aren’t alone. In fact, one study found that 46% of small businesses don’t track inventory at all, and if they do, they use a manual process that involves spreadsheets.

Effective inventory management has a direct impact on business growth and profitability. When a business properly manages its stock levels, it’s more likely to experience an increase in productivity, sustainability, and efficiency.

Not yet convinced that inventory management is so important to a business’ success? Here’s how managing stock levels impacts growth.

managing inventory

Meet Consumer Demand

Consumers are what ultimately drive the success of any business. Without a steady flow of customers, a business isn’t able to make sales, which means zero profit. But in order to attract consumers, a business must have good control of its stock levels. This means always having top-selling items in stock and being able to account for spikes (and dips) in consumer demand.

By using software to manage your inventory instead of a manual process, it’s much easier to stay on top of stock levels. Inventory management software saves time, money, and tons of effort. These applications offer all sorts of features including:

  • Real-time stock numbers
  • Ability to set alerts when stock is getting low
  • Setting stock quantity thresholds
  • Auto-reorder

When a business is able to meet consumer demand, it’s much easier to maintain a solid reputation as a reliable and credible business.

Improved Customer Satisfaction

Have you ever added an item to your online cart and started the checkout process, only to get an error that the product you selected is out of stock? Or have you ever gone to the store to buy an item, only to find the shelf completely empty? It leaves a bad taste in your mouth, to say the least!

Product availability has a huge impact on customer satisfaction. When consumers are able to find a trending item in your store, they have no need to purchase from a competitor. But on the flip side, if you’re out of a hot item, you can all but expect customers to shop for that product elsewhere.

With effective inventory management, customers can trust that your business will always have the products that they want when they want them. This builds customer confidence in your brand.

A satisfied customer is more than just another sale. When a customer is satisfied with their purchase, the return on investment is huge. One study found that satisfied customers are 3.5 times more likely to repurchase and 5 times more likely to recommend the business to friends and family members.

Reduce Overhead Costs

When overhead costs are reduced, profitability automatically increases. One of the biggest overhead costs associated with inventory management is the manual processes that businesses use to keep track of their stock levels. This includes the time spent counting, organizing, and transporting stock. In the business world, time is money, and manual inventory is not only cumbersome, but it’s also costly.

Inventory management can also impact overhead costs when stock levels are incorrect. Having too much stock of a product that isn’t selling means wasted shelf space.

Keeping track of inventory levels is much easier with inventory management software, as it completely eliminates the need for manual processes that take so much time. With less time spent walking down the aisles of your warehouse, you can focus more on other business processes.

Better Inventory Planning

It’s impossible to gauge which products you need to reorder if there isn’t a quick and easy way to determine which products have a healthy stock and which ones are running low. Not knowing which items are and aren’t selling also makes it harder to properly plan for inventory counts.

Not being able to properly plan for stock levels increases the risk of overstocking and understocking items. With an automated and efficient inventory management process, it’s much easier to mitigate these problems.

With better inventory planning, businesses are able to save time, money, and space. This sets a clear path for long-term growth.

Improve Sales Processing

A hectic warehouse means hectic sales processing. An unorganized warehouse means slower sales processing times and a higher risk of mistakes. There’s nothing more detrimental than sending a customer a product that they didn’t order.

But with streamlined inventory management, you can achieve better space management. For example, knowing your top-selling items allows you to better layout your warehouse space. By putting higher selling products in the same area, orders can be more quickly filled and shipped to customers.

Quick order fulfillment means that customers get their orders sooner, which keeps customer satisfaction high.


Though inventory management is a business process that often gets put to the side, it’s a driving factor behind a business’ ability to grow and thrive. If your business hasn’t taken inventory management by the horns, now is the time to develop an efficient process that saves money, increases sales, and keeps consumers happy.

This content is a joint venture between our publication and our partner. We do not endorse any product or service in the article.

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