Inventory Management Companies

While inventory represents a large portion of a company’s assets, it is also a headache to manage. You have to oversee storage of stock, track inventory numbers, fill orders, shipping, and a hundred other small details. For small companies that do not deal in large quantities of stock, it is feasible, and cost-effective, to manage their own inventory. However, larger companies, such as those that deal with thousands of units and hundreds of shipments a day, paying for the personnel and resources to manage it may not be the best option. In many cases, companies will outsource their inventory management to third companies.

The outsourcing of inventory management is common practice in the current world economy. In fact, the third party industry has seen tremendous growth over the past several years. In the rapidly growing markets of today, it has become more profitable to outsource their inventory. The third party companies that handle inventory are referred to as inventory management companies.

What Is An Inventory Management Company?


Inventory management companies handle a variety of functions that involve other companies’ stock. These companies deal with warehousing and storage of materials, setting up bar codes, creating inventory databases, and installing any software or hardware that might be needed. Some companies even specialize in specific types of inventory such as chemicals or agriculture.

The two most common types of inventory management companies deal in either storage or software development. The ones that handle storage also handle shipping, packaging, and other areas related to the physical materials.

Companies that handle the computer end of things develop software platforms that are used to track and manage inventory as it is used or shipped. These companies do not handle the physical stock but instead offer tech support for their clients as well as do all the upgrades and databases.

It is nice having someone else keep track of what can quickly develop into a chaotic mess. But is an inventory management company right for every business? Not necessarily. Some companies are better off managing their own inventory. Before deciding to use an inventory management company, a business should research the total cost of the supply service to see if it actually saves money. This requires a cost/benefit analysis to see what the cost of the service is versus how much a business would save.

Advantages To Using An Inventory Management Company

Using an inventory management company can have many benefits. Here are ten such benefits to help you decide if you should use one or not:

  1. Frees up the costs you would have spent on managing the inventory yourself. This additional cash flow can then be invested in other areas to promote the business.
  2. Frees up time that would have been spent tracking inventory as well as personnel man hours. You are now available to concentrate on other tasks and can delegate employees more efficiently.
  3. Allows you time to concentrate on increasing business and improving customer service.
  4. Frees up space and storage costs because you no longer have to store materials at your place of business. Many inventory management companies houses client inventory at their own warehouses.
  5. Set up a bar code system and tracks the inventory, Bar codes are fast and easy ways of tracking inventory logistics. Bar codes can store information such as unit weight, price, and overall quantity.
  6. By using the Internet, clients can inspect and control all management of inventory from practically any computer.
  7. Databases are created for cataloging all inventory as it moves through the supply chain. Clients do not have to create these databases themselves but can browse them through computer networks.
  8. In some instances, inventory management companies take care of packaging and shipping. Again, this is one less thing the client has to worry about.
  9. You do not necessarily need special software or hardware. Most inventory management software is adaptable for almost any operating system or web browser.
  10. If special equipment is required, the inventory management company provides it. You do not have to go out and purchase it yourself which can get expensive. This is most beneficial fort equipment that you might not need but a few times a year.