The Importance of Inventory Management in Manufacturing

January 1, 2024 • 5 min read

Most businesses rely on an inventory management system to ensure they’ve got everything they need to operate productively and profitably while keeping up with customer demand. And when it comes to companies in the manufacturing industry, air-tight inventory management is even more critical. 

This article will highlight the importance of inventory management in manufacturing. Then, we’ll touch on why inventory management is different for manufacturers and discuss some of the key components of inventory control in the manufacturing industry. 


What is the importance of inventory management in manufacturing? 

In manufacturing, businesses rely on all sorts of components, parts, equipment, and machinery to create the finished goods they sell to their customers. Any minor disruption to supply levels can wreak havoc on production, creating costly slowdowns and work stoppages. 

This is especially true if the manufacturers practice lean manufacturing or just-in-time inventory—inventory strategies that keep costs down but leave little room for inventory management error. 

Proper inventory management helps manufacturers track what inventory they have on hand, where it is, and how much of it they’ve got. And the best inventory management software will alert these businesses the minute certain items are falling below a minimum stock threshold, approaching warranty end, or set to expire. 

Plus, manufacturers that use an optimized inventory management system also have access to tons of data about how their inventory has been used in the past. These numbers and figures can help higher-ups make critical decisions when forecasting demand, even during tumultuous times. 


Why inventory management is different for manufacturers

There are many reasons why inventory management is different for manufacturers. Here are a few of the most notable reasons:

1. Precision is necessary when it comes to inventory control 

All businesses tend to practice some version of inventory control—the balancing act of having enough inventory on hand to satisfy demand without overspending on product that’s not necessary. But in the manufacturing industry, inventory control is an even higher-risk tight rope. 

That’s because in some industries, businesses can get away with not practicing perfect inventory control on each and every item they stock. And in those cases, many wholesalers and retailers use ABC analysis to decide what items to pay the closest attention to. 

But in manufacturing, it’s not so simple. ABC categorizing might be easy to figure out when you’re looking at profits and product popularity, but manufacturers rely on tons of raw materials and tiny parts that are only profitable or valuable once they’re part of a finished good that’s ready for sale. 

Manufacturers need to have a handle on every kind of item in their various inventories, from raw materials to works-in-process to finished goods. And since manufacturers are uniquely vulnerable to stockouts and work stoppages, there’s really no better way to support optimal inventory control than with a detailed, always up-to-date inventory list


2. The supply chain isn’t always predictable 

Another reason why optimal inventory management is so important for manufacturers? Essential raw materials aren’t always easy to come by—especially when the supply chain is experiencing unprecedented delays

While top-notch forecasting, an awareness of rapidly changing market conditions, and exceptional relationships with outstanding suppliers can help you navigate supply chain disruptions, there is no substitute for understanding what your factory needs and when they’re going to need it. That’s the crux of inventory management. 

After all, if you run out of a critical item, you may have to pay a premium for it, use a less-than-desirable substitute, or halt production on certain products altogether. All three of these outcomes could affect your company’s profits, reputation, and customer satisfaction. 

3. Your suppliers aren’t always replaceable 

Some manufacturers order an array of raw materials from suppliers worldwide. And finding a replacement supplier could take months. With that in mind, the best thing manufacturers can do is practice optimal inventory management and ensure they’re always one step ahead of their ordering processes.

The two best ways to protect your manufacturing business from interruptions are strengthening your inventory management strategy and improving your relationships with your most important suppliers. You may also want to search for, vet, and onboard backup suppliers should one of your providers fall short.

Related: How to find suppliers


Inventory management software for manufactures

Inventory management software is the top solution for most manufacturers looking to get a better handle on their stock. That’s because inventory management software helps manufacturers maintain a detailed, always-synced database of everything they’ve got on hand. 

And beyond that, the best manufacturing inventory software offers a whole suite of powerful automation features designed to speed up some of the most complex and time-consuming inventory-related tasks. 

Top-notch inventory apps like Sortly offer customized alerts when stock levels fall below a certain threshold or are beginning to approach expiration or warranty end. Other features, like barcode and QR code scanning, can speed up inventory audits and help employees quickly get more information about a product. 

Finally, offerings like customizable reports can help your company understand its needs, forecast demand more accurately, prepare for growth, and practice better inventory control. 

Experience the simplest inventory management software.

Are you ready to transform how your business does inventory?

About Sortly

Sortly is an inventory management solution that helps you track, manage, and organize your inventory—from any device, in any location. We’re an easy-to-use inventory software that’s perfect for small businesses. Sortly builds inventory tracking seamlessly into your workday so you can save time and money, satisfy your customers, and help your business succeed.

With Sortly, you can track inventory, supplies, parts, tools, assets like equipment and machinery, and anything else that matters to your business. It comes equipped with smart features like barcoding & QR coding, low stock alerts, customizable folders, data-rich reporting, and much more. Best of all, you can update inventory right from your smartphone, whether you’re  on the job, in the warehouse, or on the go.

Whether you’re just getting started with inventory management or you’re an expert looking for a more efficient solution, we can transform how your company manages inventory—so you can focus on building your business. That’s why over 10,000 businesses globally trust us as their inventory management solution.

Start your two-week free trial of Sortly today.