How to reduce your Inventory Holding Cost with Dynamics 365 Business Central

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Are you able to manage your inventory efficiently? Which method are you opting to reduce your inventory holding cost? Now you can educe your Inventory Holding Cost with Business Central

Inventory management is an essential activity that every organization carries out to ensure that they have enough stock in the warehouse, as per demand, and there is no unnecessary surplus quantity. Dynamics 365 Business Central is an efficient and proven solution for reducing inventory holding cost in businesses.

This article gives you insights on how you can reduce your inventory holding cost with Dynamics 365 Business Central. Before dwelling deep into the How’s associated with this topic lets first cater to the What’s.

What does it mean by Inventory Holding Cost?

The term Inventory Holding Cost refers to the expenses incurred by any organization in storing and retaining their unsold inventory at their warehouses. These items are those which were bought by the organization in the past, but due to change in requirements or some other reason, these remain unsold. Now, since the organization has spent some amount in getting ownership of the same, it is obvious that they will be keeping these safe for future use of reselling purposes.

What this article talks about is to reduce this cost incurred in holding inventories, to manage business finances efficiently. In other words, the sum of all the expenses involved in the storage of unsold inventory is referred to as Inventory Holding Cost.

Significance of Inventory Control

Every business should make sure that they have real-time insights into their inventory management practices ensuring that there is no unnecessary hoarding going on. With a control on inventory businesses can ensure that they have the right number of inventories at the right time and at the right location.

This control on stock helps manage inventory, reduce inventory holding costs and eliminates risks of shortages.

How Business Central Inventory management functionality help businesses?

Business Central is a dynamic ERP solution, that offers comprehensive support to businesses in their path to growth.Within Dynamics 365 Business Central, there are various methods by which organizations can manage inventory held by them.

Microsoft Dynamics 365 Business Central is a cloud-based inventory management system. This ERP solution provides in-depth view, analysis, and transparency in real-time, about the location and quantity of their inventory.  This data helps an organization be more responsive, up-to-date, and flexible.

To reduce inventory holding cost, one must first know how to manage their inventory efficiently. D365 Business Central comes into picture here. Below mentioned are steps by which businesses can manage their inventory with BC. One must note that all these steps can be performed within the all-in-one solution – Microsoft Dynamics 365 Business Central.

  • Review old stock

Also known as Aged Inventory, and falling under the same section, this is that part of your stocks that has been unattended for the past 120 days. Stakeholders will have to first review this stock to determine what’s of use and what needs to be replaced.

  • Locate high-selling stock

Next step for decision makers is to locate which among their inventory are high-selling stocks. Differentiating these is essential to determine which is the surplus stock in their warehouse that’s adding up to unnecessary expenditures.

  • Vendor lead time

On the successful completion of the two steps mentioned above stakeholders get a fair view of the performance of various items in their inventory and top selling ones among them. Next, they must ensure that they do not run out of stock, especially for the top selling items. For this one must check inventory and vendor lead time.

  • A purchase invoice entry

On discovering that one or multiple items are out-of-stock, decision makers must next purchase invoice for that item. This will ensure that there is no shortage in supply of products.

  • Predicting future inventory needs

So, Dynamics 365 Business Central does not only help in ensuring that you do not run-out-of-stock, but it also helps you predict your future needs. With an overall view of the business warehouse, stakeholders can predict the future requirements and raise purchase orders regarding the same.

The access to make changes in the inventory available in the warehouse must be limited to selected few, this is because giving everybody the access makes it difficult to monitor the changes in location and quantity of stock.

How to reduce inventory holding cost with Dynamics 365 Business Central?

Having known how to manage inventory with Business Central also gives an insight on how to reduce the holding cost of these inventories.

As aforementioned, D365 Business Central inventory management gives an overall view into the warehouse with specifics of highest-selling items and aged inventory. This helps business owners identify those items in stock that are unused for a long period of time and are expected to have little or no demand in future.

On locating unused and surplus items in inventory, business owners should next look for solutions to sell, store or replace that stock. If there are expectations that there will be some demand of the same in future, then that quantity should be preserved carefully, and the rest can be re-sold by providing exclusive offers, discounts, and gifts to customers. Some part of the inventory, if damaged, can be replaced, discarded, or converted back to its raw form.

Benefits of optimizing inventory management in Business Central

There are numerous benefits that an organization can reap when they opt for Business Central inventory management functionality.

  • First and foremost, D365 Business Central Inventory Management helps ease business processes. From small to mid-sized enterprises, all business owners can make use of this integrated business intelligence system to manage their company financials and eliminate risks of unwanted expenditures.
  • The resource tracking capabilities within Business Central enable businesses to enhance the efficiency of the Supply Chain Management of their organization.

Hence it will not be wrong to conclude that D365 Business Central is the best solution for organizations that are looking to reduce their inventory holding costs, while also maximizing output and ensuring sufficient stock.

Dynamics 365 Business Central Implementation

Implementing Dynamics 365 Business Central is mission critical project and requires expertise in handling the process. The #1 Microsoft implementation partner, Dynamics Square, has a huge client base in some of the leading Australian cities, namely Sydney, Melbourne, Perth, and Brisbane. The company has a highly experienced team of professionals, with a collective experience of 300+ successful project deliveries.


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