Inventory is often a sizable portion of a company’s assets–approaching up to 30% of the total for manufacturing companies–with packaging supplies comprising a significant portion of this amount. Managing inventory properly is important as there is an established correlation between good inventory management and a company’s financial success.
It’s a fine balance. Too much inventory raises the holding costs, but too little means possible shortage and possibly not meeting customer demand. And the bigger your packaging inventory, the more space it costs you in your warehouse, impacting your bottom line.
To manage packaging inventory costs, business owners must balance several key factors, including expected demand, order frequency, lead time, and safety stock to offset uncontrollable supply chain delays.
An additional risk of surplus inventory is obsolescence. Changing product labeling, updating certifications, or adapting graphics to fit a target demographic can all result in obsolete packaging, making it even more important to run right-sized packaging quantities. This way, your money is not tied up in overstock inventory that is at risk of becoming outdated every day it remains unused. Tossing out old stock is the same as throwing away money.
If you can order frequently, then you require less carried inventory because you can do replenishments often. But some owners fear placing more frequent orders may erode their buying power, resulting in higher per-piece pricing and freight costs.
Lead times may vary for many reasons–type of product (commodity vs. unique part), number of potential suppliers (few vs. many), locations of the suppliers (e.g., domestic vs. international), and buying power of the purchasing company (market mover vs. tiny player). Longer lead times require more precise planning, causing many companies to opt for higher inventory levels.
By providing quick turnaround with high quality products, LTI Labels and Inserts has helped many of our customers reduce their packaging inventory while still maintaining the ability to meet order demand quickly.
Many LTI customers who previously kept six months of inventory—requiring more storage and draining available funds—now order smaller quantities more frequently with assurance that LTI will meet their needs in a timely way, avoiding delays and eliminating worries about missed shipping dates.
At LTI, we’re not just another printer, we’re your partners – and we have been for more than two decades. Our clients run the gamut of modern commerce – from consumer products to food and beverage, from health and beauty to apparel – and everything in between. Let us help you identify the best solution for your label, tags, and inserts needs.