On hand inventory is the amount of inventory that a company owns and has in stock. The purpose of on hand inventory is to have the correct amount of product to meet the demand from customers.
A company needs to know how much of on hand inventory it has because if there is not enough, it can lead to lost sales and unhappy customers. If there is too much, then it will cost money to store the extra product.
Why On Hand Inventory Is Important
On hand inventory is an essential information to companies in order to improve their day to day processes from the internal workflow of the business to the final user of the product. Here’s why:
- It allows a company to efficiently manage the supply chain by knowing exactly how many units it has on hand at any given time. This can help in avoiding running out of stock or having too much stock that a business can’t sell at full price because it’s overstocked.
- It provides information about when a company should order more stock so that it arrives before customers need it, which reduces the risk of running out of stock (and therefore losing sales).
- It helps a company to forecast demand for future products or services. This enables companies to accurately predict their financial performance, including cost savings from buying in bulk and revenue growth from selling more items per customer visit.