<\/p>\n
In some cases, public companies must track inventory as a requirement for compliance with the SEC (Securities and Exchange Commission). The Sarbanes-Oxley (SOX) Act states that companies must document their inventory management process to prove compliance. Additionally, improved inventory controls helps to develop more loyal customers. That\u2019s because they are receiving orders faster and more efficiently, without having to wait.<\/p>\n<\/p>\n
At the same time, inventory can be thought of as a liability (if not in an accounting sense). A large inventory carries the risk of spoilage, theft, damage, or shifts in demand. Inventory must be insured, and if it is not used up or sold in time it may have to be disposed of at clearance prices\u2014or simply destroyed. Someone on our team will connect you with a financial professional in our network holding the correct designation and expertise. This team of experts helps Finance Strategists maintain the highest level of accuracy and professionalism possible. At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content.<\/p>\n<\/p>\n
It ensures that businesses can fulfill orders even in unpredictable situations. Minimum Order Quantity (MOQ) is the minimum quantity of a product that a supplier or manufacturer requires for each order. MOQs can impact inventory management decisions, especially when dealing with low-demand items or limited storage space. Dropshipping is a fulfillment method where retailers sell products without stocking them. When a customer places an order, the retailer shares the function of inventory management<\/a> order details with a supplier or manufacturer, who subsequently ships the product directly to the customer. Days Sales of Inventory (DSI) is a metric used to measure how long it takes for a company to sell its entire inventory.<\/p>\n<\/p>\n