Oracle NetSuite helps you reduce holding costs and establish a competitive advantage for your business!

As supply chain disruptions continue to plague businesses, many companies are shifting from seeking temporary fixes to strategic long-term changes to help them minimize the impact of supplier delays, transportation hold-ups, and labor shortages. At the same time, many businesses are trying to keep more cash on hand while dealing with the aftershocks of the pandemic.

Holding Costs
Due to some uncontrollable challenges, most businesses have turned their attention to factors they can control, namely profitability, especially when they face limited inventory and fewer sales opportunities. Business leaders pursue price increases, but this also brings the risk of pushing customers and potential customers towards competitors. Therefore, businesses are also increasing their focus on reducing expenses by examining variable costs.

This is where holding costs come in, and they are one of the hidden variable costs that can significantly impact profitability. Holding costs can be divided into four categories: capital costs, storage costs, service costs, and inventory risk costs. Since holding costs typically account for 25% of all inventory expenses, they can affect the overall financial condition of a business. Like many challenges faced by businesses, technology plays a key role in helping businesses control holding costs. By providing a centralized view of inventory, suppliers, and finances, it can help businesses reduce holding costs and increase profits.

NetSuite
Inventory management systems are the most important technology for reducing holding costs. NetSuite inventory management can track individual items in real-time across multiple locations.
Accessible information makes achieving the ideal inventory balance more realistic because it can help employees better schedule the timing of new orders and track inventory turnover and sales volume by product category and individual SKU. NetSuite's solution also supports batch tracking, which is another way to limit transportation costs.
As businesses grow, there is a need for applications dedicated to demand planning, supplier management, warehouse management, and reverse logistics. NetSuite offers these applications within its ERP suite to help you further optimize these aspects of your business. All inventory data in the NetSuite system can be extracted into a demand planning model, and forecasts will be updated as data is updated.
The software can also save a list of all suppliers and contact information in one place, then monitor their behavior over time to predict whether your next order with a particular supplier will arrive early or late. NetSuite's Warehouse Management System (WMS) can maximize warehouse productivity by guiding employees through picking and fulfillment and allowing operations managers to lay out the warehouse in a way that maximizes efficiency using different picking methods.
Finally, the multi-location inventory feature in NetSuite inventory management allows store employees to quickly add returned goods back to available inventory and put them back on the shelves or use them directly for shipping orders.

Given supply chain issues and the sharp rise in costs, many product companies continue to look for ways to control expenses, and holding costs, as an important part of expenses, have received close attention from businesses. But it is important to establish a method to measure these costs so that changes and improvements can be monitored over time, and increases or decreases in transportation costs can be identified, thus finding potential causes.
Technology—especially inventory management systems—can support many of the suggestions mentioned above. Even in the most challenging times, this tool can provide you with more options without having to purchase more products to get a solution.
Among the often overlooked costs, holding costs are the most important, especially for companies that already hold a lot of inventory. Finding ways to reduce the costs of storing and handling goods can give your business a competitive advantage.