Improved inventory monitoring systems help businesses boost earnings

Businesses that fail to actively monitor their supply chains often accrue additional business costs, among other effects, according to a published report.

The Harvard Business Review reports that companies that fail to effectively control inventory are setting themselves up to lose money. What's more, industry experts contend that failure to control supplies often results in the unintended release of greenhouse gas emissions, increasing a firm's carbon footprint.

Many experts, including environmental strategist Andrew Winston, assert that businesses are racking up business costs as they fail to overhaul their strategic sourcing and inventory systems.

To combat rising costs, supply chain and procurement analysts recommend that businesses improve their demand planning divisions. Demand planning can be exceedingly complex, but by monitoring simple supply and demand fundamentals, many companies have reduced their overall costs, improving their profit margins in the process. 

International consumer products conglomerate Proctor and Gamble (P&G), for example, succeeded in trimming more than $2.1 billion out of its inventory by employing demand planning software and professionals. The money the company saved in manufacturing, distribution and warehousing costs helped boost profit margins and improve earnings, according to experts. 

P&G reported its fourth quarter earnings late last week, beating analysts' expectations as earnings climbed 15 percent compared to 2010, according to the Wall Street Journal.