Inventory management is one of the most essential requirements for distributors and manufacturers, especially in a rapidly changing landscape where the paper and pen method of record keeping has become obsolete and we all are responding actively to digital transformation. Companies must keep their inventory management techniques up-to-date to have a proper understanding of the factors that influence their product inventory levels. This can help businesses to fasten the fulfillment process, minimize costs, and prevent fraud. An overstocked inventory is both cost and time inefficient and occupies precious warehouse space that could be used to store high demand products. On the other hand, if the lack of inventory makes you lose the sale then this could drive customers to competitors and could lead to poor customer service. Therefore, maintaining the right inventory balance in the warehouses is very crucial. In this article, we have talked in detail about various inventory management techniques and different types of inventory management techniques to help you save more money.
Inventory Management Techniques
Setting par levels
Setting par levels is one of the best inventory management techniques that makes the process easier. Par levels are nothing but the minimum amount of product that should be there at all times. When your inventory stock goes below the par levels, you get to know that it’s time to order more. Par levels usually vary from product to product based on how fast the item sells and how long it takes to get it back in stock. This obviously requires some research and decision-making but setting par levels definitely helps in systemizing the ordering process.
Successful inventory management enables you to adapt quickly. Returning a slow-selling item, restocking fast selling items, troubleshoot issues related to manufacturing or expanding the storage capacity temporarily, all involve a good relationship with your suppliers. Following efficient inventory management techniques can help you establish a good relationship with suppliers and encourage them to work with you and solve your problems.
Regular audit is very important, and this can be done through different types of inventory management techniques such as physical inventory, spot checking, and cycle counting. There are also other types of inventory management techniques such as barcode tracking and radio frequency identification. Choose the type that suits your business and requirements. Regular audit helps in estimating the exact number of products in the inventory.
This is one of the inventory management techniques which is very important for any organization. It is tough to perform due to the sheer number of variables involved. Accurate forecasting can help in managing inventory efficiently but as a failsafe do check the following things to predict your sales more accurately:
- Market trends
- Sales completed last year during the same week
- Present year’s growth rate
- Guaranteed sales from subscriptions and contracts
- Impact of seasons on the revenue
- Future promotions
- Planned expenditure on advertisement
To know more about inventory management techniques