Inventory Management Techniques for Consumer Goods Industry
When considering the importance of inventory management and keeping this adage in mind: “Money spent on inventory is money that is not spent on growth”, let’s look at a few inventory management techniques and best practices.
Just-in-Time (JIT) – inventory management technique helps with managing cash flow for an organization.
ABC Analysis – is an analysis of a company’s most valuable items to the least. This technique is also referred to as the inventory categorization method.
Minimal Stock Level – is the minimal amount of safety inventory that a company is willing to keep on hand before replenishing the supplies.
First-In-First-Out (FIFO) for Perishable Stock – is the best practice for getting the oldest products out the door first. This is crucial for items with a limited shelf-life such as products with expiration dates.
Last-In-First-Out (LIFO) for Heavy Raw Materials – is a technique where materials are stored in piles at a stockyard with new goods being piled on top.
Types of Inventory Management
Whatever type of inventory management an organization chooses, it is important to have the facts about it and then use it as consistently as possible from that point on. There are two main types of inventory management:
- Perpetual Method: Inventory records get updated in real time via barcode scanning and other mechanized means
- Periodic Method: Inventory records get updated manually on a planned basis
SpendEdge’s procurement market intelligence solutions assist industries in meticulously monitoring the supply market settings and comprehend the types of inventory management techniques.
