The best inventory management methods
Posted: Thu Jan 23, 2025 4:12 am
The best inventory management methods
Inventory translates into cash, so proper management is critical to maintaining a cash-positive business. Sales management involves proper forecasting, auditing, and minimizing spoilage, dead stock, and costs related to storing, counting, and transporting merchandise. These are the most effective methods of managing inventory that can be improved, simplified, and made more precise with online and mobile tools like inSitu Sales platforms.
First in, first out (FIFO)
Sell off the oldest stock received from manufacturers first, then work marketing list of plumbers email through newer stock. This helps to minimise spoilage of perishable goods and prevents older models from becoming obsolete as newer models become available and customers start to reject older stock, leaving your business stuck.
ABC
This method requires prioritizing product inventory levels by their value and sales frequency. Category A is comprised of high value products (70-80%) and low sales frequency (10-20%). Category B is comprised of moderate value products (20%) and moderate sales frequency (20%). Category C is the group of products with a low value cost (10-20%) and a high sales frequency (70-80%).
Set triggers for even levels
Use mobile tools to notify stakeholders – suppliers, warehouse managers, sales managers and buyers – when inventory reaches a certain level so that repurchase can be processed in time before the stock is completely depleted. This will reduce costs and problems associated with overstock (obsolescence, spoilage, storage costs) and stockout (loss of sales due to lack of inventory, loss of customer confidence).
Positive and frequent communication with suppliers.
Properly managing your company's relationship with manufacturers builds trust, which has many benefits. Your company is in a better position to negotiate minimum order requirements, forecast-based delivery schedules, and bulk shipment processing. Maintaining as much flexibility as possible is key to dealing with unexpected events, such as sales spikes and dips, low cash flow, forecast miscalculations, and supplier issues such as shipping delays and discontinuations.
Just in time (JIT)
This method requires diligent monitoring of stock and forecast levels to minimize product costs. When sales orders are frequent and contain consistent quantities, product can be ordered and scheduled to be received shortly before sales orders are delivered to customers. This minimizes storage and audit costs.
Crossdocking
This method bypasses the warehousing component of the inventory management process. The inbound fleet transfers goods directly to outbound trucks, to be delivered to customers.
Dropshipping
To completely eliminate storage and auditing costs, consider drop shipping, or shipping directly from the supplier to the customer. This method has the most positive impact on cash flow and inventory management.
Meticulous auditing and monitoring.
Physical counting is a timely and tedious process that most businesses only perform annually. However, mid-year spot checks and cycle counting can detect discrepancies and minimize costs so businesses can make adjustments more frequently and improve their inventory management system as needed. The inSitu Sales B2B Portal and mobile app connect to Quickbooks inventory data for easy management.
Inventory translates into cash, so proper management is critical to maintaining a cash-positive business. Sales management involves proper forecasting, auditing, and minimizing spoilage, dead stock, and costs related to storing, counting, and transporting merchandise. These are the most effective methods of managing inventory that can be improved, simplified, and made more precise with online and mobile tools like inSitu Sales platforms.
First in, first out (FIFO)
Sell off the oldest stock received from manufacturers first, then work marketing list of plumbers email through newer stock. This helps to minimise spoilage of perishable goods and prevents older models from becoming obsolete as newer models become available and customers start to reject older stock, leaving your business stuck.
ABC
This method requires prioritizing product inventory levels by their value and sales frequency. Category A is comprised of high value products (70-80%) and low sales frequency (10-20%). Category B is comprised of moderate value products (20%) and moderate sales frequency (20%). Category C is the group of products with a low value cost (10-20%) and a high sales frequency (70-80%).
Set triggers for even levels
Use mobile tools to notify stakeholders – suppliers, warehouse managers, sales managers and buyers – when inventory reaches a certain level so that repurchase can be processed in time before the stock is completely depleted. This will reduce costs and problems associated with overstock (obsolescence, spoilage, storage costs) and stockout (loss of sales due to lack of inventory, loss of customer confidence).
Positive and frequent communication with suppliers.
Properly managing your company's relationship with manufacturers builds trust, which has many benefits. Your company is in a better position to negotiate minimum order requirements, forecast-based delivery schedules, and bulk shipment processing. Maintaining as much flexibility as possible is key to dealing with unexpected events, such as sales spikes and dips, low cash flow, forecast miscalculations, and supplier issues such as shipping delays and discontinuations.
Just in time (JIT)
This method requires diligent monitoring of stock and forecast levels to minimize product costs. When sales orders are frequent and contain consistent quantities, product can be ordered and scheduled to be received shortly before sales orders are delivered to customers. This minimizes storage and audit costs.
Crossdocking
This method bypasses the warehousing component of the inventory management process. The inbound fleet transfers goods directly to outbound trucks, to be delivered to customers.
Dropshipping
To completely eliminate storage and auditing costs, consider drop shipping, or shipping directly from the supplier to the customer. This method has the most positive impact on cash flow and inventory management.
Meticulous auditing and monitoring.
Physical counting is a timely and tedious process that most businesses only perform annually. However, mid-year spot checks and cycle counting can detect discrepancies and minimize costs so businesses can make adjustments more frequently and improve their inventory management system as needed. The inSitu Sales B2B Portal and mobile app connect to Quickbooks inventory data for easy management.