If you want to run a successful business you need to implement better inventory management techniques! Here are 3 techniques you need to use right now!
Have you ever heard of a successful company that has become successful while not controlling its inventory? No, because they don’t exist!
There are plenty of businesses that mismanaged their inventories and because of that, they lost billions after being successful. So, what are we trying to say is that if you want to be successful, you have to implement better inventory management techniques!
The same goes for you and your business, If you want to run a competitive and profitable business you need to know how to use and take advantage of inventory management techniques and tools. In order to help you out, we’ve listed a few of the most important inventory management techniques you should know about:
- Economic Order Quantity: This is the lowest amount of inventory one business must order to meet the customer need without going out of stock or without producing out-of-date inventory. Its main goal is to reduce inventory and to keep the cost of inventory as low as possible. The economic order quantity uses 3 variables: ordering cost, demand, and carrying a cost.
- ABC Analysis: This is a technique of organizing the inventory into 3 different categories according to how they sell and how much exactly they cost to hold. The A-items are the most popular or the best-selling products that don’t really take up all of your warehouse space. The B-items are known as mid-range products that sell regularly, however, they may cost more than the A-items to hold. And finally, the C-items are the rest of your inventory that makes up the most of your inventory cost while contributing the least to your business. This technique helps you keep the working capital expenses low because it identifies which products you should re-order more often and which products don’t need to be stocked often.
- Safety Stock Inventory: The safety stock inventory is a small amount of inventory you keep against changes in market demand. The safety stock can play a very important role in the business operation of the supply chain. Without a safety stock inventory, you could experience customer loss, loss of revenue, and loss in market share.
Here are the most popular inventory management techniques. If you want to make the most of them, we recommend you to find a great POS or Point of Sales system.