7 Best Practices of Inventory Management
Reading time: 3 minutes
By: ServingIntel
Choosing the ideal inventory process strategies for your business can be challenging. The bigger your business is, the more strenuous handling your inventory management turns into. It is vital to understand the importance of setting the right groundwork from the start.
Below are helpful guidelines to help make your inventory process less stressful.
Offer Shipments in Bulk:
It is cheaper to buy and ship products in bulk. It is one of the predominant methods in the world of business, which applies to higher customer demand products.
The drawback to bulk shipping is that you need to pay extra cost on inventory warehousing. That amount of money will likely be offset by the expenses saved from buying items in large quantities and selling them fast.
The ABC Inventory Process:
This inventory process is based on adding products into different categories according to importance. A is the most valuable and C being the least. All products are not of equal value, and you should focus more on more popular items.
This technique is to manage all categories differently, especially when it comes to funding allocations, selective control, and human resources.
Know Your ABC Inventory Management:
For you to maximize sales turnover, know what inventory to rank first. Not all items are equally made. This method classifies products into three categories, depending on how valuable they are to your business. This is known as the Pareto principle — 80% of the effects come from just 20% of causes.
A: Items of high value (70%) and small in number (10%)
B: Items of moderate value (20%) and moderate in number (20%)
C: Items of small value (10%) and large in number (70%)
Consignment:
This process is where wholesaler places supplies to a retailer but retains ownership until the item is sold. Generally, there is a high level of demand uncertainty involved from the retailer’s perspective when selling on consignment.
Backordering:
A strategy that refers to decisions a company must make in terms of taking orders and obtaining payments. Allowing backorder means a boost in your sales.
Regular Inventory Counting:
Inventory counting is counting a minimal inventory on a certain day without the entire stock counting. With this, you can see how accurate your records and your stock are all together. Most businesses use this method as it helps ensure that customers get what they want.
Demand Forecast:
Before, obtaining precise demand forecasting was no easy task. A wide variety of products, numerous sales paths, price changes, promotional offerings, and other external factors have made it harder to obtain forecast data. Today, with the development of intelligent inventory management systems, automated demand forecasting can be done across all businesses.
Takeaway:
Even the best practices and methods have their restrictions outside a unified inventory management system. If you’re not aware of it, you’ll most likely find yourself in a loop with inventory issues. Especially when dealing with automation, smart insights, and real-time visibility. Time to step up your typical inventory process to a more advanced and effective system to record and forecast business demands and sales.
About ServingIntel:
ServingIntel is an international hospitality technology company that creates cloud-based enterprise and point-of-sale solutions serving a variety of hospitality industries, including restaurants, country clubs, hospitals, and senior living communities — providing complete software, mobile hardware, and business intelligence software through its ServingIntel platform. ServingIntel increases revenue and profit in foodservice operations while enhancing service and quality levels for the guests.
Reference:
https://www.tradegecko.com/inventory-management/techniques-process