Logistics management is a critical function performed by both physical and virtual assistants in the contemporary business environment. For the purpose of enlightening you and your virtual assistant. Moreover, your virtual assistant can help you with tracking inventory, e-commerce management and business cost.
this article comprises forty effective inventory management strategies.
What are the factors of inventory management techniques?
Inventory management techniques can vary based on several factors, including the type of products being sold, the size and structure of the business, and its supply chain capabilities. Other factors that may influence the choice of inventory management technique include:
Business goals and objectives
The goals and objectives of a business may affect which inventory management techniques are most suitable. For example, a small business with limited storage space may prioritize cost-saving techniques, while a larger business with a wider product range may focus on optimizing stock levels.
Product demand and seasonality
The level of demand for products can influence the choice of inventory management technique. For example, businesses with high-demand products may benefit from using just-in-time methods to avoid overstocking, while those with seasonal products may need to use techniques that can handle fluctuations in demand.
Supply chain capabilities
The efficiency and reliability of a business’s supply chain can also impact which inventory management techniques are most effective. For example, businesses with strong supplier partnerships and quick delivery times may benefit from using vendor-managed inventory or cross-docking, while those with less reliable suppliers may need to have safety stock on hand.
Cost considerations
Different inventory management techniques have varying costs associated with them, such as setup costs, holding costs, and ordering costs. Businesses need to consider these costs when deciding which technique is the most cost-effective for their specific needs and goals.
Technological capabilities
Advancements in technology have also led to the development of more advanced inventory management techniques such as RFID and barcode scanning. Businesses with the necessary technological capabilities may choose to implement these techniques for more accurate and efficient inventory management.
Regulatory requirements
For businesses dealing with regulated goods, such as pharmaceuticals or food products, lot tracking and FEFO methods may be necessary to ensure compliance with regulations. These businesses must consider regulatory requirements when choosing their inventory management techniques.
Lists of inventory management techniques
1. Just-in-time (JIT) inventory system
This method aims to reduce the inventory level by ordering products only when there is a demand for them.
2. ABC analysis
It prioritizes inventory based on its value, with A being high-value items and C being low-value items.
3. Economic Order Quantity
This technique helps determine the optimum amount of product to order based on the cost of ordering and carrying inventory.
4. Drop-shipping
Inventory is kept by a third-party seller and sent straight to the customer, so there’s no need to store it.
5. Cross-docking
Incoming shipments are sorted and immediately distributed to outbound trucks for delivery, reducing storage time.
6. Vendor-managed inventory (VMI)
The supplier monitors and manages the inventory levels at the customer’s location, ensuring timely restocking.
7. Just-in-sequence (JIS) delivery
Products are delivered in a specific sequence to support efficient production processes.
8. Consignment inventory
The supplier retains ownership of inventory until it is sold by the customer, reducing risk for the buyer.
9. Safety stock
Extra inventory held to buffer against unexpected demand or supply disruptions.
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10. RFID technology
Radio-frequency identification tags are used to track inventory in real-time, improving accuracy and efficiency.
11. Kanban system
A visual signal system is used to trigger production or ordering of inventory as needed.
12. First-in, first-out (FIFO) method
The oldest inventory is sold first, reducing the risk of spoilage or obsolescence.
13. Last-in, first-out (LIFO) method
The newest inventory is sold first, potentially reducing taxes but can lead to inflated profits during inflationary periods.
14.Perpetual inventory system
Inventory levels are continuously updated through monitoring and recording of all incoming and outgoing products.
15. Periodic inventory system
Inventory levels are only updated periodically through physical counts, requiring more manual effort.
16. Stock review
Regular evaluation of inventory levels and adjustments based on changing demand patterns.
17. Safety lead time
The additional time built into the ordering process to account for potential delays or errors.
18. Economic lead time
The optimal time between placing an order and receiving it to minimize costs.
19. Carrying costs
The costs of keeping inventory in storage and handling it, such as the cost of room, labor, insurance, and so on.
20. Stock holding cost
The prices of keeping too much goods, like the cost of it going bad or becoming outdated.
21. Ordering costs
The costs associated with placing an order for new inventory, including administrative fees and transportation costs.
22. Reorder point
The minimum inventory level at which a new order must be placed to avoid stockouts.
23. Lead time demand
The amount of inventory needed during the time it takes to receive an order.
24. Stockout costs
When you run out of stock, you might lose sales and hurt your relationships with customers, which costs money.
25. Service level
The amount of demand that can be met by stock that is already on hand.
26. Carrying cost percentage
The proportion of carrying costs to total inventory value, used to determine optimum inventory levels.
27. Stock turnover rate
The number of times inventory is sold and replaced in a given period, indicating the efficiency of inventory management.
28. Deadstock reduction
Strategies to minimize excess or obsolete inventory through promotions, discounts, or disposal.
29. FIFO/LIFO layering
Accounting methods used to track inventory and determine its value for financial reporting purposes.
30. Stock aging analysis
Looking at how old the product is to find things that aren’t selling well and might need to be marked down or taken off the market.
31. Inventory forecasting
Predicting future demand by looking at past data and market trends and then adjusting product levels to match.
32. Continuous replenishment
Continuous monitoring and restocking of inventory to maintain optimal levels.
33. Stock pooling
Combining inventory from multiple locations to optimize usage and reduce overall stock levels.
34.Multi-echelon inventory optimization (MEIO)
Strategies that leverage data and technology to optimize inventory across multiple distribution centers or suppliers.
35. SKU rationalization
Analyzing the performance of individual products to determine which should be kept or discontinued.
36. Cycle counting
Regularly scheduled physical inventory counts to ensure accuracy and identify discrepancies.
37. Inventory audits
Comprehensive reviews of inventory management processes and systems to identify areas for improvement.
38. Collaborative planning, forecasting, and replenishment (CPFR)
Shared demand and inventory information between partners in a supply chain to improve efficiency and reduce costs.
39. Virtual inventory
The use of technology, such as 3D printing or virtual warehousing, to minimize physical inventory levels.
40. Just-in-case (JIC) inventory
Holding extra inventory in case of unexpected events that may disrupt the supply chain.
Takeaways
Overall, there are many factors that businesses must consider when deciding which inventory management techniques to use. To make sure that your inventory management works well and efficiently, you need to carefully consider these factors and pick the best method for your business.
