How do you classify all of the parts and products in your inventory? It’s important to come up with a good inventory classification system because this helps you keep everything well-organized.
Choose between these four inventory classification systems to ensure your products don’t get mixed up.
Min-Max System
The Min-Max System is the simplest way to manage inventory. It involves setting upper and lower quantities of inventory that when the low level is reached, you are automatically informed that it is time to reorder a particular product. At the same time, you will be told how much to reorder so you won’t go above the upper limit. Retailers, manufacturers, food producers, makers of healthcare products, and other business types may find this system to be a good fit.Two-Bin System
The Two-Bin System separates products into two groups. One is designated for normal operations while the other is set aside as the backup so that when the first one is empty, there’s something to fall back on while waiting to be replenished. This setup ensures you always have products on hand, and you’ll be able to easily tell when it’s time to reorder. It’s important to know how much lead time it takes to get new products and how many products you expect to sell in that time to know how many backup products to keep in stock. Retailers, wholesalers, and manufacturers of electronics, books, toys and other products that have relatively long shelf lives may find this to be a good system.
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