Managing your inventory can be a daunting task, and if it is not done properly it could cost your company thousands of dollars down the line. There are several software solutions, such as Fishbowl Manufacturing and Fishbowl Warehouse, which could improve your inventory system when they are also combined with the application of these three inventory management techniques:
1. JUST IN TIME
Using the just-in-time inventory management technique can be risky, especially if it is not implemented with precise accuracy, but if you do it right it can be rewarding and seriously slash carrying costs. Just in time does what the name suggests; it involves having products arrive as soon as the customer orders them. It can be risky because it is based on customer behavior, which is not always perfectly predictable. Keep in mind when using this technique that it will take a lot of time to research your customers’ buying habits, along with seasonal demand and location-based factors in order for this to be effective.
2. STOCK REVIEW
Stock review is a regular analysis of stock versus projected future needs. This can be done through a manual review of stock or by using inventory software. Defining your minimum stock level will allow you to set up regular inspections and reorders of supplies. Make sure to take into account certain situations that can arise, such as vendors taking longer than average to replenish stock. This will aid you in using just-in-time ordering, where the inventory is held for a minimum amount of time before it moves to the next stage in the supply chain.
In businesses where manual inventory management techniques are still in use, the primary inventory control methods include:
- Visual control
- Tickler control
- Click-sheet control
You shouldn’t perform manual reviews because they can take a lot of time and possibly produce errors. Businesses are starting to invest in software to automate the review, and it will help organizations keep track of their inventory, ensure timely reorders, and avoid costly shortages.
3. ABC ANALYSIS
This is a popular way to analyze your inventory. Under this method, you classify the inventory into three categories, such as A, B and C. These categories are based upon the inventory value and cost significance. Also, the number of items and values of each category are expressed as a percentage of the total.
- Items of high value and small in number are termed as “A”
- Items of moderate value and moderate in number are termed as “B”
- Items of small in value and large in number are termed as “C”
Remember to manage each category separately: The nice thing about group C is that it can be fairly hands-off, while group A requires special attention. You can use ABC analysis in conjunction with the just-in-time technique to help you get your reorder timing just right.
Inventory management techniques are methods of keeping the right items in stock. The three main techniques are:
- Just In Time – Only obtaining items when absolutely necessary.
- Stock Review – Periodic analysis of projected inventory requirements.
- ABC Analysis – Grouping inventory into three categories.