In our last post, we have discussed Inventory Management and its importance for the retail businesses. Today we will brush up with the techniques followed by ace businesses in managing their inventory.
- Par level: Par Level is the term used to denote the minimum amount of certain product to be present in the inventory at any point of time, as such businesses can avoid the situation of out of stock or unavailability for that product. Once the quantity goes below the par level, businesses make orders of fresh stock. Businesses set par level marks for individual products depending on the parameters of sale, value, season, etc.
- First-In-First-Out: Often abbreviated as FIFO, it is a technique where the oldest brought in the product (first coming into the inventory) goes out first (first goes out of the inventory). This helps in eliminating spoilage and dead stock. To maintain this it is essential to make a system where the newest stock are always placed from the back.
- Contingency planning: Very much an applicable point for almost all aspects of businesses, contingency planning in inventory management helps you prevent situations like high-value products sitting for longer periods constricting cash flow, out of stock with seasonal products with the higher sales, deadstock, constricting storage space with slow-selling products.
- Regular Audit: Regular audit is done generally in three ways, physical inventory, spot-checking
andcycle counting. As per convenience and requirement, businesses can apply all, one or a combination of these three ways. Physical inventory is the process of checking the entire inventory at once. Generally, this is done at the end of the year or after a set long time interval as it is a laborious task to take up often. Spot Checking is a method of checking the stock and inventory of certain product(s) all of a sudden. Generally,there is no pre-set time and day for this exercise. Cycle counting is the process where items are counted in cyclesthroughout the year.
- Dropshipping: This is the method where businesses
don’thold physical stock of the items. The items are stocked and managed by suppliers. When a business receives an order to be shipped, they inform the supplier and the item is packedand given into shipment directly from the suppliers’ warehouse. This technique is very popular among onlinebusinesses.
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FAQs About “What is a good inventory management tool?“
There are several inventory tools available in the market now. You can choose one that suits your business type and products. If you are looking for some of the important features that the best inventory management software should have, they are:
- Categorization of products in stocks
- Inventory/Products history
- Cycle counting
- Vendor management
- Scan barcode easily
- Faster performance
- Get precise details of products
- Locate products
- Product tracking
- Reports and audits
- Integrated with POS system for auto-update of inventory with each sale
- Low inventory alert
- Powerful future insights
- Align sales and marketing efforts
- Helps manage your Investment Style
- Drive sales
While choosing an inventory management system for yourself, do keep in mind the requirements of your business and make decisions based on that.