It can certainly be hard for businesses to keep a track on their inventories and to know the right time, right quantity, and right price and place to place an order with. Particularly for highly inventory-intensive businesses, if you are not being able to strategize your order, it can cause serious fatal to your profitability. Therefore, we have gathered few inventory management techniques to solve your problem:
This technique is the simplest among all but requires a day to day check and balance. Said to be the simplest but is the most efficient due to the encouragement of measuring the stock inventory on a daily basis which automatically can create more control over your inventory. Such a technique is most appealing to small businesses and retailers due to fewer technicalities. Stock review is a process of calculating the available stock and the stock requirement for the foreseeable future sales. It is not that technical which is why it requires manual input but more resource to work with.
Just-in-time (JIT) method has more interaction with the existing and potential customers because it aims to comprehend the current market demands of the customers. In this method, current and potential trends, existing customer demand and customer behaviors are highly focused on before placing an order with the vendor. A significant benefit of using such a technique is it tends to keep the customer into the limelight and makes decisions accordingly; the moment a new and desirable trend is observed, the primary objective of JIT method is to place an order and serve what is needed.
Activity-based costing is also one of the simplest but is highly labor-intensive. In this technique, the value of inventory is calculated by number of activities and stages it goes through before making it to the shelves. More stages represent more value and thus, higher prices.