Everything you Need to Know About Inventory Management

Everything you Need to Know About Inventory Management 04 Jenuary 2022

Inventory is defined as the goods that a business holds in its stock to sell its customers in the future. Having sufficient inventory at all times is important to ensure timely deliveries to the clients. This is where the need for inventory management software came into being. Today companies are searching for effective inventory management software to maintain their inventory levels.

The inventory management system works by using various techniques and tools to maintain, store, and track the existing stock. With the right inventory management system in place, you can eliminate errors, optimize inventory, improve cash flow and save resources.

Software development companies in Singapore provide inventory management which takes your business to another level of success. Do you struggle with managing your inventory? Improper management of inventory is proportional to loss of money. So why risk the future of your company when you can invest in the inventory management system.

Below we will discuss inventory management and how it is beneficial for your business.

Inventory Management Tools and Techniques

Following are the inventory management techniques which are commonly used.

ABC Method

In this method, the items are categorized on the basis of their turnover rates.

The items which generate 80% of revenue are categorized as A items and these items should be kept closest in shipping areas of the warehouse. Whereas the items which generate a lesser revenue are categorized as B and C items.

Two Bin Method

According to this method, the stock items are generally stored in two separate bins based on their size. When the stock in the first bin has finished the items from the second bin are shifted to it. The stock is restocked when the second bin is empty.

Fixed Order Quantity

A minimum number of products is predefined and when the inventory reaches that point the items are ordered to restock.

Fixed Period Ordering

The items are ordered on the basis of time i.e. when the set period arrives, the items are ordered. This technique is mostly preferred by small stores that lack a well-managed inventory system.

Vendor Managed Inventory

The inventory is managed by the supplier on the basis of sales or time. This technique is preferred by healthcare, grocery, and retail.

How to Strategically Manage Inventory in Hundreds of Cities

No matter how large your business is you can now manage your inventory across all your stores, all thanks to Internet software for small businesses. From ensuring effective communication, analytics, to task delegation this software keeps you on top of your business operations. If you have a complete grip on your inventory only then you can provide the best customer service. Moreover, the mobile app for inventory management system allows you to track the movement of your goods anytime.

Just in Time Inventory Management

Just in time inventory management reduces the holding costs as it works by receiving goods from suppliers only when they are required. In this case, the company has no inventory system and works from order to order. This system holds the following benefits

- No spoiled or outdated inventory

- A well-maintained system of cash flow

- Any errors in production are identified easily

- Increased efficiency and inventory turnover

- No additional costs such as insurance, rent, etc.

Batch Tracking

Each item has a specific batch number which is used to trace them along the distribution chain and this is called batch tracking. With this feature, you can track your item and find out everything about it.

The lot tracking feature reduces errors, streamlines tracking, and improves the relationship with suppliers. The inventory management software supports batch tracking and is a highly cost-effective option for your business.

Minimum Order Quantity

Minimum order quantity or MOQ is defined as the minimum amount of goods that you have to buy from a supplier otherwise you won't be able to make the purchase.

The purpose of MOQ is to cut the need for unnecessary inventory and increase profit levels for wholesalers.

FIFO and LIFO

First-in first-out (FIFO) and last in first-out (LIFO) are the common inventory terms used in business.

FIFO states that the items which come first in your inventory must be the first ones to leave. The food companies or any other perishable items must work according to this rule or they will end up in loss.

On the other hand, LIFO states that the last items in your inventory must be the first do you want to leave. This rule works best for non-perishable items.

Reorder Point Formula

Reorder point formula tells you when you need to place an order to restock your items. It helps you in sustaining your inventory and making sure that you never go out of stock.

Reorder point formula = (Average daily unit sales* Every sleep time in days) + Safety stock

Consignment Inventory

In consignment inventory, there is an agreement between a wholesaler (consigner) and a retailer that the retailer will get the items without paying upfront. The retailer will make the payment of items once they sell. It is a win-win situation for both suppliers and retailers.

Through this method, the vendors can access the new markets and retailer gets improved cash flow.

Cycle Counting to Improve Accuracy

The counting cycle involves counting items daily, weekly, or monthly. Mostly the valuable items are counted frequently to avoid any errors and it provides better insights into the inventory.

Manual inventory mostly leads to inaccurate data so to eliminate any risk getting an order management system for small businesses is the ideal choice.

Barcode Data Collection

A Barcode system speeds up the whole process and reduces the burden on the workers. The black strip present on the item provide real-time information about the product in digital format. Moreover, it helps the managers in making informed decisions about reordering.

The inventory feature of customer relationship management CRM software ensures to keep you on top of your inventory, streamlines the whole process for your employees, and increases are their efficiency.

Integrated Planning and Execution

Inventory management system ensures to synchronize all your supplies and demands based on your sales and customer demand. If you become efficient in your inventory you will ultimately generate greater revenue and achieve your business goals.

ABC Analysis for Prioritization

ABC analysis divides your inventory into three categories depending on their sales and costs.

A items – These are the best-selling items that don't take up much space on your shelf or warehouse.

B items – these items have good sales but the cost is slightly higher than A items.

C items – These items are responsible for the bulk of your inventory costs.

Conclusion

Inventory management software works best for every business but keep in mind that each business has its own needs according to which inventory management techniques are applied so you must do proper research before choosing a method. Today if you want to make a difference in the market then you must be efficient in your services. A well-managed and well-documented inventory management system helps you in maintaining your profit levels and much more.

Looking for software development services? BTtech soft is a Singapore software development company that promises to provide you with performance-based software solutions for all types of businesses. With our software, you can now keep an eye on your everyday operations as it provides you a minute-to-minute detail about everything. Get in touch with us to find out which customer relationship management CRM software features will work best for your business!

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