Inventory management is one of the most tedious tasks of handling a business. It is both time consuming and requires a lot of manpower in successfully managing the whole job. This is also an important part of fulfillment management. Even big businesses often fail to manage inventories with all the equipments. However if certain rules are followed inventories can be managed, some of them are:
- Observe the 80/20 Rule-The 80/20 rule(also known as Pareto’s principle) states,
“20 percent of the invested input is responsible for 80 percent of the results obtained.”
Successful inventory management relies upon identifying the 20 percent of inventory that’s generating the lion’s share of sales and developing a replenishment strategy around it. That’s the portion of stock that demands the most attention, while the other 80 percent only results in marginal sales so should receive less priority.
- First-In-First-Out Principle-This simply means that the oldest inventory should be sold first before selling your newest stock. It’s important for all businesses but is especially critical for those selling perishable items. It is not desirable that stocks get wasted sitting in the warehouse.
- Set Safety Stock Level-A safety stock level is the minimum amount of stock that one needs to have on hand at any given time. Once an item falls below a certain count, one knows that it is time to re-order. This provides one with a safety net ensuring that you’re continually able to meet consumer demand.
Inbound Logistics points out,
“Safety stocks are only useful if they are used. The whole point of safety stock is to protect you against expected variations in demand and supply. If you never use your safety stock, you have too much.”
Like many aspects of business, safety stock levels require perpetual tinkering based on current buying trends, time of year, and supplier capabilities. One needs to make adjustments accordingly.
- Automating-One can reduce errors, increase efficiency and streamline much of inventory management by investing in an inventory control system. This will typically consist of hardware (e.g.scanners, mobile devices and barcode labels) and centralized software.
- Organizing- If a stock room is perpetually in disarray, it’s going to create problems. One should invest in functional shelving and bins, carefully label everything, avoid placing similar products with similar packaging right next to each other, and develop a logical flow so employees don’t run into one another when packing orders and make routine cleaning.
Even after meticulously following all the tips a person might falter in managing the inventories. The only way to expertise in the field is spontaneity in using common sense to fulfill the need of the hour. But, still it remains as a difficult job, and to relieve oneself from this onus the business may appoint an all-in-one fulfillment company to handle the inventories and the logistics for the same.