8 Inventory Management Techniques to Curb Unwanted Costs
What is Inventory Management?
Inventory management is the key to success in any business. It ensures that you are never without what your customers need and helps provide a more accurate picture of how much inventory is left for sale, thus reducing costs considerably.
Right from the manufacturing plants to the storage, and further on to the checkout, it helps businesses monitor the level of stocks as well their movement. It is what will let you cut off unnecessary products as well as avoid ‘out of stock’ situations during peak demand moments.
Inventory management can be considered the practice of ‘rightsizing’ your stock level to fulfil the expected number of sales by making a forecast of the demand.
Inventory management techniques
1. ABC Analysis
Based on the Pareto Principle, ABC analysis is a highly effective method in analyzing which products in your stock are most and least valuable. Accordingly, 20% of your stock should be responsible for 80% of your total revenue, thus helping you identify that 20%.
2. SKU optimization
SKU optimization, or SKU rationalization as it is alternatively called, is the technique that’ll help you decide which products in your inventory you should continue or discontinue, to be determined purely on the basis of profitability.
3. Stock reconciliation
Stock reconciliation or inventory reconciliation is the process of making periodic physical count of the stock (mostly year end or more frequent) and comparing with the records to prepare for accounting.
Read full article: 8 inventory management techniques to curb unwanted costs, with detailed guide on each technique, including helpful references and even a tutorial video.
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