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ERP Inventory Management: Features, Importance and 10 Indicators When Your Business Requires an ERP Inventory System

ERP Inventory Management: Features, Importance and 10 Indicators When Your Business Requires an ERP Inventory System

Businesses in the wholesale sector that have mastered the art of inventory management have long held the top positions. This is because inventory management knowledge reduces waste, saves time and resources, and ultimately boosts profit margins. To manage inventory, data is essential. Furthermore, to maximise profit, it is necessary to have accurate data, regardless of the process involved, including purchasing, shipping, warehousing, customer satisfaction, or any other activity. Inventory management has become more straightforward in modern times. Thanks to ERP inventory management systems, the business owner may now easily access a large amount of the necessary data. ERP inventory management gives businesses a competitive advantage. These ERP inventory management solutions are used to manage tasks related to inventory, finances, and other elements of enterprises. Accurate order fulfilment is not enough to differentiate oneself from the competition. For example, customers blame retailers for delayed delivery 41% of the time. Therefore, whether your company uses an internal staff or a third party for delivery, it is your brand's responsibility to ensure that customers receive their goods on schedule. In addition, your company may improve last-mile delivery, increase warehousing efficiency, and inventory optimization by implementing and utilising an ERP inventory management solution. This article discusses the importance of ERP inventory systems and the qualities to look for in an ERP inventory management system. By the end of the article, you will be able to determine when your business needs one. What is ERP Inventory Management? Enterprise resource planning (ERP) is the process of centralising and integrating several essential corporate tools and activities. A comprehensive approach to business is intended to be provided by this integration and centralization, where one workflow informs another. For instance, companies that combine their inventory forecasting and ordering processes can more efficiently manage their inventory levels. Businesses may manage their business activities from a single platform using ERP inventory management systems. The management of inventory, finances, operations, planning, and logistics are typically addressed. ERP solutions enable firms to manage complicated inventory procedures across the entire organisation using real-time data. While all ERP modules are housed on the same platform, each function operates as a standalone piece of software. This has the advantage of allowing data to be shared between modules, which will facilitate rapid and straightforward calculations with greater inventory accuracy. Small enterprises can get away with only one or two standalone software products. However, this quickly turns into a management nightmare for many larger firms. Businesses can invest in a single platform rather than numerous distinct software packages to manage their inventories. This additional efficiency and synchrony are also beneficial to many medium-to-large-sized companies. What are the prominent features of an ERP Inventory Management System? Features of ERP systems are designed to enhance business operations. An ERP inventory management system's assistance with order quantity calculations is one of its core capabilities. This aids companies in timely and cost-effective planning and order replenishment, preventing stockouts and other expensive effects of improper inventory control. Your stock levels, real-time inventory, and reorder points may all be viewed, calculated, and automated with the aid of an ERP. For instance, when data indicates that demand for a particular SKU has risen to a specific specified level, inventory products might be automatically ordered. Similarly, an ERP system might detect and resolve problems with a surplus or automatically place sales orders when purchasing costs are low. The capabilities offered by each ERP inventory management system will differ slightly. However, the most common features include: Automation ERPs automate time-consuming, repetitive business operations, such as data entry, to save time and lower errors. This works because users place information into an ERP system accessible throughout the enterprise. And those data power very effective, clever, automated procedures. As a result, when automation performs at its peak, a significant amount of time and money is saved. To code and create automation rules in an ERP system, however, you almost certainly require a system administrator. A Solitary System Two of an ERP's primary functions are integrating processes across departments and eliminating needless data silos. ERPs assemble information from several internal departments to produce a holistic view of operational, financial, business, and customer data. Accurate reporting, insights, and superior company decision-making are all supported by this business intelligence. Management and Data Reporting ERP systems mobilise data and offer valuable insights to improve decision-making. Real-time reporting that is incredibly accurate enables operational improvement, cost reductions, and enhanced services all around. Data will be compiled by an ERP and shown in charts, graphs, and reports. Supply chain Administration The management of the supply chain is a crucial feature of ERP systems. This includes managing logistics and distribution as well as tracking demand and inventories. In addition, ERPs gather information about the supply chain to recommend optimal transfer and purchase orders. Accounting and Financial Administration Like standard accounting software, an ERP will provide financial data tracking and analysis for all business accounts, budgeting, and inventory forecasting needs. Additionally, specific systems might provide revenue recognition, multi-currency support, and tax and asset management. An ERP is made to assist organisations in planning, spending, and decision-making that is organised and optimised. Customer Relationship Management (CRM) To include customer data in reporting and decision-making, many ERP systems link with CRMs. For example, to build a prospect-reachable database, ERPs will mobilise information such as contact details, prospect status, serial numbers, and order histories. The marketing and sales teams may then focus on leads that are likely to convert, optimise lead times, and develop more decisive campaigns. Manufacturing Administration With the aid of product planning, procuring raw materials, and production monitoring, ERP systems assist firms in increasing the productivity of their manufacturing processes. To assist in managing your inventory planning processes, an ERP will gather and store precise data on your bill of materials, shop-floor controls, distribution planning, product tracking, and more. Importance of ERP Inventory System For eCommerce Businesses in 2022 ERP inventory management helps firms run and streamline their operations productively and economically. Businesses can manage finances, operations, and inventory all in one location with the help of ERP inventory management, which lowers the chance of errors and increases productivity. Additionally, by leveraging exact real-time data, ERP helps business executives make strategic decisions. Using ERP inventory management solutions within a firm has numerous advantages, some of which are listed below. Planning Inventory Replenishments is Simplified When ERP inventory management solutions are used, managing inventory is a million times simpler. In addition, business owners can precisely plan replenishment orders using such inventory management software. Systems for managing inventory assist in classifying components, making ordering the correct quantity at the right time simpler. Fewer transactions are needed, and inventory management is improved and made more precise. Regulation of Surplus Inventory Business owners may easily access any excess inventory with the help of ERP inventory management. It provides a 360-degree perspective of the complete inventory and explains the precise reason for the overstock. Additionally, this speedy discovery of the excess prompts the business owner to act with greater urgency and determination, saving precious resources that could be used to purchase inventory. Increased Effectiveness One of its key benefits is that an ERP inventory management system increases efficiency at every stage. Utilizing a single, centralised system allows for automation and avoids double handling, leading to increased productivity. Increased production and earnings result from increased efficiency. Reduced Costs Every business owner knows the importance of reducing costs to boost profit margins. Systems for managing inventory part of ERP make sure to do that. Such technologies not only minimise human work but also eliminate the requirement for business owners to buy or invest in different resources or systems because they combine so many services into a single solution. Accurate Data Gathering and Reporting ERP systems ensure that the correct data is always available to business owners on time. ERP inventory management solutions enable quality data collection with real-time updates on consumers, available stock, and pending orders. Additionally, customised inventory records and sales data can be produced by ERP systems, enabling a business owner to analyse operational performance and plan for expansion continuously. Enables Business Growth ERP inventory management solutions were built primarily to maximise earnings while minimising costs. Automating almost every aspect of inventory management reduces the need for manual labour. ERP inventory management solutions offer the ideal setting for business owners to advance their enterprises, whether it is to expand locally or worldwide. Typical Inventory Issues That an ERP Inventory System Can Address in 2022 A business may experience issues if inventory management is not practised. However, the most typical inventory problems can be resolved by switching to an Enterprise Resource Planning (ERP) system. By using an ERP inventory system, you can prevent the following situations: Overstock Inventory It is advisable to stay away from carrying too much inventory while selling seasonal goods. A surplus of inventory can raise costs and decrease liquidity. However, you can experience an inventory deficit if your projection is excessively pessimistic. You can quickly evaluate historical sales data and past seasonal trends with an ERP inventory system, which can help your organisation establish realistic safety margins. Inventory Deficits (Out-of-Stock) Both excess and shortages of inventory are expensive. For instance, insufficient stock during peak sales can hurt your company if your products have a high-profit margin in a crowded market. The "par levels" (also known as minimum inventory thresholds) that can be set by ERP inventory software for each product can be adjusted year-round. If a product's inventory falls below the predetermined par level, the inventory management software promptly sends out a request for further orders. A purchase request can be sent out automatically using an ERP inventory management system in conjunction with the appropriate automation software. Dead Stock For the uninitiated, expired products used once and then forgotten about are referred to as dead stock or on-hand. Dead stock is detrimental since it costs money on two different fronts. The initial cost of the things you sold cannot be recovered.Every day a product is left unused, the prices of storage (warehousing) rise. An ERP inventory system can assist in keeping track of all information pertaining to the product's acquisition, production, expiration, and insolvency. For example, when equities expire, the system can send alerts to inform users. Inventory Movement Knowing when to place a new order or make things again is made more accessible by inventory turnover. It takes a long time to calculate your inventory manually. 46% of SMBs track their inventory manually or don't track it. During this process, it's important to monitor: Count cycleOrder cycleDelivery cycle In addition to requiring a long time, human error is highly probable. Your business can continue to function normally even as you order and maintain products if you can automate this process. This process will be simpler to accomplish if ERP consulting is used. Things To Look In A ERP Inventory Management System  For retailers, there isn't a universal inventory system. However, all firms should consider a few factors while shopping for an ERP inventory management platform. A company must first hunt for a tool whose price won't exceed its spending limit. For improved accessibility, they should also search for a cloud-based solution with a user-friendly user interface. It's also crucial to look into the software vendor's support choices to ensure that assistance is offered in case of a system malfunction. Finally, a competent ERP application will automate order management, warehousing, and inventory management processes. Basic requirements for ERP inventory systems include: Multiple-channel Inventory Control Retailers employ multi-channel inventory management to track merchandise sales distributed throughout numerous outlets and stored in various locations. This can apply to traditional retail, e-commerce, and wholesale. Retailers will benefit from software with multi-inventory management functionality in several ways, including: Managers can quickly save time by finding the required information by providing centralised data about purchase orders and inventory levels across all sales channels and warehouse locations.It is possible to improve inventory forecasting by identifying inventory needs, establishing reorder points for replenishment, and avoiding issues like low stock levels or full stockouts.Making it simple for customers to shop for products where they choose, whether on your website or at your physical store, will improve the customer experience. Stock Monitoring and Warehousing Inventory available on multiple channels increases sales reach. However, if shops can't locate the goods they require to satisfy orders, they won't be able to meet demand or increase earnings. Due to this, effective warehousing techniques are essential for all businesses, whether giant corporations with numerous warehouses or small companies with a single storage facility. By optimising procedures, an ERP with a warehouse management system assists businesses in avoiding issues like delayed order fulfilment or missing product: Warehouse design maximises retailers' storage by instructing warehouse managers to arrange inventory and store popular goods in convenient locations that make it easier to fill orders.Finding things in the warehouse and packaging them for transport and delivery is easier by picking and packing.Receiving and storing materials make it easier to receive new shipments of goods and to arrange items in suitable locations inside the warehouse. Managing Invoices and Purchase Orders When consumers decide what they want to acquire, effective purchase order management starts and ends with that decision. This procedure can be streamlined with a robust ERP system with invoicing capabilities and a point of sale (POS) connection. It automatically produces invoices and emails them to clients when they place orders. In addition, by combining billing and order management, the ERP may be updated automatically, directing the warehouse staff to start processing the order. When Do You Need an ERP Inventory Management System? Here are ten indicators that your business may be ready for an ERP system; if any of these apply to your operation, get ahead of the game and begin your search. Increased Customer Complaints You don't want further client complaints. An increase in complaints is frequently a sign that orders are not being processed effectively or that the quality of the items is declining, and good customer service is essential. An ERP system instantly provides the data your customer service staff needs to help solve problems. Inability to Deliver on Schedule Delivering deadlines are missed, including a lack of visibility into capacity, inappropriate or ineffective scheduling of resources (including people and machinery), and improper supply chain management. An ERP system will provide a finite scheduler and capacity planner, ensuring everyone knows what is needed and when. So if your business frequently misses deadlines, you are likely ready for one. Product Quality is Deteriorating A drop in quality and a rise in returns could be signs of a communication issue inside the company, an inefficient workflow, subpar supplies, or inaccurate paperwork. An ERP system should offer traceability for a company to pinpoint the underlying causes of quality issues, create preventative measures, and engage in continuous improvement. Unawareness of Your Potential The scheduling system is strained when too many operations need to be manually calculated. An inventory planning and scheduling tool facilitates effective resource use and should consider real jobs, projected staff absences, and scheduled maintenance. In addition, your sales staff will be able to securely sell unused short-term capacity when they are aware of your genuine spare capacity, reducing downtime and increasing profitability. Producing Incorrect Quotes or Estimates Unexpected increases in labour and material costs may go unnoticed in a manufacturing organisation without an accurate data flow, rendering a work unprofitable. As an alternative, you will be less competitive if you overquote. For you to know precisely what your margins are when a quote is sent out, an ERP system makes sure that the most recent expenses are used in estimates. No Stock Visibility Gaining orders frequently depends on knowing what stock is available to promise. Delays happen when there isn't centralised exact knowledge of what's in the warehouse. In addition, it is a waste of time to go out to the warehouse to check on stock because inventory is always available with an ERP system. Delay in Procurement The information that purchasing departments receive determines how effective they are. For example, they will frequently miss the delivery deadline if they don't know when the material is needed. On the other hand, ordering supplies too early can result in an extended period of time where cash flow is held in stock. Your procurement staff can place just-in-time orders for the material since an ERP system informs them of what is needed and when. Unaware of Your Business Productivity It is crucial to have reliable historical data when dealing with narrow margins to prevent losing money on fiercely competitive jobs. This data is accurate and readily available with an ERP system, allowing management to identify areas inside the business where costs or turnaround times may be higher than anticipated. Excess of Spreadsheets Spreadsheets have long served as the information storage method for many manufacturing organisations. Where there were previously only a few spreadsheets, as a firm expands, the number of spreadsheets in use increases as well, with various departments utilising their own. Using several spreadsheets is a significant sign that your business is prepared for an ERP system. These spreadsheets, and frequently other systems as well, are used to gather and retain valuable data. Still, because they cannot be thoroughly analysed, it becomes progressively challenging to produce any useful information from them. With an ERP system, such data is compiled and kept in a single system, making evaluation considerably simpler. Business Unable to Expand Nobody has the time or energy to concentrate on the firm's strategic development since everyone is too busy chasing information and finishing daily responsibilities. Even the idea of trying to discover answers among that data is daunting, so let's not think about any more information! But it becomes much simpler to prepare for the future when an ERP system is in place to control the information, generate insightful reports, automate business operations, and lessen duplication. Conclusion The industry's approach to inventory management has undergone a revolution thanks to ERP inventory management. ERP inventory management is also very efficient and cost-effective. It is currently utilised by businesses to simplify inventory management. They support decision-making processes and are accessible across a variety of platforms. ERP inventory management reduces errors in addition to increasing earnings and efficiency. Businesses that have chosen to use this technology benefit, while those still resisting changes are losing behind. Inventory LogIQ is one such ERP inventory system to improve upon your supply chain from three angles: reduce your excess stock while maintaining availability at speed for your customers by sharing the following actionable insights: Red List (to avoid out-of-stock situations)The list that highlights SKUs (bestsellers) that are likely to go out of stock soon and need replenishment taking each of the FCs/warehouses into considerationThe list that recommends a minimum order quantity (MOQ) for ordering at the Location / SKU levelBlue List (to avoid excess inventory pileups)The list of SKUs to focus on for liquidation, where you are holding excess inventoryReal-time BI tool on your key Inventory health metrics and SKU classificationReal-time view on the right Network design to meet your Regional Utilization  goals ERP Inventory Management FAQs (Frequently Asked Questions) What is ERP in inventory management?A system called enterprise resource planning (ERP) inventory management enables companies to handle all facets of their operations, including finance, planning, logistics, and inventory, on a single platform. What distinguishes inventory management from ERP?ERP is a general word that covers how businesses connect various workflows and operations. A company's techniques for managing inventory, such as product tracking, tagging, and forecasting, are referred to as inventory management. ERP can be used for other business operations or only inventory management. How might inventory management be aided by ERP software?The tools firms employ to streamline numerous inventory activities are centralised by ERP software. Making it simpler for managers to find the required tools increases efficiency and saves them time. For instance, forecasting aids retailers in avoiding inventory issues like stockouts and shortages. Retailers can shorten lead times by adopting features like inventory management and warehousing.

September 14, 2022

What is an Inventory Management System? Types, Benefits, and 10 Techniques Used in Inventory Management Systems in 2022

What is an Inventory Management System? Types, Benefits, and 10 Techniques Used in Inventory Management Systems in 2022

Inventory is constantly changing. Sales, refunds, new receipts, and even damage and theft influence your inventory levels throughout the day. Therefore, the inventory management system is the most crucial part of successful retail or wholesale organization, notwithstanding their difficulty. As your business grows and the amount of inventory you handle grows, it becomes challenging to manage inventory effectively. Using technology will make things easier for you and your employees. That is the reason any retail firm needs an inventory control system. A lot of people associate inventory management with retail applications. However, inventory management systems are used in various industries, including manufacturing, utilities, healthcare, education, government, and more. It simplifies and consolidates the process of regulating inventory movement and maintenance so that the proper inventory quantity is accessible at the right time and in the appropriate condition. What is an Inventory Management System (IMS)? An inventory management system or IMS is a system that combines technology, i.e., hardware and software, with processes and procedures to oversee the monitoring and maintenance of stocked products, whether they're company assets, raw materials and supplies, or finished goods ready to be sent to vendors or end customers. A complete IMS includes the following components: A method for identifying each inventory item and its information, such as barcode labels or asset tags. Inventory control systemHandheld barcode scanners or cell phones with barcode scanning applications are examples of hardware equipment for reading barcode labels. Inventory management software includes the capacity to analyze data, produce reports, estimate future demand, and more.Labeling, documenting, and reporting procedures and policies. This should incorporate a proven inventory management strategy like Just in Time, ABC Analysis, First-In-First-Out (FIFO), Stock Review, etc. 4 Basic Functions of Inventory Management System Modern-day IMS aid in the profitability of your company. You might be squandering money on inventory without even realizing it if you don't have a system. You may be buying too much or not enough. You can be wasting money counting and valuing your goods. You might also be wasting money by not knowing where your inventory is. Primary Functions Of the Inventory Management System include- Tracking An inventory management system's primary function is to keep track of your items and supplies. When you buy inventory, you need to track when you bought it, when you sold it, and how much you have on hand. It also tells you where your inventory is. This is especially critical if your list is used in many departments. A supply of rubber, for example, may move through manufacture, shipment, and storage before ending up in a warehouse in a distant location. You can track how inventory travels through your firm with the help of a sound system. Avoiding Redundancy Duplicate orders can quickly lead to an overabundance of inventory. When an item isn't where it should be on your storage shelf, and you presume you're out of stock, you make a new order. An inventory management system prevents duplication by alerting you that you already have the item in stock somewhere else. Inventory Valuation An inventory control system can inform you how much you pay for inventory at different times of the year. For example, an inventory control system can track those values and calculate your average cost even if you purchased the same item several times at various prices. This might assist you in determining selling prices and profit margins. Counting You won't have to pay staff to count products if you physically use an inventory control system. Based on the data in your system, you'll always know how much you have. This can help you save a lot of money on the payroll for inventory workers.  How Do Inventory Management Systems Work? Inventory control systems, such as inventory management applications, include several features that assist businesses in managing various sorts of inventory. For example, inventory management applications are often used with barcode tagging to identify inventory assets, and information about each item is recorded in a central database. Barcode labels act as inventory trackers, allowing users to get information about an item from a computer system, such as the item's price, the number of units in stock, the position of an object within a warehouse, and so on. The best inventory control applications are mobile-friendly, with companion apps that let users track and manage inventory while moving about a facility or from one location to another. There are a variety of inventory monitoring apps for smartphones, some of which are only available for mobile devices. In contrast, others feature desktop software that allows users to track inventory from any platform. There are also several inventory management apps created exclusively for warehouse managers. Look for features like trigger warnings when inventory levels hit pre-defined criteria, re-ordering capabilities, and analysis and reporting to support functions like forecasting when looking for inventory management software. 8 Benefits Of Inventory Management System Any effective business's inventory management system is what goes on behind the scenes. It's the art and science of balancing supply and demand in a company - managing the supply chain always to have enough stuff to earn a profit. For small enterprises or big retail or warehousing operations, using an inventory management system offers several advantages, including: Automation Automation is one of its most significant advantages of it. Automation eliminates the possibility of human error, saves countless hours, and assures you that you do not make errors. Once a set of rules has been established, this system can do repetitive tasks with little manual assistance. This gives you real-time access to your inventory levels and instantly changes your stock count when a sale is made. This functionality is essential for accurate inventory forecasting and a positive client experience by preventing overselling. Automated inventory management also provides real-time visibility into where your goods are located, critical to keeping stock in several places, such as a warehouse or multiple retail locations. Making Informed Decisions Having enough inventory on hand affects every aspect of a company's capacity to create profit. Through various built-in reports, the Inventory Management System allows users to make educated decisions based on real-time data from the program. In addition, the Inventory Control System will provide you with the resources to effectively estimate future sales by providing you with a picture of previous sales performance. Demand Forecasting Because of precise demand forecasting, when order fulfillment volumes grow significantly due to holidays or events throughout the year, such as a significant marketing push from an influencer, the quantity of inventory you have will stay up with demand. Historical and seasonal data may also determine if any sales patterns necessitate stock level modifications at different periods of the year. Boost Productivity and Efficiency By reducing the amount of time spent on routine and complex tasks, the Inventory Management System will help increase efficiency and productivity. Users may easily report, search, and input data and manage inventory using the Inventory Management System's user-friendly interface. Boost Sales and Purchase Order Accuracy Using a sophisticated Order Management System, you can improve the accuracy of sales and buy orders. In addition, users may reserve available goods across various locations with Dynamic Inventory to guarantee that client expectations are satisfied. Management Inventory of Multiple Locations When a firm develops into many locations, the owner must be able to keep track of inventory levels at each site. Using Dynamic Inventory's robust multi-channel sales fulfillment business model, users may monitor inventory levels across various locations. Attempt to Avoid Running Out of Stock. Use our Low-Stock Alerts to get alerted when items fall below a certain threshold, ensuring that you don't run out of stock. In addition, users will now get access to our Low Stock report, which displays all goods that require replenishment, allowing them to prevent running out of stock. Reduce Risk by Managing Product Recalls Accurately Users may trace the exact location of items using Lot Numbers, Batch Numbers, and Serial Numbers in the Inventory Management System. This capability comes in handy if you need to enable a product recall for a batch of things. Types of Inventory Management Systems Inventory management systems integrate all parts of an organization's inventory operations, including shipping, purchasing, receiving, warehouse storage, turnover, tracking, and reordering, into a single technological solution. The fact is that an efficient management system takes a holistic approach to inventory and empowers organizations to use lean practices to optimize quality and performance along the supply chain while ensuring the appropriate quantity of stock at suitable locations to deliver the promised services. The two inventory control systems available and most frequently utilized these days are. Perpetual Inventory Management System is one of the most common management systems.The second one is called as Periodic Inventory System Two technological types of inventory management systems utilized to assist the entire inventory management process are-  Barcode Systems Radio Frequency Identification (RFID) Systems. You must invest in a vertical inventory management system to meet your company's unique requirements. Finally, we can also divide IMS into industrial sectors. These are further classified into- Manufacturing Inventory Management Warehouse Inventory ManagementRetail Inventory Management Organizations must have correct inventory knowledge to be competitive. In addition, making judgments regarding future purchase and distribution duties might be difficult, if not impossible, without knowing what is in storage. Therefore, a comprehensive approach is required to decide how, where, and when to arrange merchandise. Now that we've covered the foundations of inventory control systems and how inventory control systems function in general let's talk about the types of inventory control systems. Perpetual Inventory Management System When inventory goods are acquired, sold from stock, relocated from one location to another, chosen from inventory, and destroyed, a perpetual inventory management system automatically updates inventory records and accounts for additions. Sub certain businesses prefer endless inventory control systems because they provide up-to-date inventory information and manage minimal physical inventory counts. Permanent inventory systems are also favoured for inventory tracking since, when correctly maintained, they provide reliable data regularly. This inventory management system is most effective when combined with a database of inventory amounts and bin locations updated in real-time by warehouse employees using barcode scanners. Perpetual inventory management systems come with several drawbacks. To begin with, these systems cannot be maintained manually and need specialist equipment and software, resulting in a higher installation cost, particularly for firms with many sites or a variety of warehouses. In addition, maintenance and improvements are required regularly for perpetual inventory management systems, which can be costly. Another disadvantage is that recorded inventory may not represent actual inventory as time passes since frequent physical inventory counts, which are required even when inventory trackers are utilized, are not performed. As a result, mistakes, stolen products, and wrongly scanned things influence inventory records, causing them to differ from absolute inventory counts. Periodic Inventory System Periodic inventory systems do not maintain inventory daily; they allow businesses to know the beginning and ending inventory levels over a certain period. Physical inventory counts are used to track inventory in these inventory control systems. When physical inventory is finished, the purchasing amount is transferred to the inventory account, and the cost of the ending stock is modified. Organizations can use LIFO or FIFO inventory accounting methods to calculate the cost of ending inventory or another way; keep in mind that beginning inventory is the previous period's ending inventory. The use of a periodic inventory method has a few drawbacks. To begin with, when physical inventory counts are done, routine company operations are almost halted. As a result of the time restrictions, personnel may rush through their physical counts. In addition, because periodic inventory systems do not often employ inventory trackers, mistakes and fraud may be more common due to the lack of continuous inventory control. When adopting a regular inventory management system, it's also more challenging to pinpoint where inconsistencies in inventory counts arise because so much time passes between counts. Finally, periodic inventory control systems are better suited to smaller enterprises because of the required quantity of labour. Barcodes Inventory System In a barcode inventory system, things are given unique barcodes. A barcode is scanned when a product is purchased, and data is sent to a central database. When choosing a product, the warehouse worker scans the barcode. The scanner then informs the employee if they have chosen the correct item. It also logs the activity in your IMS, allowing you to keep track of stock levels more precisely. Assisting you in keeping real-time inventory track, enhancing picking speed, and also helping in inventory accuracy. Barcodes may contain much information that your inventory management system can utilize. A barcode, for example, can carry information such as a product's name, weight, measurements, and warehouse location. However, for efficient choosing, you would often not use a barcode to retain such detailed information but rather a unique string of numbers merely to ensure the correct item is selected. Barcodes connect the data obtained while picking and packaging to your inventory management system. So, when the barcode is read, it informs the picker that they have selected the correct item and your inventory management system. Then, in your live inventory tracking, reflect the revised value. On the one hand, it makes life easier for your pickers and reduces mis-picks. But on the other hand, it provides a precise real-time live inventory count. Radio Frequency Identification (RFID) Inventory Systems Inventory management systems that employ radio frequency identification (RFID) use active and passive technologies to track inventory movements. Fixed tag readers are used throughout the warehouse using dynamic RFID technology; RFID tags pass through the reader and record the action in the inventory management software. As a result, active solutions are best suited for businesses that require real-time inventory management or where inventory security is a concern. In contrast, passive RFID technology necessitates portable readers to track inventory movement. The inventory management software records the data from a tag when it is read. Passive RFID technology has around 40 feet, while active RFID technology has a reading range of about 300 feet. RFID-enabled businesses had a 95% inventory accuracy rate. RFID inventory management solutions come with several drawbacks. For starters, RFID tags are far more expensive than barcode labels. Hence they are often utilized for higher-value items. RFID tags have also been reported to cause interference, mainly when used in many metals or liquids situations. Transitioning to RFID equipment is extremely expensive, and your suppliers, customers, and transportation providers must all have the necessary equipment. Furthermore, RFID tags contain more data than barcode labels, causing your system and servers to become overburdened with data. Manufacturing Inventory Management System This is the method you'll need if your inventory is focused on linking bills of materials and work orders together. To run a manufacturing firm, you'll need to keep track of your job and the supplies you'll need to supply or make it, which necessitates a sound inventory management system. These are the characteristics you'll require: Tracking of materials Levels of inventory (parts and finished products)ERP/maintenance software connection for automated reordering Warehouse Inventory Management System  The goal of warehouses is to find out where an item is located. Although maintaining an accurate inventory count of on-hand products is critical, it is also crucial to guarantee that you can find an item quickly in a warehouse scenario. Software-based warehouse inventory management solutions are frequently employed to optimize fulfillment center processes. You'll require the following features: Support in several locationsSystem for advanced barcodes (with QR, among other standards)Order picking assistance Shelf and bin tracking system Retail Inventory Management System It's critical to have adequate stock in a retail firm to keep things running smoothly and financially. Supplies must be reordered before they run out to maximize sales opportunities while avoiding buying too many things that will not be sold. As a result, a sound IMS is necessary to maintain your inventory balanced and in line with your business objectives. These elements are a must-have for ensuring proper inventory levels. Order choosing assistanceReordering is done automatically.Support for barcodingForecasting inventory Choosing Inventory Management System in 2022 Knowing what you have on hand is the first step in correctly managing your inventory. Depending on the type of your business and the number of things you're dealing with, you may go as straightforward or as elaborate as you like. A simple logging system may be sufficient for specific firms, while a computerized arrangement is superior for others. Consumers should consider a few things before deciding on a periodic and perpetual inventory management system technique, as well as a barcode or RFID tagging strategy. What is the size of my company?I work with what sort of inventory?Is there enough money in the budget for a new management system?What type of deployment approach should I go with? After you answer these questions, going further from here will let you dive deeper into concepts to focus on Inventory Management systems. Manual Inventory Record Keeping A stock book where you track transactions could suffice if you don't carry many different things or don't move many each day. List the types of items in one column, and write down the sales in another. This shows you how many of each item have been sold at a glance. You may accomplish this in a physical notebook or on a computer with a rudimentary spreadsheet. This is the most basic method of inventory management, and it works best when just one or two-person input data and only a few specific things need to be tracked. There are a few manual logging ways to consider. For example, each sort of merchandise may be tracked using tags, cards, or tickets, which you can record into your log when they sell. You may also determine how much was sold by comparing sales receipts from your cash register with delivery receipts. Computerized Inventory Management System It makes sense to bring the speed and usefulness of computers, tablets, and smartphones to inventory management today when most of us are so accustomed to using them. In addition, small business owners will typically profit from a more automated inventory monitoring system. You may spend significantly less time inputting data and obtain far more meaningful information than if you did it manually, with little to no learning curve. There are several sorts of computerized systems, ranging from tracking inventory through the warehouse and production process to those better suited to retail applications. Some even integrate with your accounting software, automatically updating cash flow figures and income estimates. You can read more in detail about retail warehouses here. Point of Sales Systems Your cash register is part of a system that maintains track of your inventory and rings up sales, and calculates the appropriate change using this system. POS systems are particularly useful in controlling inventory and supplies in retail establishments, taverns, and restaurants. With each sale, you'll get an updated, real-time picture of where things stand, and you'll be able to see at a glance which goods are selling and should be reordered and which aren't and should be lowered to move. In addition, other information, such as consumers' email addresses or mobile phone numbers, can be entered during a transaction and useful to your marketing efforts. If you're thinking about utilizing a POS system, find out what kinds of reports it can generate and how simple it is to use to keep track of your inventory. You want to be able to quickly add new products to your list and create alerts for items that are about to run out. The software, cash register, receipt printer, bar code scanner, and credit card reader are all included in most POS systems. Start simple and add on as you need it if you can't afford a full-fledged plan. There are also POS programs for your smartphone that are both free and affordable. 10 Techniques Utilized In Inventory Management Systems Small businesses frequently have cash flow issues, influencing stock levels, resulting in stock outs and dissatisfied consumers. If too much of this, the company may go out of business. Inventory management system solutions come in handy in this situation. Business managers may retain ideal inventory counts, eliminate human error, save money for physical inventory stock, and more with the correct inventory control procedures. Let's take a look at the most popular inventory methods. These are highly effective methods for improving inventory control in firms. Minimum Order Quantity (MOQ) The smallest amount of stock that suppliers are prepared to sell is the minimum order quantity (MOQ). If you can't meet the minimum order quantity for a product, you won't be able to buy it from that source. Suppliers use minimum order numbers to improve earnings while eliminating inventory and "bargain shoppers." The minimum order quantity is determined by the entire cost of your inventory and any additional charges you must pay before making a profit. As a result, MOQs help wholesalers stay profitable and maintain steady cash flow. Economic Order Quantity The economic order quantity (EOQ) formula helps you balance the expense of keeping goods on hand with a supply chain that satisfies consumer demand. Start with the following information to determine the economic order quantity: The pace of demand or the number of goods moved in the previous year (quarter or month, etc.)The cost of the things you'll need to order during the sales period to fulfill demand.The expense of storing merchandise at a warehouse (also called the holding cost) Understanding a product's EOQ is critical for determining inventory optimization and reorder quantity. Just In Time Inventory Management Just-in-time Inventory management comprises producing what's wanted when required, and in the amounts demanded. Many organizations employ a "just-in-case" inventory management approach, which involves keeping a modest amount of inventory on hand in case of demand increases unexpectedly. Just-in-time inventory (JIT) management aims to establish a zero-inventory system by manufacturing Goods to Order. It operates on a pull mechanism, which means that when an order is received, it initiates a chain reaction across the supply chain. As a result, employees are notified that inventory must be ordered or that the required items must be manufactured. A just-in-time inventory management system has several advantages, including: Visibility of Inventory that is less old-fashioned, outdated, or spoiltEliminating storage and stacking while optimizing inventory turnover reduces logistics costs and waste production and increases efficiency.By lowering your inventory, you may save money on insurance and rent.Since manufacturing takes place on a smaller, more concentrated scale, identifying and correcting production problems is faster.Keeping a healthy cash flow by only ordering products when it's essential FIFO and LIFO FIFO and LIFO accounting systems are used to value inventories and report profitability. First in, first out is the acronym for first in, first out. An inventory accounting system states that the first items in your inventory leave instead. Thus it would help if you always got rid of your oldest stock first. Last in, first out is the acronym " last in, first out. It is a way of inventory accounting that states that the final goods in your inventory are the first to leave, implying that you get rid of the most recent stock first. You must always utilize the FIFO rule when running a food business or dealing with perishable goods. You'll wind up with outmoded inventory, which you'll have to write off as a loss if you don't. When it comes to non-perishable homogenous commodities like brick or stone, LIFO is a fantastic strategy since you won't have to rearrange your warehouse or rotate batches because they'll be the first ones out anyhow. Reorder Point Formula The reorder point algorithm tells you when it's time to replenish your inventory. You'll be notified when you reach the lowest quantity of inventory you can maintain before needing more. By employing this strategy to order the right amount of stock every month regularly, you may stop becoming a victim of market ups and downs. ABC Analysis ABC inventory analysis divides your inventory into three groups based on how much it costs to store and how well it sells. A-Items: The most popular items that don't take up a lot of room in your warehouse or cost a lot of money. B-Items: Items in the middle of the price range that sell often but cost more to store than A-Items. C-Items: The rest of your inventory, which accounts for most of your inventory expenditures, has the smallest impact on your bottom line. By determining which goods you should refill more regularly and which items you don't need to keep as frequently, ABC analysis helps you save money on working capital. ABC analysis improves inventory turnover and lowers outdated inventory. Batch Tracking Lot tracking is another term for bat tracking. It is a method for effectively tracing items along the distribution chain using batch numbers. Batch tracking allows you to identify where your items originated from, where they went, how much was sent, and if they have an expiration date, whether they are raw materials or completed things. This inventory management system has several advantages, including: Supplier partnerships have improved.Simple and quick recallExpiration tracking has been simplified.Less accounting mistakes due to manual tracking Lean Manufacturing System The lean manufacturing system is also known as lean manufacturing or lean production. This technique is well-known for boosting customer value and eliminating waste without losing efficiency. It attempts to prevent anything in your production process that generates waste or limits your capacity to make a valuable product, it contributes to inefficient and inconsistent processes. The following concepts are shared by all lean manufacturing systems: The highest valuable product is delivered to the consumer through lean production.It outlines the actions and processes necessary to create useful products.It goes through a procedure to ensure that all of your value-adding stages run well, with no bottlenecks, delays, or disruptions.Products are created on a just-in-time basis, which means that resources are not stored and consumers can get their purchases in weeks rather than months.Lean thinking and process improvement are key to the company's culture. 6 Sigma Six Sigma practitioners use statistical models to gradually develop and optimize a company's production process until it reaches the Six Sigma level. Most commonly, this is accomplished through the use of a five-step method known as DMAIC, which stands for define, measure, analyze, improve, and control. The DMAIC processes user data and quantifiable objectives to generate a cycle of continuous improvement in manufacturing operations. DMAIC is important for improving existing processes, but Six Sigma also employs DMADV to build new processes, products, or services. DMADV is an acronym that stands for define, measure, analyze, design, and verify. It serves as data and extensive analysis to assist you in developing efficient procedures or a high-quality product or service. It uses extensive training and specialized projects, as well as realistic statistical analysis, to help your organization save a lot of money. Lean Six Sigma Lean Six Sigma combines Six Sigma and lean manufacturing to build a comprehensive system for eliminating waste and reducing process variation to simplify production and improve product output. Lean Six Sigma largely uses Six Sigma processes as the system's backbone to generate targeted improvements in production. It also combines several lean tools and approaches to decrease wasted processes and procedures. Consignment Inventory Consignment inventory is a commercial arrangement in which a seller or wholesaler known as a consigner agrees to provide their products to a consignee, most commonly a retailer, without the retailer paying for the items in advance. The co-signer retains ownership of the products and pays for them only when they are sold. As long as suppliers and retailers are ready to share the risks and profits, this is a win-win situation. Low inventory carrying costs, direct-to-retailer delivery, and access to new markets benefit vendors. Retailers benefit from reduced risk, greater cash flow, and a cheaper total cost of ownership. Partner with InventoryLogIQ for the Best Inventory Management System You can plan your stock levels and know when to place a purchase order for extra products using a proactive inventory management system. You may better manage your cash flow by projecting your inventory demands into the future. Prevent sales from being lost due to stockouts and backorders. eCommerce fulfillment businesses have never needed to plan more. Inventory management and forecasting aid in developing a robust supply chain that can withstand interruptions. You don't have to deal with the difficulties of inventory management systems across numerous sales channels. Request assistance from your third-party logistics provider or seek an inventory optimisation software like Inventory LogIQ. Inventory LogIQ optimizes the distribution of inventory across fulfillment network that can help in maximizing sales, reducing holding costs and improving regional share of demand fulfillment. These solutions are implemented quickly and operate cost-effectively, saving organizations time, money, and effort. InventoryLogIQ's extensive knowledge and capabilities in inventory forecasting, product segmentation, and easy plug & play integration offerings enable us to solve all of our clients' inventory control and management problems. Inventory Management System FAQs What factors influence inventory costs?Rent, insurance, security fees, power bills, refrigeration, and any other maintenance or storage-related charges may be included, depending on the type of business. Essentially, the higher the carrying costs, the more products a corporation must store. What are the critical factors for inventory management systems?Raw Materials, Work-In-Process (WIP), Finished Goods, and Maintenance, Repair, and Overhaul (MRO) are the four categories of inventory most typically employed (MRO). When you know what kind of inventory you have, you can deploy best practices for inventory management systems What are the characteristics of an effective inventory management system?An easy-to-use interface that doesn't require significant training, support, or documentation are among the system's criteria. Automation for inventory management business operations to eliminate manual procedures. A secure database that gives accurate, real-time information. What is the definition of inventory turnover?The inventory turnover ratio is a measurement of how rapidly your company's inventory gets sold. It's an excellent way to gauge the strength of your company's sales volume and performance by comparing it to industry norms. Knowing your inventory turnover rate may provide you with a lot of information about how your business handles inventory, sales, and expenditures. How do I know when it's time to restock stock?Calculate reorder points manually or using the software included with your inventory management system. Inventory LogIQ leverages advanced AI-ML algorithms to ensure you have the right inventory level for the correct SKU at the right location. Inventory LogIQ avoids stockouts for the same through auto-replenishment triggers when the stock falls below the set reorder point. When to Upgrade your Inventory System?• When you need more flexible solutions to avoid stockout situations• When you wish to improve your inventory accuracy • When your inventory costs are growing • When your growth is becoming slow or stagnant due to excess inventory pileups or bloated inventoryYou can check out InventoryLogIQ's IMS if you are an enterprise business or even if you are planning to scale.

August 26, 2022

What is Inventory Planning? Importance, Challenges, and 5 Best Methods of Inventory Planning for eCommerce Businesses in 2022

What is Inventory Planning? Importance, Challenges, and 5 Best Methods of Inventory Planning for eCommerce Businesses in 2022

The eCommerce industry's ethos is placing products in storage in optimal quantities so they can eventually be sold when an order is placed online. There is a lot of strategic supply chain planning behind every successful eCommerce firm, especially regarding inventory planning and management. Inventory is the most valuable asset for eCommerce sellers. With good inventory planning, you can fulfill orders by efficiently forecasting demand and enhancing the customer buying experience. When inventory planning is done correctly, it helps online sellers save money and time and streamlines their entire eCommerce supply chain. Customer expectations will be constantly met, and enterprises will remain prosperous. If you struggle to plan your inventory, you need to identify the tactics and tools that will help you improve your inventory planning operations. What is Inventory Planning? Inventory is the greatest asset of an eCommerce business, whether it is a retail, wholesale, or manufacturing unit. If we set aside store management and human resource expenses, sellers invest considerable capital in inventory planning. Inventory planning is when an organization determines the optimal quantity of listed products concerning time and other factors. Inventory planning is an essential component in the supply chain management of eCommerce that involves demand and inventory forecasting to determine optimal inventory levels across each SKU that needs to be maintained in any period to avoid loss of revenue due to stockouts or excess inventory pileup situations. It is an integral part of a company’s supply chain management strategy alongside order management, accounting, warehouse operations, and customer management.  Inventory planning is unavoidable since it allows businesses to run continuously. Low inventory levels can result in unfulfilled orders, which ruins a brand’s reputation. On the other hand, having too much stock is detrimental to a healthy cash flow and stifles corporate growth because money held up in excess inventory cannot be spent in other parts of the company. It entails anticipating demand and determining how much inventory to order and when to order it. This allows businesses to meet demand while also lowering costs. In other words, by keeping the correct amount of inventory in the right place at the right time, organizations can lower their overall storage costs, improve inventory planning and control and ensure that there is always enough stock to fulfill demand (whilst avoiding obsolete surplus stock). The Importance of Inventory Planning Increases Sales Sellers can stock up on products that appeal to their target demographic, increasing sales and revenue. During seasons of high demand, they will have enough inventory available to fulfill as many orders as possible. Improves Cash Flow Practicing inventory planning ahead of time might help eCommerce sellers to avoid problems like having too much capital locked up in their inventory. They will be able to keep inventory moving while also freeing up cash to reinvest in the company. Utilizes Storage Holding inventory costs a lot of money; if it is a perishable product and needs special conditions and temperature, the cost instantly multiplies. So here, tiny storage space can cost more than the business receives in profits. Inventory planning takes care of inventory space and utilizes it to the best of its ability.  Forecasts Demand Better demand forecasting helps to make better and more informed decisions about inventory planning and revenue generated in the future. Placing an order during high demand can cost more than procuring it during price slumps or discount periods. It not only assists a seller in meeting customer demand but also in making better financial decisions that affect profit margins, cash flow, inventory allocation, warehousing, staffing, and overall logistics spending. Improves Customer Satisfaction Customer satisfaction is the best selling point. Buyers are always choosy, but they will be satisfied if the seller has the right products at the right time. People often pay more to get a better experience and quality products. They are more inclined to return to the same seller if they can count on getting the things they need and want. Satisfying these desires will help them get a positive outlook on your brand, which will reflect in their feedback Minimizes Overstocks and Stock-Outs Inventory planning aids retailers in avoiding overstocking or understocking. It aids in the optimization of inventory storage and precise control over each item. Overstocking can hold up business capital for an extended period. In contrast, understocking can disrupt the supply chain process, resulting in more expensive procurement and an inability to fulfill orders. What are the Challenges of Inventory Planning? Managing Huge Amounts of Data When a seller runs flash sales, their sales velocity increases, and they store much data obtained from buyers. This data is instrumental while running campaigns, checking for follow-ups, and sending personalized offers and benefits according to customers’ gender, last purchase, amount they spent previously, etc. Managing this useful and colossal data is a challenging task. It needs a good inventory management application that stores data and takes care of qualified leads by marking them as prospects. In the absence of a cohesive view of the past, current inventory levels, and any other essential sales data, sellers may flounder in the dark regarding inventory-led decisions. This is why implementing a real-time inventory tracking system is non-negotiable.  Finding Reliable Data Real-time data is required for a smooth and efficient supply chain process. However, information is frequently not maintained in a meticulous manner, especially when it is done manually. It is distributed throughout several systems even when it is kept track of. This makes it challenging for merchants to consolidate all the data to get a complete picture of their inventory. A real-time inventory tracking system guarantees that sellers have reliable data as they expand into new sales channels and further develop their distribution network. Various inventory apps make it simple for online retailers to keep track of their inventory. InventoryLogIQ not only stores the seller's inventory at their preferred domestic fulfillment sites, but the seller also gets access to inventory data via a single dashboard. That way, sellers can save the time and effort associated with updating many spreadsheets while reducing human error. Developing Inventory Management Software Customers have high expectations for the speed with which their orders are processed and shipped. However, getting bogged down in planning and managing inventory can harm supply chain efficiency. There is no surprise that more and more modern merchants are turning to Inventory Management Software to help with their inventory planning requirements. Inventory management software can help eliminate time-consuming manual tasks and increase inventory accuracy. It is common for online firms to use inventory automation to automate inventory planning processes that are time-consuming and prone to human mistakes, such as the pick up of incorrect inventory and inventory shrinkage. For the smooth running of operations, a seller needs an inventory management system. This requires a substantial one-time investment for developing an IMS and technical staff must be employed to manage it. This becomes a hurdle for small and medium-scale sellers. They are already short on capital and have narrow profit margins to compete with established eCommerce giants. Third-Party inventory planning software can help them with their requirements. Instead of investing in their inventory management software, working with a third-party logistics (3PL) supplier like WareIQ can save time, effort, and money. Lack of Trained Resources The warehousing process will likely slow down or fail if the employees are not appropriately trained. Sellers must equip personnel with knowledge of the newest procedures, data analytics, distribution metrics and technology involved in supply chain management to bring value to inventory planning. However, investing in training and technology implementation can be costly and time-consuming. Though many online firms have team members who oversee logistics, it is a commonplace for online brands at all phases of development to collaborate with a 3PL that can provide the technology, data, and knowledge needed to plan and manage inventory efficiently. Best 5 Inventory Planning Methods to Consider in 2022 Now that we’ve discussed the challenges, benefits, and fundamentals of inventory planning, let’s talk about how to actually implement it. There are a handful of inventory planning methods. To consider the right one depends upon your products, business type, and processes involved. The Work in Progress Model (WIP)  Merchants who deal in partially finished items, finished goods, or goods-in-transit should use this model. This inventory model emphasizes inventory holding, and there are three reasons for this: Purchasing raw materials in bulk saves money and lowers per-unit costs.It helps avoid stockouts and provides precautions against demand uncertainty.It encourages holding inventory to reduce the chances of price hikes of materials and labor. The Self-Consistent Inventory Model Economic Order Quantity (EOQ) The economic order quantity (EOQ) method determines the best inventory quantity to order. It considers product demand, unit pricing, and holding costs to assist sellers in figuring out how much to order.  The goal of EOQ is to assist sellers in determining the number of products that will allow them to meet demand without overordering and inflating their holding costs. To make this strategy work, a seller should have a firm grasp on the following: Order costs – Expense per merchandise orderDemand rate – Units sold during a particular time periodHolding costs – expenses involved in holding the product The EOQ formula is : EOQ = Square Root of [{ 2 (Order Costs) X (Remand Rate)} / Holding Costs ] Minimum Order Quantity (MOQ)  The minimum order quantity (MOQ) estimates how much inventory a seller should order at any given time. This is perfect for sellers that wish to be careful with their ordering habits or who want to maximize their cash on hand while avoiding excessive inventory spending. There is not a set formula for MOQ, but a seller can calculate the correct MOQ for their eCommerce business by: Calculating Demand: It considers the seller’s historical sales data and current patterns to determine how much inventory they will need.  Being Aware of Holding Costs: Calculate the costs of storing a product. Keeping small and minuscule objects in a warehouse will be less expensive than keeping them in a climate-controlled setting. Knowing the Breakeven Point: Calculate how many products are needed to sell to reach the breakeven point before buying the product. Determining MOQ: The criteria listed above will assist sellers in determining the proper minimum order quantity for their products. FIFO or LILO First-in, First-out (FIFO) and Last-in, Last-out (LILO) are supply management methods in which products purchased first are sold first or vice versa. An ideal formula for retailers who sell perishable products, FIFO requires keeping track of the purchase date of each product and dispatching inventory according to it. The main motto is to monitor the expiration dates of perishable products. Structure the stock in the warehouse in such a way that makes it easy to implement FIFO or LILO. Setting Reorder Points Reorder points are crucial tools in inventory planning since they assist the store in avoiding stockouts. Product demand, sales velocity, order lead time, and safety stock levels determine the optimal reorder point. Calculating the reordering point requires two components: Safety Stock: (max daily orders x max lead time to get it) – (average daily orders x average lead time to get it)Lead Time Demand: the average number of units sold daily x the lead time of a product  To determine the reorder point, add lead-time demand to safety stock. Use the following formula: Reorder Point = Safety Stock + Lead Time Demand  Just-in-Time (JIT) Model Just-in-time ordering is an approach in which items are ordered just when required. Because it allows a seller to avoid sitting on too much stock at any given moment, this strategy can help them save a lot of money on holding expenses. It requires trustworthy supply chain management. Sellers will need a quick ordering process and dependable vendors who can deliver products on schedule for JIT to succeed. Here, the idea is to decrease waste and increase efficiency by ordering products as per demand and never prematurely. Conclusion: Inventory Planning with InventoryLogIQ A retail business that makes smart inventory decisions in advance will almost certainly succeed. The main problem is monitoring bulk orders while carefully monitoring data and upcoming inventory trends. Without adequate inventory planning, substantial consequences might arise, ranging from increased transportation costs to catastrophic stockouts and shipping order delays. InventoryLogIQ can help you save money on inventory planning. It provides the tools, experience and support you need to make smarter business decisions and grow your organization faster, from inventory planning to real-time inventory management. Be a part of our sophisticated Warehousing Management System by partnering with InventoryLogIQ while maintaining control and visibility over your multi-location inventory across the nation and supply chain. With our inventory planning platform, brands experience 80%+ regional utilization & 40% lower holding costs. Inventory LogIQ achieves this by utilizing the following: AI-based Algorithms for Product Bundling Recommendations: This generates rich insights in the form of minimalistic reports, which help businesses identify the product bundling strategy aimed at improving the sales of non-moving products and free-up working capital locked in slow-moving inventory. Ultimately, this helps in inventory liquidation and reduction in storage space required.Product Segmentation Tool & Planning Engine: This allows you to segregate your SKUs as per their performance and helps you enhance your product-level sell-through focus. Furthermore, with automated replenishment triggers, you will never miss out on any sale by stocking the right SKU at the right time.Sophisticated Fulfillment Network Planner: Our network planning engine analyses the regional buying patterns and enables you to optimize your fulfillment network so that you can place inventory closest to your customers and unlock speedy deliveries for a significantly larger share of regional demand. Inventory planning FAQs How to develop an inventory plan?To develop an inventory plan, understand your reorder points, the time taken to order products and any potential impediments. When you have a plan in place to receive essential goods fast if needed, set up a broad refill schedule for things you'll use frequently. What are the 3 primary inventory management techniques?They are:The pull strategyThe push strategyThe just in time (JIT) strategy How does InventoryLogIQ help in inventory planning?InventoryLogIQ, an inventory planner helps in smart inventory placement using an ML-based prediction engine. It helps eCommerce & D2C brands to forecast inventory & optimize stocks for warehouses by enhancing regional utilization. What is an inventory strategy?An inventory strategy is a method for ordering, managing and processing products in your warehouse on a daily basis. Inventory management is an easy task for a small business but as your volume grows, you'll require a strategy. How is Excel useful for inventory planning?Excel spreadsheets can be an intelligent approach to start tracking inventory management when you're short on resources. It's also an easy-to-use solution for getting you up and running with a simple method to manage inventory. What is the difference between inventory and stock?Inventory contains both finished goods and components that make up a finished product, while stock is the supply of finished goods that are ready for sale. To put it another way, all inventory is in stock but not all stock is inventory.

August 26, 2022

What is ABC Analysis For Inventory Management? Benefits, Limitations and Best Practices to Effectively Carry Out ABC Analysis in 2022

What is ABC Analysis For Inventory Management? Benefits, Limitations and Best Practices to Effectively Carry Out ABC Analysis in 2022

Recent studies show that inventories hold over $1.1 trillion in cash, or 7% of the U.S. GDP. This indicates that more money than you could make from sales is sitting in your warehouse.  The majority of businesses today struggle with adequately managing their inventory. After all, when juggling a variety of consumer requests, keeping the ideal inventory quantity can be challenging. However, you can manage your goods effectively with a robust inventory control system. Inventory management helps companies have the right amount of merchandise on hand. As a result, many sectors, including eCommerce, manufacturing, logistics, retail, and other enterprises that deal with inventory, place it at the top of their priority lists. ABC analysis is one of those several inventory control strategies. What is ABC Analysis For Inventory Management? Inventory management teams utilise ABC inventory analysis to divide their stock into three groups, A, B, and C, according to the "value" or "importance" of each group to their particular organisation. Managers can direct their attention and resources toward controlling stock that is more important by using the very straightforward ABC analysis. To ensure they carry the ideal levels of the appropriate goods, they may also modify their inventory control procedures for each category. A system for controlling inventory is utilised in the ABC method of inventory control; this system is used for materials and throughout the distribution management. It is often referred to as SIC or selective inventory control. In the ABC analysis approach, inventory is split into three groups, A, B, and C, in order of decreasing value. The things in category A are the most valuable, followed by those in class B, which are less valuable than A and those in category C, which are the least useful. Management and control of the inventory are essential for a firm. They assist in keeping their expenses in check. The ABC analysis enables management to concentrate on the highest value things (the A-items) rather than the numerous low-value products (the B-items), which helps the firm regulate inventory. Read our blog on inventory accuracy to understand how to achieve high inventory accuracy for operational efficiency in 2022. How Does the Pareto Principle Relate to ABC Analysis? According to the Pareto principle, commonly referred to as the 80/20 rule, 80% of results are brought about by 20% of the inputs. Vilfredo Pareto, an economist from Italy, saw that just 20% of the pea pods he planted produced the majority of the peas in his garden, which led him to develop the concept that bears his name. More crucially, he discovered that 20% of the population in Italy held 80% of the country's land, which led him to detect a similar ratio. Since then, the Pareto principle has altered how economics is researched and how we comprehend how the world's resources are distributed. The Pareto Principle, which states that typically 20% of an organization's inventory accounts for 80% of its value, is the basis of ABC inventory analysis. Using this knowledge, leaders can make well-informed decisions.  The application of Pareto's Principle to rank and prioritise particular inventories over others is one way it contributes to ABC analysis. By organising your goods into three categories, ABC analysis simplifies inventory analysis and empowers you to make more strategic choices. ABC Classification of Inventory The ABC analysis is one of the most popular inventory management techniques. Based on the degree of value any item has within a firm, the ABC analysis divides it into three categories (A, B, and C). Businesses may better prioritise their inventory, streamline processes, and make informed decisions by classifying their inventory using ABC analysis.  The ABC classification of inventory, as the name implies, divides inventory into three main categories: Segment A- Goods falling under category A are the most valuable and essential items. About 20% of all products comprise segment A products, which generate 80% of your company's income. It is regarded as a niche market with few products but high sales. Segment B- Products in category B are somewhat more expensive than those in segment B. However, it controls 30% of the product market and generates 15% of the income. In addition, although more items are in this category, they are less valuable. Segment C- Products falling under category C are numerous but less effective at bringing in money. Comparatively to categories A and B, sector C has the highest stock ownership at 50% but only produces 5% of the revenue. Why Utilize ABC Method of Inventory Control? Despite having many stock-keeping units (SKUs), most enterprises have not been able to grow or expand their businesses considerably. Businesses must deal with a wide range of additional inventory management difficulties. Lack of stock information, a poor management system, trouble managing personnel, a lack of space, and other issues might be problems. This issue is resolved through ABC analysis. It can help businesses optimise and streamline their inventory management. Let's examine the 5 benefits of ABC analysis in inventory management. Analyze Industry's Demand for a Product After manufacture, each product passes through four stages: dispatch, growth, development, and decline. After a certain point, the product's demand in the market starts to decline as it reaches its actual value. You might refer to it as a product's life expectancy rate. Additionally, a product's lifespan is determined by the customer's demands. ABC analysis aids businesses in determining client wants. Businesses often overestimate the product demand and end up stocking up on excess. ABC analysis ensures that you know what your customers desire so you can ban that dark room from your firm. Due to this, you will be able to efficiently and successfully manage your inventory. You will only place orders for what your consumers desire, neither more nor fewer than is necessary. It's essential to remember that if a product's demand suddenly increases on the market, the product's decline will be further postponed. Enables Supplier Negotiations Using ABC analysis helps negotiate a reasonable price for a product with a supplier. Watch to discover how. For instance, if you are negotiating with a supplier for a product in the A category, you are aware that you must make the most significant investment possible since it brings in the most money for your business. You can entice the provider with any additional benefits from your end if they are reluctant to make you a reasonable offer or accept your offer. Perhaps a form of agreement that you will purchase the following shipment of items from the same vendor. Consequently, you'll get a reasonable price that suits your needs and save more money on items in the A category, resulting in more advantages. Enhanced Customer Service When you don't know the precise amount of inventory you need, you may overstock on items that won't even be useful to you. Then, instead of stocking up on things your clients might want, you fill up on useless items. You may utilise ABC analysis to determine precisely what your consumers desire or are seeking. Consequently, you will be able to meet client needs and grow your business. As a result, you'll spend less on things you don't need and concentrate on buying something that will make you money. Additionally, you will cut down on inventory expenditures that you could be squandering on products that don't appeal to your target market. Goods Manufacturing Manufacturers may enhance their cycle of stock renewal by using ABC analysis. It enables them to make things based on their yearly cost rather than randomly. As we have already explained, what frequently occurs is that we often anticipate demand. This presumption causes the manufacture of unnecessary commodities stocked in the warehouse where they will sit for the longest. Consequently, your items are ruined while in the warehouse, which is the greatest nightmare any business owner can have. Manufacturers may use ABC analysis to determine the value of their items so they can produce just those in high demand and less those in low demand. Warehouse and Supply Chain Management The ABC analysis inventory control method is used to enhance a company's stock count cycle. For instance, commodities in Category A of the ABC analysis are tallied every three months, those in Category B are counted every two years, and category C products are only computed once a year. Doing this means you no longer entirely disregard your inventory status or waste too much time monitoring it. When you have A category items that bring in excellent revenue, you want to regularly check to ensure they are always in stock, if not in plenty. You frequently refuse to concentrate on the condition/status of your warehouse in terms of stocks when you don't know what your items are worth or imagine they are worth. This might result in goods running out or stock waste. These are some of the powerful advantages of ABC analysis that business owners shouldn't give up. Limitations of ABC Analysis For Inventory Management. ABC analysis is not a one-size-fits-all inventory management solution despite its inventory management and maintenance advantages. The usage of an ABC analysis is impacted by the unique consumer demand patterns, classifications, systems, and difficulties each firm faces. The focus on the financial worth of inventory and the sizeable amount of time and discipline required to use the approach are two drawbacks of ABC analysis. Here are some more difficulties: Parameter Instability According to ABC analysis, managers frequently allocate up to 50% of items to a new category every quarter or year. Since organisations sometimes don't become aware of the changes until there is a demand issue, the necessity to reevaluate might waste time and harm customer happiness. Limited Pattern Consideration The traditional ABC approach will not consider elements like new product launches or seasonality. For instance, the lack of a prior customer base may explain a new product's low sales volume. When demand is changing or unclear, ABC analysis will produce inventory inefficiencies since it provides a relatively static view of demand. Low Information Extraction Information from the ABC class might not have all the statistics or detail required to make educated decisions. High Resource Consumption An unpleasant outcome of ABC analysis is bikeshedding, which is the practice of giving excessive weight to unimportant matters. Staff members may add their ideas or seek variations since ABC analysis is simple to understand, turning it into a resource-intensive process rather than a time-saving instrument. Value Blindness ABC analysis bases a product's essential judgement on its sales volume or usage frequency, yet some goods may defy this paradigm. A retail display item could, for instance, sell very little yet draw a lot of consumers (who will buy other things) because of its novelty. In the aerospace industry, a particular component for a plane could not be utilised frequently and have low market value, yet it might provide a crucial safety role. System Incompatibility ABC inventory analysis does not adhere to widely accepted accounting rules (GAAP) and contradicts conventional costing methods. Running numerous costing systems will increase labour expenses and inefficiencies. Issues Of Under or Oversupply There is a chance of running out of Class B or C products since the ABC analysis looks at dollar values rather than the volume that moves through inventories. However, the inverse can also take place. If you repeatedly order low-class things without reviewing them, you can end up with excesses that build up in your inventory. Loss Risk Just because B and C products aren't as valuable as Class A ones don't imply they are worthless. One of the ABC analysis's shortcomings is that surplus stocks are constantly at risk of deterioration or damage. As a result, routinely uncounted or unmonitored merchandise might be stolen. Mandatory Standardization The ABC technique can only be effective if all components are subject to mandatory naming, storing, rating, and monitoring standards.  Arbitrary Categorization Classifying items relies on the manager's expert judgement without established parameters or consensus criteria for each group. As a result, this method may be entirely subjective. Business Restrictions ABC analysis is not helpful for businesses with an equal yearly consumption value of inventory items by type. For example, a firm that offers identical versions of goods like candies, nails, or socks might be unable to arrange stock according to the Pareto Principle. High Resource Consumption Employing more people or purchasing specialised equipment will be necessary for businesses with many inventory products to manage their inventory using ABC classification. How is the ABC Analysis For Inventory Management Carried Out?  The most straightforward strategy to adopt ABC inventory management is determining if it will work for your company first. By addressing insightful queries, avoid making a lot of assumptions. Make all essential preparations for a smoother execution as soon as you decide to move forward. 5 steps to carry out ABC analysis for inventory management are as follows: Examine Your Present Setup To use ABC analysis, you must determine whether your present system can function well under the ABC methodology. For example, you may need to redesign your whole inventory management system if your existing setup does not enable you to give some things more priority than others. This may be costly, time-consuming, and generally annoying. You must ensure that your inventory cost and consumer demand data are correct before you can begin employing the ABC method for inventory control. This is because cost and demand are crucial factors in defining each item's utilisation value; without this information, you won't be able to differentiate between which things to put in category A and which to put in category C. Determine Values It's time to begin determining how each item benefits your company. This is how: 1. Select the time frame for your study. You can only look at sales for the most recent month or quarter. Still, many organisations choose to utilise annual consumption value, which examines the volume and cost of goods sold throughout the previous year. 2. To get the consumption value of each item, multiply the quantity sold by the cost per unit. Units sold times price per item equals usage value. 3. Add up each product's unique consumption numbers to get the worth of your overall inventory. Product utilisation value from item 1 plus item 2 equals total inventory value. 4. Arrange the items (in your Excel spreadsheet or other application) according to the highest utilisation value to the lowest usage value. 5. Divide the product's inventory value from the overall inventory value, then multiply the result by 100 to determine each item's cumulative worth. You should now know what portion of the cost of your entire inventory may be allocated to each item. (Product Inventory Value / Total Inventory Value) x 100 is the cumulative value. Remember that while most inventory planning allows for manual calculation of these values, any inventory management software that supports ABC analysis ought to be able to calculate these values for you automatically. Determine The Parameters The Pareto principle, which essentially states that the bulk of any effect arises from a relatively small share of the causes, forms the foundation of ABC analysis. When applied to ABC analysis, this suggests that the majority of the overall consumption value of your inventory is assigned to A goods. At the same time, B and C items account for a smaller portion of that value. The specific amount of inventory items and consumption value allotted to each category is up to you. Your values should, however, typically fall between the following ranges: Items A comprise 10%–20% of your inventory and represent 60%–80% of your yearly consumption value. B products, which makeup 20%–30% of your inventory and represent 20%–30% of your yearly consumption value C goods make up 50%–70% of your inventory and 5%–15% of your total sales. Arrange Inventory Items You may organise your stock goods into groups based on the criteria you predetermined in advance if you know how much each item in your catalogue contributes to the overall utilisation value of your company. So, if you were to examine sales volume over the previous year, you would group the things that accounted for the largest share of your yearly consumption value into category A. Until you reach the value threshold for category A (60–80% of your total value annual consumption), you will keep adding things to category A. After that, you would keep adding stuff to category B until you reached 20%–30% of your yearly utilisation value. Finally, the objects that are left would all belong in category C. Measure and Re-Assess After following the steps mentioned above, ABC analysis is formally integrated into your inventory management system. However, it doesn't end there. Your items will inevitably evolve. A vendor in the supply chain can decide to transport your products at a higher cost overnight. For some products, your manufacturer could reduce the unit price. The demand may increase or decrease. Your goods' proportion of the value of your entire inventory will vary due to these adjustments; therefore, you'll need to modify your ABC categorization to reflect those changes. However, the last thing you want to do is use an old categorization to classify an item that is currently an A-level item as a C item. Therefore, be careful to review your ABC method periodically. Best Practices and The Most Effective Approach For Applying ABC Inventory Analysis Applying ABC method of inventory control consistently and reviewing it frequently yields the most outstanding results. The following are some of the best practices to follow while doing ABC analysis in your company: Categorise Inventory Items in a Simple Way It is essential to keep your ABC analysis categories straightforward to simplify your inventory management. Your teams should have no trouble identifying which goods fall under a particular category immediately. For instance, popular categorization techniques include using the product's cost or frequency of sales. Specify Classification-Based Labour Levels A labour level, or the number of hours spent working on a particular inventory class, should be allocated to each categorization. Naturally, higher labour levels should be assigned to a classification if it has a more excellent value or influence on the company. Review Each Class Separately Each categorization should be evaluated following the guidelines established by the original ABC analysis. This entails a unique set of KPIs, performance evaluations, and a strategy for reordering or offloading any excess inventory. Review The Categories The initial ABC study considered several product categories and the company's current state. It's crucial to review the existing categories and, if required, reclassify when inventories and markets change. Consider sales changes by product and class, new industry rivals, and consumer trends. Conclusion A company may effectively assess the worth of its products by using an ABC analysis. Large volumes of inventory may be managed with this straightforward method, which also determines how many resources should be devoted to each categorization to maximise profits. The inventory management procedure may be made even more efficient by using specialised software. For example, a platform for inventory management may gather vital product data, monitor specific product levels in real-time, and boost order processing effectiveness. Inventory LogIQ is one of advanced inventory planning, and management tools for small, medium and enterprise eCommerce businesses. It enables businesses to leverage hard data and rich insights to streamline the inventory planning operations. A brainchild of WareIQ, which is backed by leading global investors includingY Combinator, Funders Club, Flexport, Pioneer Fund, Soma Capital, and Emles Venture Partner, Inventory LogIQ has intelligent inventory planning capabilities that allow you to manage any change in the market, experience a new & better way of managing your inventory operations.  ABC Analysis For Inventory Management FAQs (Frequently Asked Questions) What is the inventory management application of ABC analysis?The value of inventory items is calculated using the inventory management approach of ABC analysis based on their significance to the company. Inventory managers classify things according to how ABC prioritises them based on demand, cost, and risk data What does inventory ABC classification entail?Inventory management teams divide stock items into three categories depending on their "value" or "importance" to their organisation using the ABC inventory analysis (also known as ABC inventory classification) approach. What is the primary goal of an ABC analysis?The goal of ABC Analysis is to assist organisations in deciding how to allocate resources to maximise outcomes. Items that belong to the same category should be analysed using ABC analysis (inventory, customers, documents, etc.)

August 15, 2022

What is Inventory Aging? How to Calculate Average Inventory Age and Prepare Inventory Aging Report in 2022?

What is Inventory Aging? How to Calculate Average Inventory Age and Prepare Inventory Aging Report in 2022?

Running a retail business can never be more fun when your products are flying off the shelves and you have enough stock on hand to precisely satisfy every request. What happens, though, when your SKUs begin to gather dust? Stagnant or excessive inventory can result in significant problems, such as rising storage costs and reducing profit margins. However, considering inventory aging is a practical way to avoid the pitfalls of unsold inventory and maintain your cash flow because it provides outstanding visibility into your stock and enables you to make inventory adjustments as necessary. As a result, aging inventory is a popular measure among product-based companies.  The potential for expansion in online retail is limitless. However, it's not always as simple as vendors assume to get merchandise off digital shelves and into the hands of your buyers. Because, in reality, e-commerce is a fast-moving industry. Additionally, because of inventory distortion, businesses currently lose a staggering $1.1 trillion annually as their inventory ages minute by minute.  The good news is that you can easily avoid many of your most considerable stock-related problems if you understand what inventory aging is and how to calculate it. This blog will introduce you to the fundamentals of inventory aging and essential indicators for keeping ideal stock levels and provide helpful advice for maximizing sales and inventory expenditures. Let's begin! What is Inventory Aging? The phrase " inventory aging " refers to stocks that hardly move, products that haven't sold rapidly, or at total retail value. Retailers monitor their aging inventory because, after a certain amount of time, if an item hasn't sold, they may need to price it down to get rid of it and make room for new inventory. Generally, a brand's potential for profitability increases with how quickly it can exhaust its inventory. The optimal inventory age, according to theory, might be as little as a week, a month, or even 90 days after the supplier's delivery date. But on the other hand, most businesses see products that remain unsold for more than 180 days or six months as dead stock. Negative Consequences of Inventory Aging Accepting the reality that certain things aren't selling pays off, as harsh as it may sound. However, if you don't, you'll still have to deal with inventory aging, which has a variety of adverse effects, including: Your Inventory Might Expire  Your inventory probably has a time limit on how long it may be used. You should be much more cautious if you provide meals or items with a food component. You won't be able to make any money from your inventory if it runs empty. Your Warehouse Will Run Out Of Space Your warehouse will have less room to hold new products with a more aged inventory. Therefore, you will need to purchase extra storage or reallocate your current inventory to store more products. Your overall production costs will thus rise due to the rising facility charges. Your Outdated Inventory Will Need to Be Marked Down It will be challenging to sell your merchandise the longer it sits in the warehouse. As a result, you could choose to mark it down and sell it for less than its total retail value. If you are prosperous enough, you might be able to break even by selling it for what you paid for it. However, in most situations, outdated inventory might cause a loss for the providers. Increased Expenses For Quality Maintenance These expenses include warranty claims, customer service, and repairs. Extra expenses are unavoidable to guarantee a superior client experience without the knowledge provided by inventory aging data. High storage costs Your storage and utility costs will increase as your supplies get older. Examining inventory aging might aid in locating slow-moving products if more storage space is needed. In addition, you now have the chance to make room for more quickly moving goods that may have been stored there. Poor Inventory Management Managing your inventory well enables you to keep an eye on the distribution, management, and storage phases of the life cycle of your supplies. Stocks become more susceptible to depreciation if no one monitors inventory aging throughout that cycle. What are the Benefits of Monitoring Inventory Aging in 2022? When management teams periodically review inventory and keep an eye on how long things are left in the warehouse, they can act promptly to protect their brand's bottom line. For instance, the business might plan fresh marketing initiatives to boost sales if a product is slow-moving. Knowing how old your inventory is can help you make wise purchasing decisions and safeguard your company's financial health.  Calculating average inventory age and preparing inventory aging reports has further advantages, which include: Reduce Unnecessary Warehouse Expenses Carrying costs for excess goods left in warehouse facilities may apply, mainly if the business leases storage space from outside sources. Additionally, the items occupy precious warehouse space that might be utilized for products with a higher profit margin. Sales and potential clients may be lost as a result of this. Business teams may quickly remove out-of-date products from their warehouse or storerooms using dated inventory reports to detect them. Ensure High-Quality Inventory Goods  Offering high-end, trendy products is the primary objective of many businesses. For instance, supermarket companies must ensure their perishable products are sold before they go wrong, and clothing stores want to sell in-vogue and in-season items. Managers may make sure that their items are up to par by understanding the popularity and calibre of their offerings using aging reports. Avoid Overstocking Businesses should manage their purchase and replenishment strategies to avoid overstocking by identifying which inventory items are ineffective. As a result, they can avoid paying for unnecessary warehousing expenses and guarantee that resources are dedicated to profitable merchandise. Provides Information About Consumer Demand Understanding the age of your product might help you better understand client demand. Additionally, you may utilize these data to create more precise inventory planning based on what customers truly want (or don't want). Take the case of an SKU that sells quickly. That indicates a high level of demand, and to prevent a stockout, you might wish to acquire a little bit more safety stock. However, demand is minimal if you don't sell a lot of an SKU. As a result, you don't want to purchase a tonne more of that item to have it go out of stock. Identifies Unsellable and Slow Moving Products When you routinely run an aging inventory report, you can determine which goods have a slow turnover rate and aren't selling. This allows you to head off the issue before those goods become dead stock by offering a discount on the SKU, including it in product bundles, or altogether rebranding the out-of-date products. Enables Making Well-Informed Decisions Knowing which of your products are difficult to sell or slow-moving gives you the power to decide how to raise demand for those products (and subsequently increase your revenue). This might entail reaching out to a new market with those sluggish sellers, combining them with more well-liked SKUs, or lowering their retail price. What is an Inventory Aging Report? A financial report calculates the typical number of days merchandise remains unsold in your warehouse and is termed an inventory aging report (also known as an aged stock report). This analysis may help brands discover slower-moving SKUs so they can apply tactics to boost inventory turnover ratio and stop certain products from going out of stock. Aged stock reports typically consist of the following simple information: Numerous SKUsUnits available for each SKUThe average inventory age of products in the warehouse Using spreadsheets and regular inventory checks, you may produce these reports manually. However, this method is laborious, time-consuming, and prone to mistakes made by humans. Therefore, most retail firms employ inventory management software to automate these processes and create these data in real-time. How to Calculate Average Inventory Age? Calculating the average inventory age is a crucial component of inventory management to identify inventory inefficiencies and lost earnings. You must know your average inventory cost, cost of goods sold (COGS), and inventory turnover ratio (ITR) to calculate the inventory age for your product listings. Know The Average Cost of Your Inventory The volume (or worth) of a company's inventory during a specific period is estimated by average inventory. An average cost estimate evens out these unexpected jumps in either way. It provides a reliable indicator of inventory valuation, smooth if inventory levels might vary dramatically based on seasonality when shipments are received and other factors. Use the following calculation to get your average inventory cost: Average Inventory Cost = Annual Cost of Goods Sold ÷ Total Ending Inventory For eCommerce businesses of all sizes, having a firm handle on these figures may be powerful since they show if the volume of goods you're holding is truly hurting your bottom line. Be Aware of Your Cost of Goods Sold The cost of creating the commodities a company or brand sells is the cost of goods sold. The COGS amount includes costs directly associated with manufacturing (such as labour and raw materials), but it excludes several secondary expenses (like overhead and marketing). The following is the COGS formula: Cost of Goods Sold = (Beginning Inventory + Purchases During Period) – Ending inventory. In this case, the quantity left over from the prior period is considered the starting inventory (month, quarter, etc.). Purchases throughout the Period, as the name implies, indicate the cost of the items you bought within the specified accounting period. Everything that didn't sell within that same period makes up ending inventory. Must Be Aware of Your Inventory Turnover Ratio The inventory turnover ratio measures how frequently a business sold and replaced its inventory over a certain period (like over a year, for example). Making better-educated judgments about pricing, marketing, production, and acquiring new stock may benefit eCommerce enterprises. The inventory turnover formula is Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory During Period.  A slower ratio usually denotes high sales or insufficient inventory levels, whereas a slower ratio may indicate weak sales or significant excess inventory. In either case, ITR is a crucial tool for identifying potential regions for inventory growth. Multiply by the Number of days The average number of days it takes to sell out specific SKUs is reflected in the age of your inventory. As a result, analysts typically use this measure to evaluate how well a company's sales are doing. As a result, the average age of the stock is occasionally referred to by the term "day sales in inventory" (DSI). ​ Use the following equation to determine the average inventory age for your products. Average Inventory Age = Average Inventory Cost ÷ Cost of Goods Sold] x 365 In general, it is advised that merchants verify this number using other inventory measurements (such as gross profit margin). Example For Calculating Average Inventory Age For instance, a company's average inventory age would be 146 days if its COGS for that inventory were $500,000 and its average inventory cost was $200,000. ($200,000 average inventory cost / $500,000 COGS) x 365 days is 146 days for the average inventory age. The longer it takes for a product to sell through and the greater your holding costs will be, the older your typical inventory is on average. As a result, the demand will be more robust, and you will need to be more attentive about placing a reorder in time to prevent a stockout the lower this number is. How To Detect Aging Inventory? Keeping outdated inventory is a significant expenditure for your company, and neglecting it may worsen matters. Here are four methods for maximizing inventory control by identifying your aging goods. Manually Tracking Inventory You must write down every stock movement when using a manual inventory system. The delivery of the supplier to the point of sale, together with any subsequent transfers, is where the process begins. The average age of the inventory may then be calculated based on your observations of their life cycle. The least expensive option on this list is manual inventory aging tracking. However, this approach is ineffective, mainly if you deal with hundreds of daily transactions. Additionally, it takes up too much staff time that might be used for other, more crucial responsibilities. First-In, First-Out (FIFO) Approach The acronym FIFO, which means first in, first out, says it all: the first things placed in the storerooms are the ones that are made available for purchase first. Therefore, it would help if you recorded each item's unique purchase dates using this storage and recording technique. In this manner, you may identify and eliminate obsolete inventory that doesn't move inside the standard time frame. For supermarkets that offer perishable goods with expiration dates, FIFO is a typical strategy. But due to its complexity, maintaining it without AI assistance is challenging. Spreadsheets Spreadsheets, especially MS Excel, are well-known for helping small businesses keep track of the age of their inventory. The average age of inventory is determined using a procedure that includes manual data entry and computerized computing. But if your personnel has the methodology and navigational skills necessary to guarantee the report's accuracy, this won't work. This method has certain limitations, one of which is that it cannot give the inventory team real-world data. In addition, this task is arduous and error-prone without automation. Another employee could place a fresh order, resulting in surplus stock if, for example, one person gets the cargo but does not update the sheet. Software for Automated Inventory Management All the tasks mentioned earlier are carried out by inventory management software with the added benefit of automation. With it, you can keep track of everything and instantly extract inventory aging data. Moreover, since the system adjusts balances continuously, it is hard to ignore the objects that move slowly. When utilising the software, you may quickly obtain a list of quick and slow movers. Additionally, it immediately removes your aging inventory from your next replenishment, enhancing the long-term scalability of your company. How to Avoid Inventory Aging in 2022? Knowing the average age of your inventory may help business owners see underperforming SKUs, estimate client demand more accurately, and spend less money on incorrect goods. But only if they use that knowledge to decrease their obsolete inventory. Here's how to go about it. Enhance Collaboration Between Procurement and Warehouse You can keep an eye on whatever SKUs you have too much of or aren't selling rapidly with inventory management KPIs like inventory aging. And you don't keep adding to your holding expenses by buying more of those things. However, it would be best to let your buying and warehouse management personnel know about this choice. In this method, your buying department won't unintentionally place another order for that item number. Additionally, your warehouse management staff is aware that no additional inventory is anticipated, so they may utilize that space for other items (this small gesture can seriously improve your fulfilment relationships). Conduct Routine Inventory Audits Inventory audits regularly ensure that your stock records reflect what is in your warehouse. This increases inventory accuracy and clarifies which goods aren't moving (leading to better inventory control). You will then know which SKUs sell well and which do not. Following that, you may choose how to decrease (or remove) the low-demand inventory by holding a marketing event to boost demand. Examine The Causes Of The Low Sales Volumes SKUs that aren't selling typically have a good cause behind them. Seasonality, Website positioning, or shifting consumer patterns are common culprits. You may improve the efficiency of your inventory management by knowing the cause. For instance, you may alter your purchase choices or marketing initiatives to eliminate the extra old inventory. Improve Demand Forecasting Accuracy Inventory aging is significantly impacted by inaccurate inventory forecasting, particularly when it is predicted that a slow-moving SKU would be more in demand than it is. However, you may pick better products when you develop operational strategies utilizing synchronized, real-time data. Keep an eye on your inventory all the time. As a result, you must change your inventory strategy as soon as the demand for your products falls. You won't need to make further orders for things that won't sell if you do it this way. Conclusion Inventory aging is an issue that is sometimes unavoidable, particularly for large businesses that have a lot of warehouses and a lot of inventory. However, it could be challenging to accurately track all the inventory on hand and forecast the costs associated with acquiring additional inventory; therefore, whether someone is experiencing trouble managing already-aged inventory or is attempting to make predictions about the possible amounts of stock that may age, automation tools and inventory management software come in handy. Inventory LogIQ Can Help You Prevent Aged Inventory Scenarios Want to get even more advantageous than getting rid of old stock? Avoid overstocking SKUs with weak sales in the first place. This presents specific difficulties for retail companies. But fortunately, Inventory LogIQ can assist! Inventory LogIQ's inventory optimization solutions enable you to work more intelligently and generate more sales.  Accurate demand projections based on current inventory levels and historical trends help you avoid being trapped with SKUs that don't sell quickly. Sustainable operational strategies to achieve your boldest sales targets (with the power to effortlessly pivot when demand shifts). Optimized POs with automated replenishment warnings help you avoid running low on inventory. Inventory LogIQ, a source of accurate inventory information, enables you to see which goods are selling (and which are ageing) and take appropriate action. Frequently Asked Questions What is inventory aging analysis?How long merchandise has been sitting unused in your warehouse is determined through an inventory aging analysis. Using this research, brands can pinpoint slower-moving SKUs and put measures in place to boost inventory turnover and stop such products from becoming expensive dead stock. Why is Inventory aging a problem?Inventory that is too old is problematic since it increases the cost of storage the longer it sits. As a result of these carrying costs, the product's margins are reduced, and if it remains on the market for a long enough time, it may become unprofitable. Not to add that an item's likelihood of becoming outdated inventory increases the longer it remains unsold. How can inventory aging be reduced?Retail brands may get rid of old inventory by giving it a discount, grouping it with bestsellers, or (if all else fails) giving the extra stock to a good cause. However, by doing routine inventory audits, looking into demand trends, and refining their demand projections, they may prevent having outdated stock in the first place. How often should I provide inventory age reporting?The average age of inventory is typically calculated over the course of a single calendar year. One age analysis every year is largely the norm among contemporary eCommerce merchants, while some businesses may opt to evaluate this number more regularly or less frequently. What should be the standard average inventory age?In general, a good inventory age is between 60 and 90 days after the receiving date. Inventory that is older than six months (180 days) is often regarded as dead stock and should be prioritised before new items are bought; however, a shorter time period may even be desirable. How should I handle aging stock?If you discover that you have a lot of aging inventory, one approach to deal with this issue is to give the 'old' things a significant discount. Alternately, you can upsell or combine such goods in an effort to get rid of them permanently.

August 13, 2022

What is Inventory Management Software? 10 Best Inventory Management Softwares to Streamline eCommerce Fulfillment in 2022

What is Inventory Management Software? 10 Best Inventory Management Softwares to Streamline eCommerce Fulfillment in 2022

Research that has been conducted recently suggests that India will have more eCommerce users by 2025 than the total population of the United States. The Indian eCommerce market is predicted to develop at a 23% compound annual growth rate (CAGR), reaching half a billion dollars by the end of this decade. Bernstein, a private wealth management firm, reports that India’s internet buyers will number 330 million by 2025.  For thriving small and medium eCommerce businesses, the challenge is being unable to fulfill orders because of inventory level miscalculations and mismanagement. For SMBs, keeping track of multiple different processes can get difficult, if they use outdated technology such as maintaining spreadsheets. Tying data about inventory levels into all of the other data that a business measures requires a dedicated software solution called inventory management software. Inventory software has become a very important tool to stay relevant in the game. This highly efficient software has started a revolution in the eCommerce marketplace. Inventory management software helps sellers to track the exact location of inventory and measure the levels of available products in real-time. Deciding on the right inventory management apps for your business can be difficult as sellers need to strike a balance between the required features and the most cost-effective pricing. What is Inventory Management Software? Inventory management is the term used for ensuring the adequate amount of stock levels that need to be maintained to avoid product shortages in a business. Businesses need to manage their inventory around the clock according to their demand and sales. In the context of online selling, businesses need to have an easy and effective inventory management tool for facilitating and streamlining their day-to-day inventory processes. Inventory management software encompasses much more than just monitoring inventory levels. It helps organizations streamline inventory management and organize order fulfillment operations effectively. Inventory management apps help businesses optimize their inventory and improve supply chain efficiency. Advanced features of inventory software provide real-time inventory tracking, control, and auditing functions. A good inventory management software system includes the following: Inventory Details It is a count of the total quantity of a specific product that is in stock at multiple locations. When a seller checks for the item in their inventory management software, it will prominently display details such as the quantity, the duration from when it has been in storage, expiry date, etc. This also helps to keep a check on the inventory and avoid situations of dead stock lying in the warehouse. Order Records This is an authorized record of the sale or purchase of items from a specific merchant/manufacturer or from customers. Within inventory management software, a seller can place sales orders and/or purchase orders and prevent overstocking or understocking of goods. Product Identification Inventory management software helps a seller to instantly and uniquely identify each item. Within the software’s dynamic inventory feature, a seller can identify products using barcodes, names, SKUs, or custom fields as per business requirements. Who Uses Inventory Management Software? Offline Retailers In order to categorize products, offline retailers import item barcodes and manage item pricing points across their inventory. For this, retailers employ inventory control software. Managing product levels give retailers insight into which products are in great demand. These analytics alert shops to autofill orders on high-demand items, ensuring that the product is always available. In addition, if a product is overstocked in another retail location, the software can advise stock transfers so that each location's inventory is more evenly distributed. Read our blog on inventory vs stock to under a few differences & also how to manage both efficiently. Wholesalers Inventory software is used by wholesalers who use online distribution channels to handle bulk inventory, manage suppliers and customers, and automate fulfillment processes. Kitting, sales order and warehouse fulfillment, lot tracking for perishable products, and bin management are all aspects that wholesalers commonly employ. Manufacturers In the manufacturing industry, inventory control is a crucial element for day-to-day operations. When a customer purchases a large quantity of a product, the makers must determine if they have sufficient raw materials on hand to fulfill the order. These orders are made up of a range of components that the manufacturer must combine to make a single finished product. To execute an order, the manufacturer may need to buy more stock from several other sources. Earlier, manufacturers would use spreadsheets to keep track of inventory, which was a crude approach that was also prone to error. However, with specialized inventory management software, each item has a barcode that is linked to the software. The manufacturer can thus correctly analyze if they have adequate material on hand, track orders from suppliers, and complete orders more quickly. eCommerce Sellers Businesses that sell products on online marketplaces need to keep track of their inventory. Returns are handled by inventory software, which also automates restocking, shipping, and virtual stock inventory for eCommerce sellers. How do Inventory Management Systems Work? Inventory Management Systems work by organizing all of the store's goods in one virtual location and providing relevant information to customers and managers. Products are at the center of any inventory management system. Size, cost, pricing, number of units, and other characteristics accurately describe products. Product owners, buyers, and even vendors use these traits to make informed decisions. Some attributes, such as IDs and names, are static and aid in communicating the product's identity. Inventory management is concerned with determining stock levels and the location in warehouses. Inventory management apps track the flow of products from suppliers to customers through the manufacturing and order fulfillment process. Inventory management at the warehouse keeps track of stock receipts, picking, packing, and shipment. For growing businesses, other variables such as cost, price, and quantity are dynamic and constantly evolve. Inventory management is a way of efficiently arranging all of this product data in order to accurately depict it. Features That an Inventory Management Software Must Have Real-Time Inventory Tracking To cut expenses and avoid fraud, inventory tracking should be in place to check available items in stock and where they are stored across warehouses, in real-time. The most significant feature of inventory management software is that it allows for proper inventory control through inventory tracking. The inventory management software should provide sellers with extensive real-time visibility into essential supply chain management components. This will assist them in avoiding stockouts, placing automatic reorders, and receiving automatic stock updates when sales occur. Barcoding Software Integration The barcode technique is the most prevalent method of inventory tabulation. Businesses can use barcode technology to enhance accuracy and speed while lowering costs by integrating barcode software into their inventory management apps and acquiring widely available barcode scanners. A barcode scanner is a device that reads printed barcodes and converts them into alphanumeric characters. The scanner sends the information to a computer database, where it is saved, using barcoding software. Each number corresponds to a distinct item in the inventory and scanning the bars provides access to a wealth of information about SKUs such as price, stock on hand, and description. Integrating barcode scanning software into inventory management can be extremely beneficial. This streamlines the inventory tracking, stock-taking, and stock-organization processes, making them considerably more efficient. Businesses can arrange inventory or asset identifiers automatically to make tracking easier. It reassures sellers that they have the most up-to-date information at their fingertips and aids in the better management of out-of-stock SKUs and revenue optimization. Control Over Purchasing and Order Fulfillment The accuracy with which inventory levels are managed is influenced directly by the purchasing decision method of a company. When a purchase order is made, inventory management software guarantees that the inventory is automatically updated. With all of the relevant supplier information at one's fingertips, the software can figure out when to give purchase orders. When items are low on stock, the inventory management software can generate purchase orders automatically, receive partial orders, and track backorders. From start to completion, it keeps track of all purchase orders and notifies sellers about each purchase order sent. Users can also calculate shipping costs automatically using shipping zones or cargo weights, connect shipping services with eCommerce stores to display shipping charges and automate the entire workflow from order creation through fulfillment, order tracking, and order return, for all selling platforms. Integrated CRM Softwares A CRM helps save customer data securely in a customized manner so that a seller has access to their preference details and purchase history to predict future behavior. It is further observed that data has enough potential to change an inquiry into a sale. CRM tools also help in storing order history, personalized marketing, offers for an individual buyer, customizing taxes and default address setting, and building a price card for individuals taking care of each pricing strategy. Inventory Reports Inventory management metrics provide a detailed report of how the inventory has performed over time. These metrics are: Inventory Control: Knowing how much inventory a seller has in their warehouse at any given time is vital information for any organization to fulfill orders swiftly. Inventory Management: To manage inventory, there are a lot of factors to take care of. A seller can use multiple accounting methods to evaluate inventory such as First-Out (FIFO), Last-In, First-Out (LIFO), or First-Expired, First-Out (FEFO). Inventory Forecasting: The difference between actual demand and what is expected at the business level is reflected in the accuracy of demand or inventory forecasting. This is derived from inventory management software through data customization. Fulfillment Quality Index: This will determine whether suppliers are functioning at their highest capacity or whether there is potential for improvement. Scale the return rate and the "on-time products, received" report. Inventory Performance Report: To obtain a general picture of how the business is performing, keep track of how much profit products are bringing in to guarantee that it is operating at maximum efficiency. Benefits of Using an Inventory Management Software Making Informed Decisions For eCommerce businesses, generating a profit depends on having enough in-hand inventory. It allows users to make informed decisions based on real-time data from the software, through a wide range of built-in inventory tracking facilities. Inventory software provides tools for sellers to forecast future sales accurately by giving sellers an insight into sales performances from the past. Every aspect of a business's ability to make a profit is contingent on having enough inventory on hand. The inventory management system provides users with a variety of built-in reports that enable them to make informed decisions based on real-time data from the software. By providing a seller with a snapshot of past sales success, the software will give a seller the tools to properly estimate future sales. Increasing Efficiency and Productivity The inventory management system assists in increasing efficiency and production by lowering the amount of time spent on mundane and difficult processes. Inventory management systems offer a user-friendly interface that allows users to quickly report, search and input data, as well as manage inventory. Improving Accuracy of Sales and Purchase Orders The inventory management system allows users to store available stock at multiple locations to meet customer demand. A sophisticated inventory system can improve the accuracy of sales and purchase orders. Users can reserve available products across various locations with an inventory management system, ensuring that client expectations are met. Tracking Inventory Across Multiple Locations As companies thrive and expand into multiple branches, sellers should be able to keep track of inventory levels at each branch. Inventory management systems have powerful tracking models that allow users to monitor inventory levels across multiple locations. Avoiding Out-of-Stock Situations Retailers can avoid stock shortages by using low stock alerts to notify the seller when products are below the running-out threshold. Users will also have access to the low stock report, which gives sellers a breakdown of all items that need replenishing and can be broken down by location. Reducing Risk by Properly Managing Product Recalls Inventory management software gives the facility of being able to track the precise location of products by serial numbers, batch numbers, and lot numbers, in real-time. The feature becomes helpful if a seller needs to facilitate a single item recall for a batch of items. Automating Inventory Tasks The days are gone when businesses maintained inventory in books or spreadsheets. Such conventional methods are time-consuming and result in multiple glitches and errors. Inventory management software automates the management of inventory using advanced tools. Businesses can now integrate the software with their books of accounts and sales can be automatically integrated with warehouse records. Companies can now easily know when they have to buy or sell and the exact number of items that are available in stock. Factors to Consider When Choosing Inventory Management Software for Operations Integrability With Accounting Applications Accounting software integration powers inventory management software and inventory audit management, which are critical activities. Always seek software that has inbuilt integration capabilities with accounting which will result in easy and smooth functioning.  Features and Pricing of the Application Depending on product support, data storage, implementation, training, additional features, degradation, and other factors, different vendors charge different prices for specific inventory management software. Always keep an eye out for the pricing that comes with the benefits. Before a seller buys inventory software, they should figure out how much it will cost them. Cloud-Based Storage Features The majority of advanced inventory management software has cloud-based features. This may not be necessary if sellers are purchasing inventory management software for smaller firms. Cloud-based software, on the other hand, might be beneficial for medium and large-scale businesses. Users can view inventory details regardless of location, so sales figures and inventory updates will not be limited to a single location. 10 Best Inventory Management Softwares for eCommerce sellers in 2022 InventoryLogIQ Inventory LogIQ – Lean Inventory Management for eCommerce Business Inventory LogIQ is an advanced inventory planning, optimization, and management tool for small & medium and enterprise eCommerce businesses. It enables businesses to leverage hard data and rich insights to streamline the inventory planning operations like never before.  With Inventory LogIQ, business owners can unlock incredible revenue-enhancing benefits such as: Decrease inventory holding costs by 40%Increase product availability to 99%+Cover more than 70% of the regional demand InventoryLogIQ Dashboard InventoryLogIQ’s inventory planner is an ML-based prediction engine that leads to smart inventory placement. It helps online brands in the following ways: Manage Replenishment for Multiple Warehouses Combine your sales from Amazon & other websites in a consolidated inventory planner and reorder products based on the overall performance Identify Trends Powerful reports show you what's happening in your business so you can put your time and money in the right places Automate Replenishment Recommendations Save time by automating your reordering process. Compute the sales forecast for thousands of products in minutes Create Purchase Orders in One Click Save time on purchasing. Send POs directly to your suppliers from the inventory planner. Keep track of outstanding orders, expected arrival dates, and received inventory Zoho Inventory Source Zoho Inventory is an inventory management software that helps businesses optimize their operations by allowing them to manage inventory and purchase orders and shipments more effectively. When a sale, purchase, invoice or bill is generated, the GST-ready inventory management software remembers the business GSTIN and populates it automatically. Zoho Inventory is an AI-powered feature-rich inventory management system with item-kitting capabilities. Additionally, a few features are listed below:  Zoho Inventory aids with easy sales management on digital marketplaces like Amazon, Shopify, eBay, and Etsy.With this integrated order management system, the sales force can now properly manage both offline and online orders.Zoho Inventory's end-to-end tracking features allow sellers to follow each item's travel from the warehouse to the salespoint.Zoho Inventory provides its customers with real-time shipping rates and in-transit information.New clients can get a free demo of the business inventory software, which will help them evaluate the most important features.Makes invoices and allows teams to operate their firm properly.Monthly and annual subscriptions are available for Zoho Inventory. Clients can sign up for a free trial plan to test out the features before purchasing. NetSuite Source Using inventory and order management software like NetSuite, a seller can manage and improve their worldwide supply chain. App creators have given this program as a virtual present to firms who have tried to locate the best product management and order management software. NetSuite's capabilities extend beyond supply chain management to include product data management, inventory planning, and scheduling, work order management, manufacturing execution systems, product distribution, product supply planning and execution, warehouse management, and inbound-outbound logistics. Some features of the software have been listed below: Comes with a number of unique tools and capabilities that aid in inventory tracking across many locations, maintaining safety stock, reorder points, demand planning, and product distribution planning.It creates product catalogs based on categories, quantities, and types, automatically.Eliminates stock counting errors, promotes item counts, and standardizes inventory accuracy.Backed by highly professional customer support that guides sellers for each feature and helps in proper integration. ShipMonk Source ShipMonk is a software package that combines order and inventory management and warehouse administration into a single, easy-to-understand interface. It was created with the idea of expansion in mind, so small and medium-sized eCommerce businesses can actually take their brand to the next level with trustworthy and user-friendly technology. Additionally, it has the following features. ShipMonk provides eCommerce business owners with next-level support for crowdfunding campaigns and subscription boxes, allowing merchants to seamlessly grow into new business initiatives without missing a beat.With only a few simple clicks, merchants can submit SKUs, monitor inventory levels, do inventory tracking, calculate shipping rates, export vital data, and much more.Merchants are immediately greeted with a complete dashboard of their current activities upon signing into their accounts, with nearly everything they might need right at their fingertips.With over 60 connections with online marketplaces, shopping carts, and solution providers, every eCommerce business owner can almost certainly sync their online POS systems with ShipMonk.ShipMonk can handle the operations of clients who sell on Amazon, Shopify, eBay, Etsy, Target, Walmart, etc. Zenventory Source Zenventory is one of the top corporate inventory management programs available, offering a time-saving, efficient, and cost-effective cloud-based solution for managing orders and stocks. Zenventory allows sellers to choose warehouse locations based on their business needs, avoid the needless bulk of pick process errors and remain on top of stock levels via stock level alerts. Some additional features are listed below: Comes with extensive tools to maintain inventory and manage orders on multichannel portalsThe platform is tailored for small enterprises looking to make an impact on the global market through a progressive workflow.The program provides unlimited user access and multiple warehouses at no extra charge.The software is compatible with any desktop, is mobile-friendly, and requires no ongoing maintenance.Product management, vendor management, cycle counting, innovative par level, kitting, multi-warehouse readiness, and low-stock alerts are just a few of the dynamic capabilities included in this cloud-based platform.It allows users to track product movement by connecting any device, tablet, or mobile app.It makes it easier to track down goods in multiple places and increases picking efficiency.This multi-channel ready software is very flexible and aids in the proper integration with other platforms.It comes with comprehensive support and a free trial period. SkuVault Source SkuVault's eCommerce Inventory Management Software makes managing sellers’ online stores a breeze. It includes simple workflows in a platform that anyone on the seller’s team can utilize, regardless of their technical knowledge. The solution is designed to streamline sellers’ order fulfillment procedures, from inventory management to warehouse organization. Here is the list of features that they provide:  Efficient pick-to-ship cycle, ensuring that orders are completed on time.The ability to integrate with multiple sales channels streamlines business operations even further.It prevents shipping problems and wrong shipments, as well as the normal errors produced by manual entries, thanks to the automation provided.Its buffer inventory also assists sellers in maintaining the desired quantity levels. Included smart analytics and reporting capabilities allows sellers to establish precise inventory estimates in order to maximize sales. Increases the quality of a company’s decisions with its data-driven insights.Integrates effectively with other corporate systems, such as ERP, accounting and CRM, for a truly seamless experience. eChannelHub Source eChannelHub strives to alleviate the agony of multi-channel sales by allowing sellers to concentrate on the seller's main business rather than worrying about stock management, product data updates, order fulfillment, and other related duties. It is a multi-channel eCommerce platform fully linked with all major channels, allowing retailers to spend less time updating, upgrading, and formatting product data, allowing them to focus more on selling.Supported by a professional, young workforce, to assist everyone planning to take advantage of the inventory management software.Uses a single, centralized interface for multi-channel eCommerce platforms.Simplifies and manages the online listing and syncing of products, inventory, orders, processing, and shipping across all marketplaces, shopping carts, shipping solutions, and ERPs.Covers everything for a seller, from marketplace listing tools to real-time inventory sync tools, order management systems, etc. TradeGecko Source TradeGecko is one of the top inventory management software solutions because of its simple user interface and remarkable functionality. This versatile inventory management software is designed to help high-growth eCommerce and multichannel businesses succeed. TradeGecko is a cloud-based inventory management software system that mainly: Caters to small and medium-sized businesses with limited resources but a desire to succeed.Strives to help sellers work smarter, expand faster, and improve sales.Provides best-in-class inventory management software that optimizes and ensures the efficient functioning of the seller’s organization.Keeps track of stock levels and maintains inventory across several warehouses by automatically updating inventory. Allows the moving of inventory between warehouses, manages several currencies, receives and fulfills orders, synchronizes orders with inventory, and generates sales reports.Serves as a single point for inventory management and maintaining a balance between B2B and B2C marketplaces.Generates sales orders, creates sales emails, sets shipping rates, and does various other things to make the business run more efficiently. Deskera Books Source For managing inventory and auto-bookkeeping, Deskera Books is all a seller needs. Deskera Books is cloud-based, user-friendly inventory management and accounting software that automates inventory management. Unlike other inventory management software on the market, this one:  Combines inventory management and inventory accounting, so the COGS are updated in real-time once sellers have fulfilled orders.Provides built-in compliance that allows sellers to safely and easily prepare accounting and tax reports.Covers a business whether it's a small dropshipping business or a large wholesaler with many warehouses in operation.Immediately updates stock levels and stock valuation when it receives stock or fulfills orders from vendors and customers.Offer services such as pick, pack & ship, drop ship, backorder, warehouse management, stock transfer, stock adjustment, and inventory reports are among the advanced inventory functions available.Allows a seller to keep track of their business and access real-time inventory from anywhere with the Deskera Mobile App. Finale Inventory Source Finale Inventory is a multichannel inventory management software that is cloud-based for developing organizations. Finale Inventory is used by the majority of the world's smaller and medium-sized firms because of its essential features. The program was created with the goal of meeting inventory requirements while also emphasizing the necessity of centralization, multipurpose integration, and warehouse management. Some of the additional services it provides are listed below: Avoids costly stock-outs by calculating reordering points based on product sales velocity. Helps you make better purchasing decisions and handles restock forecasting using comprehensive order management features.Has a comprehensive out-of-the-box barcode inventory control solution.Uses multi-operational mobile barcode scanners, which aim to boost warehouse capacity.It expressly coordinates between warehouses and online sales channels, as well as assists with stock updates on a regular basis.It includes a robust reporting engine that generates configurable reports to aid in the making of swift business decisions. Conclusion: Implementing InventoryLogIQ’s Inventory Management Software for Enhancing Fulfillment Capabilities. We at InventoryLogIQ have created a cutting-edge inventory management software solution that will assist you in streamlining your processes and increasing the efficiency of your everyday operations. We provide sophisticated, user-friendly inventory management software that is tailored to small and medium-sized businesses. Our inventory management solution is cost-effective and tackles a variety of challenges that previously required expensive enterprise-level solutions. Our inventory management software offers a 360-degree analytics engine to online brands for business growth. Through InventoryLogIQ's inventory planner and WareIQ’s integrated fulfillment platform, eCommerce & D2C companies benefit in the following ways: Monitoring Business Health  Closely track gross orders, revenue & inventory amount, and growth to assess business success and health. Data at Your Fingertips Get visibility of your inventory in historical, zone-wise, and channel-wise segments and access NDR data easily. Ensure Business Continuity Analyze orders across categories such as unprocessed, ready-to-ship, RTO, etc. to take quick and appropriate action. Inventory Management Software - FAQs What is inventory management software?Inventory management software helps organizations streamline their inventory creation and order fulfillment processes. Inventory management software, as well as inventory auditing, inventory control and purchase order management, are used by businesses to optimize their inventory management operations. What are the 4 types of inventory?There are four main types of inventory are: Raw materials/componentsWork in ProgressFinished goodsMRO supplies Does InventoryLogIQ have inventory management software?Yes, Inventory LogIQ has an inventory management software that provides insights on appropriate network design & inventory placement to improve inventory returns & increase regional fulfillment share. What are the 3 major inventory management techniques?The three most prevalent inventory management tactics used by most manufacturers are:Pull approachPush strategyJust-in-Time (JIT) strategy What is EOQ analysis?Economic order quantity (EOQ) is a calculation that businesses use to determine their ideal order size, which allows them to meet demand without going over budget. EOQ is calculated by inventory managers to reduce holding costs and surplus inventory.

August 12, 2022

What is Inventory Accuracy? Importance, Formula, Challenges, and Strategies to Achieve High Inventory Accuracy for Operational Efficiency in 2022

What is Inventory Accuracy? Importance, Formula, Challenges, and Strategies to Achieve High Inventory Accuracy for Operational Efficiency in 2022

Inventory is one of the key aspects of an eCommerce business. It is what allows them to make sales and generate revenue. Because of this, inventory management should be handled with utter care and in the most efficient way possible. One of the main ways that a business can understand more about its inventory is by measuring its inventory accuracy. This allows retailers to understand how accurately their supply chain processes really are. In this blog, we will get a clear understanding of accurate inventory, its importance and how InventoryLogIQ can help increase it. Read along. What is Inventory Accuracy? A metric that measures the difference between your warehouse records and your actual stock is known as inventory accuracy. Keeping track of inventory accuracy is critical in order to prevent stockouts, shortages, and shrinkage and control inventory quality, maintain happy customers and give them a great shopping experience. Any issues in maintaining inventory accuracy can cause massive problems in your supply chain. Your supply chain can suffer when there are inaccuracies in your inventory records. A registered product that does not exist might be sold. Your records may show plenty of stock when there’s could be practically no stock in the warehouse. This is why it is imperative to place importance on inventory accuracy. Inventory Accuracy Formula Used in Calculations To calculate inventory accuracy using the inventory accuracy formula, count the number of items currently in stock, divide it by the stock count on file and multiply by 100. The result will be your inventory accuracy rate. However, before calculating your inventory accuracy rate and using it as a KPI, make sure that you have a reliable manual count to compare your inventory records with. The count must meet the following requirements:  Multiple employees must perform and confirm the count or it can be done through inventory management software which reduces the possibility of human error. The count is done meticulously over several days with a focus on accuracy and an emphasis on precision. Here is the inventory accuracy formula: Counted units/Units on record X 100 = Inventory accuracy rate The average inventory accuracy for businesses while using the inventory accuracy formula is between 65% and 75%. This covers businesses that manage inventory using SKUs and barcode scanning. However, such a low (or even lower) percentage is bad for the company.  Most organizations that want to enhance their inventory management should aim for a score of 97% or higher.  Why is Attaining a High Level of Inventory Accuracy of >99% Important for Operational Efficiency? Your inventory records must reflect your actual inventory in order to run an efficient business and optimize your inventory. If you don't, you could risk the following consequences: Customers Can be Lost if Product Orders are Delayed  If their delivery is delayed for more than two days, the majority of clients will not shop with that business again. It could take weeks for a consumer to receive a box if they order a product that exists in the database but not in the warehouse. Imagine how the person will react to a much longer delay. Keeping accurate inventory counts will help avoid stockouts like these in the future.  Inventory That Has Not Been Registered Will Not be Sold  A business almost certainly has merchandise that isn't on the books. This inventory will not be able to be sold or moved. Sales of a product will be significantly slowed, and inventory may be hampered as a result. From order fulfillment to inventory stock control, every process will be affected badly. Customers can be lost if product orders are delayed. Every business is aware of this fact. Overstocking and Additional Holding Expenses Can Occur  Bad recordkeeping can lead to unwise judgments, such as purchasing too many inventory goods based on inaccurate consumption data. This will result in excess inventory, higher carrying costs, and unsellable items filling the warehouses. Accurate digital records are required for a successful inventory procedure. If not, it'll be tough to keep track of actual stock levels. Real-time tracking is a good solution along with WMS (Warehouse Management System), which uses barcoding and RFID to track arriving and outgoing items in real-time. Every delivered or received item in the warehouse is scanned swiftly and added or removed from the system automatically. Human errors are greatly reduced through automation. Instead of manually entering data for new shipments, everything is automatically uploaded to the records. 3 Reasons Why eCommerce Businesses Struggle to Maintain Inventory Accuracy Many businesses struggle to maintain inventory accuracy for the 3 following reasons: Fulfilling orders directlyLack of proper inventory managementUse of outdated technology Fulfilling Orders Directly Many eCommerce retailers desire to be as self-sufficient and cost-effective as possible by taking care of the entire process of inventory management and order fulfillment on their own. When inventory is not professionally stored or handled at a warehouse, it might result in inventory accuracy issues.  Without the proper equipment and a devoted, skilled workforce, inventory storage becomes increasingly difficult as the company grows and expands its range of products and services which leads to lower inventory accuracy.  A business can track inventory on paper or spreadsheets if its inventory management system is sub-standard or non-existent. However, this inventory accuracy formula won’t be very tenable for long. Integrating with an advanced inventory management software makes it easier to keep inventory records up to date, simplifies accounting processes, prevents stockouts, and expedites manufacturer purchases. Lack of Proper Inventory Management Without proper inventory management, the entire supply chain process suffers, including picking, packing, and shipping. If inventory accuracy is not maintained, the wrong product could easily be picked, which means that the order is destined to fail from the beginning. This will then have a spiral effect on processes further down the supply chain until it finally reaches the customer, who will be furious that they have received the wrong product and will initiate an RTO request, which will cost the company even more money.  In a similar way, if there isn’t a concise process available, the driver could easily drop off the wrong product to the customer. To mitigate all these issues, retailers need to invest in getting as close to a 100% inventory accuracy rate as possible. One way to remove the threat of driver error is to install shipping apps where the logistics company can give routes to drivers automatically. With the push of a button, drivers can access the order list and obtain directions. There's no chance that they'll mistype or misinterpret an address.  One may also track drivers' movements and deliveries in real-time through the app. When the driver arrives at an address, the app will immediately reflect if the package has been successfully delivered or not. The software then sends this information to the dashboard, along with the user's current GPS location. Hence, the app shows the status of all deliveries, including ETAs and expected delays. Use of Outdated Technology Most inventory accuracy happens at the warehouse and the only way to reduce problems that may arise at the source is to invest in good inventory management software to take care of updating and keeping track of inventory.  Companies that rely on old and manual methods of tabulating inventory levels and updating inventory every time an order is placed are bound to make more miscalculations than firms that employ advanced inventory management software to maintain a high level of inventory accuracy. The use of technology instantly makes any manual mistakes and errors redundant and results in an impressive inventory accuracy rate of over 99%. Comprehensive analytics addresses issues such as faulty or delayed delivery. If there is a problem with a certain week, day, or depot, one can investigate the information to discover the source of the problem causing issues.  5 Strategies to Increase Inventory Accuracy by Using an Inventory Planning Software like InventoryLogIQ and a 3PL like WareIQ Optimizing Warehousing Processes If a business wants to scale up sustainably, it needs a solid warehouse management system. Traditional warehousing systems are simple, prone to errors and lack the functionality firms need to succeed in today's eCommerce environment. However, investing in a functional WMS can help you to optimize warehousing processes and make the entire operation more efficient. The new and improved modern warehouse management systems can assist in the following ways:  Makes sure a business is never under or overstocked Maintains inventory levels down to each item Syncs inventory across all sales channels Compiles inventory data in real-time, in order to generate data-driven insights and provide accurate inventory data Concise Labeling of Inventory In addition to labeling actual products, one must also mark the storage location for each item. Sections, rows and shelf numbers must all be included in the label, in addition to important information about the product itself. If a company has a large storage area, it's a good idea to assign zone numbers or even room numbers, if necessary. The following points can help you to accurately label your inventory to achieve higher inventory accuracy: Empty storage spaces should not be overlooked. Even if a section is not being used for storage right now, it should still be named for future usage. This saves time and eliminates the possibility of inconsistencies in the labeling scheme. Labels should be easy to read. The text colour should contrast with the label colour to make it more readable.To minimize misinterpretation, no apparent reference labels can be the same. Include arrows pointing to objects the label refers to, which is especially handy when shelves are layered. Maintain consistency in labeling by using letters and numbers (sometimes both) consistently and in the same order throughout. Start at the top, for example, A or 1, and move down.Each item comes with its own description. A label's name should begin with the item's name (a noun). If all item labels begin with the colour of an item, then searching and tracking will be difficult. The item should then be described with adjectives. Start with the most crucial descriptive term. When labeling products, make sure that you keep them in accordance with these guidelines.Print out photos or photographs of the products inside plain or assorted boxes to help you determine products without having to open them. On the label, only provide information that will assist in identifying and locating the objects.When adding size, measurements or weight to an item's description, attempt to use abbreviations that everyone understands and in lower case letters.To boost your efficiency, identify your products and storage areas in a realistic, concise, and organized manner. Clear Internal Policies Clear internal policies necessitate the establishment of quality standards and policies for employees to follow. Here are some tips to create clear internal policies to increase your inventory accuracy: Choose Management Quality Control Techniques: Inventory control is only one aspect of improving inventory management. With a management approach that workers can commit to, you can enhance business operations from the ground up. Using Kaizen, Lean and Six Sigma are just a few examples. Optimize Purchasing Procedures: Using data and forecasting to regulate purchasing procedures is one of the trademarks of good inventory management and clear internal policy. Identifying metrics by monitoring consumer demand, removing obsolete stock, adjusting safety stock and reorder points are all parts of this process.Manage Supplier Relationships: Managing supply chain relationships correctly is crucial since working closely with suppliers may often prevent and fix problems. Suppliers, for example, can offer your company a negotiated minimum order size, take back things that aren't selling and assist you in fast restocking when sales for a given item pick up. Create Automated Reports: Because stock control and management systems generate massive amounts of data, companies must figure out where to evaluate, report, and how to use it. Inventory status, stock logs, reconciliation, historical stock, aging inventory, and inventory financials are all reports that many systems create automatically. Furthermore, firms should select where in their supply chain this information should be used so that suppliers can effectively prepare.Perform a Risk Analysis: Whether you have an unanticipated sales increase, a cash shortfall, insufficient storage facilities, a stock underestimation, and slow-moving or discontinued products, problems will inevitably arise. Make a risk matrix to figure out what your biggest threats are or how to deal with them if they arise. Audit on a Regular Basis: This is to ensure that your real stock and reports are in sync. Physical items, spot-checking and cycle counting are the three methods for conducting an audit. Physical inventory entails counting all of your stock and it should be done at least once a year and more frequently near the end of the year to coincide with taxation reports. Checking for flaws on the spot is a good idea.Forecast Inventory: Use techniques such as ABC analysis and other inventory forecasting techniques. Accurate Counting Per Cycle Cycle counting is the technique of counting items in parts on a regular basis in order to keep track of stock levels without disrupting normal operations. This method entails breaking down the stock in warehouses into smaller groupings of products that need to be counted. This segmentation could be based on a variety of factors, including the product category, manufacturer, warehouse location and so on. When using a good inventory management system, segmentation becomes simple.  However, for the greatest cycle count results, it is recommended that two unique segments are created: High-risk counts: These are groups of products that have had the most inventory discrepancies, errors or inventory write-offs in the past.High-value counts: These are product groups with the highest cost or sales potential. Because these are the most expensive items, it is critical to keep accurate track of them. Utilise Technology for Inventory Management Inventory management software like InventoryLogIQ that is up to current standards can have a significant impact on improving inventory accuracy. Inventory management software includes everything you need, including an intuitive user interface, efficient order administration, precise stock management, and real-time inventory insights.   Here's what it can do for an eCommerce business:  Tracks inventory in real-time and reconciles at the SKU level. Analyzes previous sales trends, predicts demand and suggests the appropriate inventory levels accordingly.Sets a reorder threshold to prevent stockouts by automatically replenishing goods. Conclusion Maintaining inventory accuracy is a key component of the success of a business in today’s day and age. It reduces the number of errors that could occur further down the supply chain and ensures that customers receive accurate orders so that they will have a positive opinion about your business. As discussed above, there are many ways to achieve a high level of inventory accuracy, if you require assistance with inventory accuracy and any other eCommerce-related processes, you can check out Inventory LogIQ. InventoryLogIQ can help your business achieve an accuracy rate of more than 99% with our state-of-the-art IMS that assists in accurate inventory management and efficient regional utilisation. Inventory Accuracy: FAQs How important is inventory accuracy to your business?Inventory accuracy is extremely important to your business because it ensures that the right amount of inventory is tracked and maintained so that there is no confusion or dispute regarding the amount of inventory available for sale, which is the key component for all eCommerce businesses. What is an acceptable level of inventory accuracy?An average inventory accuracy rate that many businesses maintain is between 60% to 70%. However, it is preferable to have an inventory accuracy rate of above 97% to avoid any unwanted errors and mistakes. Which stakeholders measure inventory accuracy?Many stakeholders keep a close eye on inventory accuracy including:Owners and shareholdersTop managementWarehouse managerShipperStrategic plannerInventory analystFinancial analyst How can InventoryLogIQ help you to achieve a plus 99% inventory accuracy rate?InventoryLogIQ helps users accurately and efficiently manage their inventory and track orders across multiple platforms through our custom inventory management software(IMS).

August 11, 2022

What is Dead Stock? How Does It Affect Businesses & How to Get Rid of Dead Stock Lying in Warehouses in 2022?

What is Dead Stock? How Does It Affect Businesses & How to Get Rid of Dead Stock Lying in Warehouses in 2022?

The goal of the inventory is to be sold. However, unsold goods may accumulate over time and become "dead stock." Dead stock is money that isn't being used and may seriously affect a retailer's bottom line. High-profit margins must be maintained through offloading dead stock, but as eCommerce businesses grow, challenges with inventory optimization occur. Dead stock builds up over time due to a lack of inventory management methods and procedures. A healthy firm typically has 15% dead stock (or less) in its active inventory. However, for direct-to-consumer (DTC) brands, that figure often rises to over 33%. This locks up cash and significantly raises operational costs. This post will go through what causes dead stock, how to get rid of it, and how to keep earnings up. We'll also discuss how to avoid dead stockpiles with proper inventory management. What is Dead Stock? Inventory that a business believes will be hard to sell is known as dead stock or dead inventory. Items that do not sell as well as anticipated are out of stock. Dead stock can also refer to faulty, out-of-date, out-of-season, or damaged products. The most frequent types of dead stock are seasonal items that are no longer in demand. In some circumstances, they are unlikely to be sold before their expiration date and are wasted. In addition, they only occupy valuable warehouse space that might be utilized for goods that sell quickly as a consequence. Slow-moving inventory thus has some high hidden costs. Types Of Dead Stocks There are several types of dead stocks that a corporation may encounter. Each of them may be traced back to specific events and may necessitate a different method of dealing with them. Outdated Inventory Obsolete inventory is products that have not been utilized or sold in a long time owing to a lack of demand. In many respects, inventory may become outdated. For example, in the clothing and electronics sectors, new trends and models frequently replace old ones. When the holiday season is over, a firm may find an abundance of unsold holiday-themed products. A manufacturing corporation may employ other materials or components in a product, leaving the replacement items on the stockroom shelves to accumulate dust. Poor sales due to bad marketing may force a corporation to discontinue a product line entirely. Damaged Products Damaged goods are materials or items that have become useless due to irresponsible inventory handling, production errors, or horrible warehousing conditions. For example, a pallet with an imbalanced load may tumble off a forklift, the malfunctioning gear may render some materials worthless, or a leak may spoil a batch of items that must be kept dry. Expired goods The food business is the most vulnerable to product expiry. However, some industries, such as medicines and chemicals, require makers and distributors to keep track of expiration dates. Rigid restrictions in businesses that deal with expiring items necessitate organizations meticulously track the expiry dates of their inventory, which may be accomplished with tracking software. Defective Products Items that have not been explicitly damaged at your facility but are flawed in some way are considered defective products. These flaws can occasionally be traced back to the supplier, but they might also result from engineering or design flaws at your factory. Unused Inventory Inadequate inventory management techniques may result in items being stocked and forgotten. For example, if inventory is not adequately accounted for, a corporation may order more stock without realizing that useable products remain in the stockroom. Forgotten inventory is frequently still usable, although it can also become outdated in specific instances. How Does Dead Stock Affect Your Business? Dead stock costs money and depletes essential resources in your firm. This should be self-evident to you and your staff. Aside from replenishing your discount department, there is little benefit to keeping merchandise hanging around your store or warehouse (not a good thing). Here's a closer look at dead stock inventory's three immediate adverse effects on your business. Dead Stock Has a Multiplier Effect on Your Business Finances Dead inventory strains your budget and additional resources exponentially. Not only do you lose the initial investment in the unsaleable goods, but you also lose the margin you were expecting to gain from selling them. If finished goods remain on your shelves across your business, you're also losing out on prospective sales of other products. This is less critical for online stores, but it might significantly impact your inventory, or the eCommerce platform charges you per SKU. Having outdated, undesired, out-of-season things polluting your physical and online store is a poor reflection of your business.  Dead Stock Limits Future Growth Prospects From the previous point, slow-moving stock can be detrimental to future development prospects. We've demonstrated that it's a drain on your already-thin margins and scarce resources. The harmful consequences extend not just into the present but also to the future. Your investment in dead stock represents additional funds that could have been used to test another product, replenish a proven product, or increase your marketing efforts. Unfortunately, these wasted chances are keeping you from reaching your full potential. Dead Stocks Takes Up Warehouse Space Another critically limited resource that slow-moving stock influences are your warehouse or general inventory space. Dead stock incurs carrying expenses on top of eating into your valuable and limited space, whether you have proper storage, a vast closet at the rear of your business, or just your storeroom floor. Depending on the nature of the items, the amount left over, and your warehouse storage plan, your slow-moving stock may necessitate additional insurance coverage. These actual retail wastes of space can also accumulate over time and increase your labour costs. With little room and too much dead stock, retailers drive staff to get inventive to navigate inventory counts and order pulls correctly. What Causes Dead Stock? Understanding what causes dead stock to accumulate in the first place is essential for avoiding it. If you can find out what's causing the dead stock to pile up, you'll be in a better position to move it out and prevent it from piling up in the future. The following are some of the most common causes of dead stock. Over Ordering Ordering excess inventory without knowing how much you'll sell at a particular time is the quickest way to accumulate dead stock and increase carrying expenses. It might be challenging to determine how much inventory you will require to satisfy future demands. There is a delicate line between having too much and too little stock. Still, by devoting effort to setting up an inventory management system and tracking important distribution indicators such as turnover percentage, you may make better decisions regarding inventory replenishing, how much inventory to buy, and when to acquire it. Another way businesses can reduce over-ordering is to purchase fewer items more frequently. For example, you may reduce the danger of gathering dead stock by purchasing inventory to meet a month's need rather than a year's demand. Erroneous Demand Forecasting Future demand is underestimated when the relevant data is not tracked. As a result, eCommerce firms are in the dark about which goods are popular and how quickly they will sell. Rather than acquiring slow-moving items that take up warehouse space and affect your bottom line, you may need better forecast demand by getting precise prior order data. Furthermore, if you have accurate inventory forecasting, you may decide how much inventory to purchase to meet future needs. Ineffective Marketing and Sales Efforts If you offer a high-demand product and your inventory isn't moving as quickly as you'd like, it's probably due to a lack of marketing and sales activity; this is a significant potential expense. Furthermore, poor communication between you and your sales and marketing teams on selling goods, incorrect product messaging, a poor online experience, and a lack of consumer comprehension can lead to high-demand products being unsold. Inadequate Quality Control Even though the inventory is brand new, it does not mean high quality. To maintain proper quality control, it is critical to establish a solid working relationship with a recognized manufacturer or supplier. This guarantees that adequate quality control standards are in place before acquiring other items. How To Avoid Dead Stock? Dead stock is an inescapable part of the retail industry, especially if you've been in business for a few years or more. A few additional Christmas items here and there aren't going to bankrupt your company. However, you are harmed by big over-orders and under-sells. There are several techniques for reducing this risk. There are also a few efficient methods for relocating unsaleable objects, such as just giving them away. Strengthen Your Inventory Management System  Inventory management software levels the playing field when preventing dead stock. Your inventory management system offers the same fundamental automated, measurable, and analytical features used by major retailers to avoid dead stock. The underlying inventory control technologies are the same, but the feature set and specialized employees are much different. On-hand inventory throughout your business and warehouse sites, sales monitoring and forecasting, supplier management, and accurate, automated reordering capabilities are essential inventory management tools that assist reduce the risk of dead stock. Aim Low, Miss Low You may minimize dead stock by placing fewer orders with your suppliers or producing fewer products if you are in charge of manufacturing. This is particularly vital for those annoying seasonal things, and it's also crucial if you want to test a new product on your clients. Aim low and miss low by having a modest stock on hand in case the product fails or a small number of missed sales while you're waiting to restock in case the product succeeds. This tactic is priced because you'll miss out on manufacturer savings for purchasing bulk. However, it's a minor, temporary cost to bear to demonstrate the feasibility of a new product. Examine Your Purchasing Procedures Maintaining a minimal inventory is a specific strategy to guarantee that the risk of amassing finished goods is as low as possible. You can do this by introducing just-in-time inventory policies or placing more frequent orders for smaller volumes. Effective communication with your suppliers is crucial regardless of your approach. Utilize Precise Forecasting To maintain ideal inventory levels and prevent dead stock, distributors and make-to-stock manufacturers must do accurate forecasting. Forecasting gathers data from all organization sectors to identify demand patterns and provide information about when to purchase extra stock. Therefore, it is advised to employ software, such as an ERP/MRP system that gathers substantial volumes of data throughout your company to provide precise projections. Examine Incoming Products You have the opportunity to find any non-conformance early on by inspecting arriving products, at which point you may ask your suppliers for a refund or a replacement shipment. However, it is challenging to demonstrate to your suppliers that the issue was on their end if you do not discover that the supplies or goods are defective till they are on the factory floor or, worse yet, in the hands of a consumer. Utilize Inventory Management Methods Most inventory situations need tried-and-true inventory control procedures like ABC analysis, safety stock, reorder point, First-in-First-out, etc. These techniques allow you to manage your inventory operations by offering a clear framework for inventory management, replenishment, and consumption. By classifying your inventory goods according to their consumption value or frequency, ABC analysis enables you to deploy resources or arrange your stockroom physically more effectively. A mathematical method of keeping buffer stock is called safety stock. It gives you the ideal amounts of excess stock to keep on hand. Calculating the inventory levels at which you should restock your products is called the reorder point. When an SKU's quantity reaches the reorder point, it is time to order or make more. Reorder point and safety stock work well together. First-in-First-out (FIFO) is a strategy for consuming inventories. You will drink stock lots in the order they were brought into inventory if you stick to it. This is an excellent method for managing goods that have an expiration date. Utilize ERP/MRP Software to Organize Your Inventories ERP/MRP systems with integrated buying modules and inventory management software have quickly become necessary in manufacturing and distribution companies. Companies that manage their inventories, process orders, plan production, schedule jobs, handle accounting, and other functions using spreadsheets or several isolated systems recognize that these antiquated systems and procedures impede their ability to expand. Instead, companies may design efficient communication methods, produce precise timetables, and quickly maintain their inventory using a single piece of software for everything, including expiration date tracking. Spend on Marketing You run the danger of poor demand for your items when you are not visible to your target market, which increases the likelihood that your inventory may go out of stock. While word-of-mouth advertising is excellent for gaining customers, employing other media to spread the word may considerably boost sales, enhance inventory turnover, and improve cash flow. The secret is to be visible where your target audience congregates, such as gatherings, print and online periodicals, internet forums, social media platforms, etc. How To Get Rid Of Dead Stock in 9 Easy Ways? There are various strategies to save the situation if you find yourself in a dead stock position where inventory occupies an excessive amount of space in your warehouse and badly impacts your balance sheet. Also one can sell the dead stock in order to get rid of dead stock and free the spaces in the warehouse. Offer Customers a Free Gift When you offer products, increasing the order value by giving customers a free present encourages them to buy from you. As an alternative, you might please customers by surprising them with a gift. This will improve the customer experience and increase the likelihood that they will make another purchase from you. This may be an excellent marketing strategy, whether you use surprise elements or gifts with purchase promotions. It provides an additional incentive to purchase, which should ultimately increase your conversion rates. Recent research indicated that shoppers preferred "freebies" over "discounted merchandise," which shows how useful this may be. For example, customers chose the "33% free" offer over the one that offered a 33% reduction off the usual cost of a particular brand. Combine Products Like free presents, you may utilize product bundles to boost an order's perceived value. Multiple things are bundled together and sold at a discounted rate. These are often goods with a common theme. The combined cost is frequently less than what a customer would have to pay if they had bought each item separately. Offering complimentary gift wrapping or a bag or container, such as a cosmetics bag, to put products in can also increase the perceived value of a transaction. Pair surplus products with best-selling items to employ product bundling to remove dead inventory. Even if you don't profit from these things, they will no longer take up valuable storage space. Promotional Sales You might hold a sales event advertising all of your finished goods on the website and making sure it's accessible in your physical and mortar shop locations to shift finished products swiftly. Please make sure you use email wherever feasible to inform them about the offers. Even while you won't necessarily raise your profit margins by doing this, you will create some cash flow and free up space on those shelves so you may stock them with more lucrative products. Start modestly when discounting, such as with a 20% discount, and increase the values if it doesn't work. Customers might feel a sense of urgency from flash deals, but make sure it has a significant impact. This will help you sell off different products and expand your clientele. Send Goods Back to The Provider This is a simple solution to the problem of deadstock. To discover if you may return any dead merchandise, contact a supplier. They might not fully reimburse you for the consignment, but they could agree to repurchase specific inventory at a reduced cost. While not ideal, at least you may somewhat mitigate your losses in this situation. Remember that you'll likely have to pay both postage and a restocking charge, and it's doubtful you'll be reimbursed for the shipping fees you previously paid. In addition, a vendor could give you credit rather than a cash return. In this situation, you must determine if a supplier or quality fault is to blame for the deadstock. It seems logical to resolve this right away. Make a case for returning it if they offered you a product that wasn't appropriate for your market. Your providers should work to maintain your satisfaction since they want to keep you as a client. If you have only had the stock for a short period—say, let's a month as opposed to a year—you have a better opportunity to improve the situation. But, first, verify that the products are in brand-new packaging and are not damaged. Dead Stock Donations Growing numbers of customers consider a brand's corporate social responsibility (CSR) when determining whether or not to buy from them. Research supports this, showing that 52% of customers think producers are responsible for the planet's future. According to a recent Mintel research, three-quarters of American consumers are influenced by a company's philanthropic giving activities. People feel as if they are helping their community when they participate in charitable endeavours, and they also help a company's reputation. In addition, giving away finished goods enhances consumer perception of your business and qualifies as a tax deduction when you file your accounting. Given how simple it is to donate brand-new clothing, fashion stores have a solid chance to give dead stock to charities. Finding a charity to work with and donating the extra merchandise to their worthwhile cause are the only two steps required. Always follow the correct documentation requirements, and if you need assistance navigating the tax write-off procedures, contact a registered tax professional. Look For Collaboration Possibilities Any connections you may already have with other brick-and-mortar stores or e-commerce enterprises might be helpful regarding dead stock. Discuss the most significant applications for a dead stock item with them. Relationships may take many various forms, so be aware of that. For instance, you may try to collaborate with another retailer to develop a co-branded product package. Or plan a jointly funded "garage sale." Sell Products on Online Stores Although it will take some effort on your part, selling extra stuff on Amazon, eBay, and Etsy might be a wise option. If you haven't already, you'll need to take product photos, create product pages with descriptions and SKUs, and upload your products. Make sure to read the instructions before registering because each marketplace has its restrictions. Resell Your Products Unsold inventory may not always be a result of the product itself. Instead, it could have something to do with how the products were positioned or advertised. Updating products with fresh merchandising and marketing initiatives might be worthwhile in this situation. When you have a physical presence, one method to achieve this is in-store. It can be enough to move some things about or rearrange the shelf to give them a new life. Items may be made more aesthetically pleasing and offer a better shopping experience for customers by installing fresh, bright signage and changing worn-out price tags. Rephotographing items for the website is another option, and if you run a blog, you could write a post outlining the product's benefits. The reward might be worthwhile even if it requires additional time or resources. Consider Liquidation You can choose to liquidate your surplus inventory by offering it to businesses that buy only dead stock products. It's doubtful that you will make money this way as these firms are known to "cherry-pick" products and offer to buy your stuff for a significant discount. Nevertheless, at least you'll be giving the company more room and money. Conclusion Several things, including shifting consumer expectations, ineffective inventory management, and straightforward spoilage, can result in dead stock. On your warehouse shelves, though, the product lines are accumulating dust. As a result, the most potent businesses put forth a lot of effort to keep dead stock to a minimum. Several tactics may be used to reduce the danger of dead stock. Two include enhancing inventory control and paying greater attention to consumer expectations. However, if you come across lines that are moving glacially slowly, act right away. Dead stock can be eliminated by giving it as presents, donating it to a good cause, or selling it for less than it is worth. Dead Stock Management With Inventory LogIQ By regularly monitoring and controlling inventory levels to ensure you have just enough inventory to satisfy demand, InventoryLogIQ helps avoid reduce dead stock. By monitoring usage and demand, and automatically determining the best time to restock inventory goods, advanced inventory management software at Inventory LogIQ may enhance forecasting skills—this aids businesses in avoiding retaining surplus inventory that can remain on shelves permanently. In addition, leading software solutions enable organizations to track things through their complete life cycles to identify product quality concerns and facilitate inventory management across different locations. It can be challenging for firms of any size to avoid dead stock. For various reasons, including uneven ordering patterns, economic downturns, and quality related issues, businesses may end up with dead stock. However, strict product-quality standards, keeping track of client demand, and inventory management software can help firms reduce the danger of dead stock with Inventory LogIQ. Dead Stock: FAQs What makes it "dead stock"?Dead stock is a term used to describe e-commerce inventory that isn't now selling and probably won't in the future. These items are no longer in high demand due to inferior quality, a decline in order, and seasonality, which reduces profit margins. How is dead stock managed?Deadstock often remains unsold in a warehouse or the fulfilment facility of a 3PL until it is removed. While there, it rapidly raises carrying costs and may take up the storage space required for a fresh, marketable product. Deadstock, not selling, can reduce profit margins and affect a company's bottom line. In addition, dead stock can be seen as an inventory write-off since it frequently results from a shift in market demand. What are the typical reasons for dead stock?Various factors can cause deadstock; the most frequent are incorrect inventory forecasts, excessive order amounts, poor sales, low demand, and subpar product quality. How can dead stock be avoided?You may use inventory management software, keep an eye on sales patterns, determine precise reorder points, survey consumers, diversify your product mix, and buy high-quality items to stop the deadstock from building up in your inventory in the first place. Why does dead stock harm businesses?Stocking up on finished products might hurt a company's bottom line. Dead inventory has high holding costs and reduces sales for the company. Additionally, it would help if you improved the pay for your personnel to avoid employee unhappiness due to the increasing workload at the warehouse. Last but not least, dead stock takes up space in the inventory that might otherwise be occupied by things that drive sales.

August 10, 2022

What is Inventory Forecasting? Definition, Inventory Forecasting Methods, Tools Used, Benefits and Best Practices in 2022

What is Inventory Forecasting? Definition, Inventory Forecasting Methods, Tools Used, Benefits and Best Practices in 2022

Inventory forecasting is critical to the financial viability of your business, whether you run an eCommerce site or maintain a physical retail outlet. If you have insufficient merchandise on hand, you will lose sales. Excessive inventory on your racks means you're tying up income that could be utilised to grow your firm in other ways. So, how can you find a balance between maximising stock levels and controlling cash flow? Inventory forecasting may be a valuable tool to assist you with this task. What is Inventory Forecasting? Inventory forecasting anticipates consumer demand for a certain item of inventory over a specific period of time. To achieve the best inventory control, accurate inventory forecasting allows a corporation to maintain the optimum stock quantity without overstocking or understocking. Forecasting inventory demand is frequently made using historical data patterns and an understanding of how market demand might change. A precise inventory prediction is vital, particularly in today’s scenario when supply chains and customer demand are continually shifting.  A combination of data analysis, industry expertise and consumer insights are involved to successfully gauge demand and match it with the required quantity of inventory. 4 Inventory Forecasting Methods Although instincts and experience can play a crucial part, the most efficient inventory forecasting methods are based on data and calculations. All inventory forecasting methods consider both rising and declining trends in consumer demand. Profits are directly affected by the accuracy of the model you choose; therefore, it is essential to select an inventory forecasting method that will aid in proper inventory forecasting. There are several inventory forecasting methods to be considered that help in demand planning. As each inventory forecasting method has a particular application or focus, they should be combined and matched to predict future outcomes. The most common methods of inventory forecasting based on various formulas are as follows:  Trend Forecasting A trend is a shift in product demand over a specified time. This approach anticipates prospective trends by using historical sales and growth data while removing seasonal impacts and discrepancies. More comprehensive sales data supports this inventory forecasting method by suggesting how certain customers and customer categories are expected to purchase in the future. This data can assist analysts in developing new strategies for marketing and selling. It is a strategy for forecasting future sales trends based on previous sales or market growth data. The trend for a given product is identified and demand is forecasted based on the outcome. Trend data help you forecast future sales and adjust your inventory management strategy accordingly. Graphical Forecasting The same data forecasters analyse for trend forecasting may be plotted into a graph to highlight sales peaks and valleys. Some forecasters favour the graphical technique because of its visual character and available information. They may recognise patterns in data points and add sloping trend lines to graphs to investigate potential paths that might otherwise go unnoticed. The troughs and crests assist you in identifying prior inventory exploration, trends, and patterns, allowing you to forecast more effectively. Qualitative Forecasting When faced with a lack of historical data, several firms look to their consumers for important information. Focus groups and market research are two complex data collection strategies utilised in qualitative inventory forecasting. Forecasters then use this data to develop models. Qualitative forecasting is employed when historical data is no longer useful, relevant, or available.  Inventory forecasting based on current and future market economic demand is part of this technique. Inventory planners repeatedly run this prediction model using sales data, human intuition, market research, and panel consensus.  Quantitative Forecasting Quantitative forecasting employs historical numerical data and is thought to be more accurate than qualitative research. The more data a corporation has, the more accurate the projection will be. Time-series forecasting is an example of quantitative forecasting since it employs periodic quantitative data to build a model that predicts future trends. This forecasting methodology is typically more accurate since it analyses historical sales data to estimate future demand. This strategy works well for established firms because it is based on prior sales data. It may be generated using data from the preceding quarter or year.  5 Best Practices for Inventory Forecasting in 2022 Involve Other Teams It is not advisable to attempt inventory forecasting on your own. Your task will be made simpler if you work in a group. You'll be able to manage your inventory with more precision and efficiency if you incorporate the help of operations, finance, marketing, product development, and other essential players. Take Notes and Revisit Them for Future Planning Future planning is critical for any business as it assists you in determining the number of items you require for your inventory. To effectively plan for the future, you should make notes and store present information. The prior year's notes can simply be used to forecast your inventory for the current year. You can also list holidays and special days when demand will be heavier than usual. Conversely, you can note down periods of low demand for accurate demand forecasting. Utilise Available Data To reorganize your inventory, you must first analyse its historical data. Data is critical for any small, medium, or large firm. However, your previous sales and inventory data should inform your future actions and aid you in being proactive. Your inventory forecasting method may then be repeated and employed for a consistent timeframe in the future. View Real-Time Stock Levels To correctly estimate future demand, you need real-time data. This real-time data can aid in inventory forecasting. Real-time data allows you to examine actual stocks at any moment and determine if your estimations were accurate or far off. If they were inadequate, look into the underlying reason. Understanding why this occurred will allow you to learn from the past and modify your forecast. Choose the Right Software When you operate a business, you have a lot on your mind. The absence of good management might result in pandemonium. And amid this pandemonium, resolving inventory issues might be nothing short of a conundrum. As a result, ensure that the system you're utilising has all of the capabilities necessary to handle your company's size and complexity. There are many inventory systems that are ideal for small to medium-sized organisations. Tools to Perform Inventory Forecasting As a business expands, it becomes increasingly difficult to forecast inventory. Hence, businesses need tools to carry out inventory forecasting in an easy and hassle-free way. Microsoft Excel Basic spreadsheets might be useful in firms with only a few standard commodities. They may be used to load formulas, make assumptions, and do simple computations. Although spreadsheets can be used as an inventory forecasting method, they are not very effective since they represent a static snapshot in time and are not linked to other tools or updated in real-time. Inventory forecasting should be extremely dynamic, bringing in data inputs from several sources for the most up-to-date information. 3PL Companies Third-party logistics organisations, or 3PLs, frequently employ statistical modeling experts to fulfill the demands of developing enterprises. As your company expands and you start expanding the items in your inventory to satisfy demand, inventory planning becomes more complicated and necessary. Many eCommerce firms outsource fulfillment to a 3PL provider, so they don't have to construct the infrastructure, allocate resources and engage in the handling of inventory and logistics themselves. Inventory Management Software Inventory management systems incorporate forecasting capabilities if you manage order fulfillment yourself or if your 3PL does not supply the necessary software. This allows you to keep track of your inventory and units sold in real-time, run reports to determine which SKUs are your best sellers, and keep a pulse on how your business is doing. When deciding on the best inventory management system for your business, look for platforms that include incorporated forecasting features. The most modern systems link with other aspects of your business through enterprise resource planning (ERP), so your inventory is handled from the same digital portal as your supply chain, customer relationship management, accounting, and other functions. Inventory Forecasting Tools Apart from 3PLs and inventory management software, solutions for inventory forecasting with distribution indicators, graphical representations, sophisticated analytics, and inventory reports on sales and stock metrics are available. This allows you to connect upstream purchasing and production operations to downstream sales and product demand. Benefits of Using Inventory Forecasting Inventory forecasting could make the difference between generating a profit and sitting on mounds of unutilised goods if you can anticipate it accurately. You may save money on storage, keep your customers happy and plan for prospective trends more effectively if you do this right. A forecasting program requires a significant amount of initial effort, but it may pay dividends in several ways after you've acquired the essential data. To begin with, you may save a lot of money. You can keep safety stock at a reasonable level if you can order the proper amount of merchandise at the right time. As a result, you'll have less money for unsold goods. It helps reduce the quantity of out-of-stock goods displayed online to improve the user experience. Easy Access to Information Inventory forecasting helps you have easy access to relevant details of the quantity of stock, product types, etc. With inventory management and stock information, you can readily notice sales patterns and track recalled items or expiry dates. Simple to Measure SKU velocity  You can obtain out-of-the-box reports, data visualisations, inventory summaries and adjust date ranges with a good inventory forecasting system. Some points that will help are: Examine how much you've sold throughout various periods.Calculate the number of days until an item will be out of stock.Save the reports by downloading them to a .csv file. Summary of Inventory Levels Inventory management provides a thorough perspective of inventory across all departments. This reduces duplication when updating inventory and the ability to buy in bulk will save your business money. When you combine inventory software with accounting and back-office operations, you will enjoy even more benefits. You can avoid stockouts, which translate to lost sales revenue. Inventory forecasting prevents this by properly projecting future demand. Using this information, you may determine when to refill and how many units to order. Discerns Your Location Distribution Many growing businesses prioritise geographic distribution. Having inventory forecasting systems that answer the following questions assists companies in optimising inventory placement and shipment to reduce transit times and shipping costs. Some common questions you need to consider include: Where do my customers usually ship to?Which delivery options are the most popular with my customers?How long does it take for my orders to be delivered?Which states receive the most orders from me?How should my inventory be distributed over the fulfillment network?What would my shipping expenses be if I increased the number of fulfillment centers from one to two (or two to three, and so on)? Easily Integratable with Other Software When deciding on the best inventory management system for your business, look for platforms that include incorporated forecasting features. The most modern systems link with other aspects of your business through enterprise resource planning (ERP), so your inventory is handled from the same digital portal as your supply chain, customer relationship management, accounting, and other functions. So it is essential to have a system that can be integrated with other systems for the efficient functioning of your business. Additionally, it should be integrated with eCommerce selling platforms to be able to sync and consolidate inventory levels across all of them. Conclusion Nothing is definite in life. However, uncertainty may provide a significant opportunity for those who are prepared. Forecasters do not deal with certainty. Instead, they seek undercurrents in the market that might lead to various conclusions so that they can plan appropriately. Forecasts are based on facts and reasoning, and models built from historical performance and other criteria are modified over time, typically using advanced technology. Inventory forecasting may help your business succeed by ensuring that you have the proper merchandise to fulfill client demand while not tying up cash in unnecessary inventory. If you require assistance with inventory forecasting and any other eCommerce-related processes, you can check out Inventory LogIQ. InventoryLogIQ is a smart warehouse and inventory planning & optimisation solution that assists in inventory forecasting, inventory management across multiple platforms and warehouses. It is a plug and play software that can integrate easily with WareIQ's WMS, 3rd party or Merchant’s own WMS. Inventory Forecasting FAQs Can a formula be used for forecasting?There is a formula for sales forecasting which is as follows:Sales forecasting = total value of current deals in sales cycle x close rate What is the main goal of inventory forecasting?The main goal of inventory forecasting is to analyse various metrics from past sales cycles, among multiple other factors, in order to predict future demand and supply levels so that the most optimum level of inventory can be stored at all times, which results in reduced storage and operational costs. What are the factors that generally affect inventory forecasting?Dynamic business and global factors can affect inventory forecasting. Some of them are listed below:- Economic condition of the country- Population- Distribution of wealth- General customs and traditions- Seasonal fluctuations- Preferences- Per-capita income- Government policies What are the limitations of inventory forecasting?Inventory forecasting, just like other forms of forecasting, is essentially a well-informed guessing game. There are many dynamic factors at play that can constantly change the outcomes of the forecast so it can never be a 100% accurate. How can InventoryLogIQ help provide inventory forecasting for your business?InventoryLogIQ utilises a highly advanced IMS that tracks every important metric related to inventory and order management and is capable of using this data to predict supply and demand levels for the future and therefore, also the optimum amount of inventory that is needed.

August 09, 2022

What is Inventory Management? Objectives, Challenges, Importance & 10 Benefits of Implementing Inventory Management in 2022

What is Inventory Management? Objectives, Challenges, Importance & 10 Benefits of Implementing Inventory Management in 2022

It's critical to assess your company on a frequent basis to verify that you're on the right route. Inventory management or Stock management is among the most important aspects of any company. How has inventory management worked out for your online business? Ever had the proper stock levels when you needed them? Ever lost sales because an item was out of stock? Or did you lose money because you had too much inventory? Address these questions to yourself and in the end, you will be having answers and solutions for your queries. We also got you covered over some standard practices for managing inventory in this article, as well as fundamentals of inventory management strategies. What is Inventory Management? There are many different meanings of inventory. Some people define inventory as the total value of all the things used in your firm. This encompasses anything to do with your business operations, such as business supplies and the security of the products. We feel that thinking of inventory as the total of all products utilized in your business that are meant for sale is more beneficial. This entails examining all of the components that go into producing your goods. Materials directly tied to your manufacturing process include both goods that are ready to sell and items that you plan to sell in the future. Inventory management, in its most basic form, is the management of your industrial inventory, often known as product inventory. These are all of the supplies and materials in your warehouse or storage area that are intended for product manufacture. Only things ready to sell, or merchandise inventory, are kept in the inventories of retailers and wholesalers. However, before going into the intricacies, it's always a good idea to brush up on the basics or you might end up following others like a blind sheep if you don't. In this scenario, we need to know not just what inventory is, but also what the goals and objectives of good inventory management for small businesses are. Read our blog on perpetual inventory systems to know more about the methods, benefits & how perpetual inventory is different from periodic inventory systems. What are the Different Types of Inventory to be Managed? While handling and controlling stock, a corporation may encounter a variety of various forms of inventory. All of these concepts are crucial to grasp to achieve successful inventory management. When it comes to the things that a company could sell, there are seven different types of inventory- Raw Materials Any goods utilized to make completed products or the separate components that go into them are referred to as raw materials. These can be manufactured or sourced by a company, or they can be acquired from a vendor. Work-in-progress (WIP) Inventory Retailers who make their items have work-in-progress (WIP) inventory. These are unfinished or in-progress goods or components that are not yet available for sale. Finished Goods The term "finished goods" refers to things that are finished and ready to sell. These might have been produced in-house or obtained as a complete, finished product from a vendor. Most shops will either buy entire, finished items from a provider or commission a third-party to create unique products for them. As a result, finished items are frequently (but not always) one of the few forms of inventory that require attention in retail inventory management. Safety Stock Safety stock is an important inventory categorization that allows producers to maintain planned output levels in the event of an emergency. This sort of inventory is simply a stretch surplus of anything required to finish the manufacture of some or all products, such as raw materials, parts, products, and any other necessary items. The purpose of safety stock is to guarantee that firms do not experience any production disruptions that result in incomplete items or idle industrial machines. Any substantial delays in finishing and distributing items might result in a drop in income as well as a loss of customer confidence. The amount of safety stock inventory required will be specific to the items being created, as well as the anticipated demand and supply of the product. Ready to Sell Inventory Ready-for-sale inventory products are finished goods that are sitting in warehouses waiting to be dispatched to merchants. This is the amount of ready-to-sell inventory held by a manufacturer or retail warehouse. Nothing prevents these things from being processed, packaged, and dispatched to merchants or straight to customers from the warehouse. Anticipation Inventory Anticipation inventory refers to things that are only available at certain periods of the year. Retailers and manufacturers alike must keep a close watch on forthcoming seasons and inventory levels. Packaging Materials Everything needed for packaging and delivering items is the final category of inventory that merchants and manufacturers alike cannot disregard. Pallets, shrink wrap, wooden boards and planks, nails, and everything else needed to properly deliver items to merchants fall under this category for manufacturers. Bubble Wrap, Styrofoam peanuts, and other cushioning materials, as well as a range of boxes and adhesives, are available to online merchants and retailers who offer delivery. Objectives of Inventory Management Objectives of Inventory Management should be both operational and financial. In terms of operations, stored items should be accessible in appropriate quantities, and working capital should be kept to a minimum. The following are some of the most important objectives of inventory management - Processing the Orders If you don't know how much stock you have at your hand, you won't be able to meet a received order. To fulfil or fulfil you must have the appropriate items on hand at all times. Otherwise, directives may throw you into disarray. Assume you're selling apparel and you've gotten an order for 500 men's denim jeans, but there are only 300 pieces of denim available at the warehouse when you checked out. If the order is received without knowing the stock level at the warehouse, then the chaos will follow. An inventory management system should be utilized to avoid this, and team members should be aware of the inventory level. Having Adequate Supplies Inventory should be conveniently stocked in advance, from raw materials to completed goods. You should provide enough of the essential material to ensure that items are not harmed when a client requires them. Supply tracking ensures that goods are available to fulfil client demands. It also allows for the shaping of demand depending on the available supply. After you have adequate supply to match client demand, you create specific targets based on customer demand. Stock Management To make things go more smoothly, you'll need a thorough inventory record. This approach allows you to keep track of your inventory and stops you from making mistakes like duplicating orders or maintaining the wrong quantity of inventory on hand. Situations of overstock or understock should always be considered. We already know that understocking may lead to shortages and disrupt the ordering process, but overstocking is just as dangerous. Assume you're working with perishable goods and have an excess of them. Perhaps you plan to keep such stockpiles on hand as a backup in case of higher-than-usual demand. However, holding an excessive amount of stocks may create more problems than not being able to satisfy the actual supply and demand. Also holding stocks for too long can spoil the quality of products and may cost you money. Minimizing Expenses  The basic objective of inventory management is to save expenses as much as possible. To be financially secure, you should reduce superfluous capital. After all, money is a critical restriction. To lower manufacturing costs, you should restrict your investment to a minimum and keep material costs under control. If the things don't sell, your assets might become liabilities overnight. As a result, one of the objectives is to guarantee that you do not lose money as a result of holding inventory. Items should be used while their original worth is still intact. Working capital should be kept to a minimum because it is also required for other activities like operations and sales. When you manage your inventory well, you can avoid extra expenses. Dealing With Losses When it comes to coping with losses, managing inventory effectively helps to a great extent. When there is no effective tracking system in place, items are prone to be squandered or misplaced. Besides, no matter what sort of employment you conduct, theft is always a danger worth addressing. Keeping a record of things reduces, but does not eliminate, the risk of loss. Having a record on hand eliminates potential waste and protects your firm from theft. Such dangers are heightened in situations when large quantities of items must be handled. As a result, an inventory management system is a lifesaver when it comes to keeping track of everything and minimizing any losses. Strengthening Production Managing your inventory benefits productivity in a variety of ways. When you want to update something in the manufacturing process, having an inventory system makes it easier. If you wish to grow or downsize your production, look at your tracking system and determine how to lead it. Furthermore, inventory systems assist manufacturing in running smoothly by assuring an effective supply. Production doesn't have to be reformed again if you retain your records and have enough supplies. Product Sales Optimization Analyzing product sales patterns is another thing you can do with stock management. The phase of sales is crucial to the entire operation. It aids in the comprehension of the existing situation and the formulation of future assumptions based on the analysis. For example - s Sluggish items can be detected and eliminated. Assume you're in the business of selling jewellery. Some of your items aren't performing well in the marketplace. The sales aren't going as planned, and they're all sitting on the shelf. Keeping things that are no longer in demand does not appear to be a wise idea. In that scenario, you may lower the pricing to sell them, or you can find another means to sell them. 7 Challenges Faced In Inventory Management Every physical product selling firm requires inventory management. Given the volatile nature of the business, managing inventory becomes extremely difficult. A competeCompetentng software may assist you in resolving a variety of issues, including inventory reorder limits, excess inventory storage costs, and many more, which we will go over in further detail later. The following are the most common issues encountered during stock management. Unpredictable Tracking Using manual management procedures across a variety of programming and accounting pages is time-consuming, repetitious, and impotent in the face of errors. Even small businesses can benefit from a solid stock global positioning strategy that includes accounting features. Because of the uncertain monitoring and invisibility of stock, more than 33% of enterprises will miss a shipment deadline, as they sold an item that wasn't truly in stock. For a large percentage of businesses, inadequate visibility is a difficult issue to deal with when it comes to inventory management processes, and the results may be disastrous. Improving data collection and analytics by improving your procedures, and equipment as part of warehouse management services helps solve inventory and supply chain concerns. Transparency The finest companies will include transparency in their satisfaction to guarantee that reps and clients are aware of what is going on. Request difficulties can occur in any circumstance, even with the special challenges of inventory management in internet purchases. If your client is aware of the delays, they may adjust their expectations and be certain that their item will arrive in the end. Your success depends on your ability to communicate and be honest. This includes informing the client that the second item they are waiting for returns stock. Poor Operational Processes At the distribution centre, inventory management controls are escalated actions that include getting and putting away, picking, pressing, and transportation. The goal is to do each of these tasks in the most efficient manner possible. Inefficient Software Inventory management programming must combine your present company measure stages to scale to support complicated coordination. Various arrangements and a big group of highlights requiring preparation and progress help are perusing many demand and supply management arrangements and dominating a large number of highlights requiring preparation and progress support Businesses count specific items in the stockroom rather than totalling the entire stock at once. Cycling calculating is a method of fact-checking. The computation of individual things serves as a type of lens through which the rest of the stockroom may be viewed. You'll probably see similar inaccuracies in various zones if your stock is wrong in the cycle tallies. Similarly, if your store's cycle checks verify it's accurate, you'll have accurate tallies. Keeping Track Of Warehouse Space Managing space effectively is a daunting task. You may better control the situation of new stock conveyances by arranging and organizing stockroom spaces using inventory management stages. It can represent important elements such as available spaces. Collaboration Between Workers One of the most common challenges in inventory management is labour cooperation. To guarantee that their eCommerce warehousing process is executed correctly, communication and teamwork are essential. When departments are averse to sharing information, it's far more difficult to discover inventory patterns and find ways to improve. Employees cannot be informed about tasks, requirements, progress, or work condition if information flow is delayed and disturbed. As a result, firms will face warehouse-related problems. Production Scheduling Production planning is critical for reducing production costs and delays. Businesses must summarise their production results each month, identify the problem and its remedy, and set objectives for the next month. Based on the solution and monthly KPIs, they generate detailed production plans. It may have an impact on sales predictions and project timelines if not done appropriately. Importance of Inventory Management Inventory Management is an important part of supply chain management, which is the process of keeping track of inventory levels and goods flow, whether it's providing raw materials to manufacturers or satisfying orders for finished items. Inventory management is a critical component of a company's long-term success, as it helps them save expenses, enhance cash flow, and increase profits. The balance of your supply chain will fall into place once your inventory is correctly arranged. Mis-shipments, shortages, out-of-stocks, spoiling (when dealing with vulnerable inventory stock), excess stock, incorrect pick-ups, and other mistakes are all possible without an effective inventory management system. Small business owners still don't track their inventory, and supply chain accuracy in U.S. retail operations is just 60 per cent on average, implying that many merchants aren't productively managing their inventory. An Inventory Management system, unlike an enterprise resource planning (ERP) system, concentrates on a single supply chain operation. It can link with other software systems, such as POS (point of sale), multi-channel sales management, and branded shipping, allowing you to create a customized integration stack to match your business's particular requirements. 10 Benefits Of Efficient Inventory Management Increased Competitiveness in the Market Inventory control is aided by utilizing efficient ways of managing inventory. In establishing a business's competitive strength, criteria such as commonalities with values, high factor loadings values, and substantial mean values are taken into account. These reasons unquestionably highlight the necessity of inventory management and control, which increases market competitiveness. Improved Service Quality due to Lesser Lead Time It's still true that managing inventory efficiently leads to repetitive customers, which is something that every firm strives for. If you want your loyal customers to keep coming back to buy your products and services, you must always enhance your service quality so that you can quickly respond to their requests. Inventory management and control assist businesses in fulfilling such demands by allowing you to give the appropriate levels of hands-on service as soon as your clients request it with an acceptable lead time which ultimately emphasizes the necessity of quality stock management. Reduced Storage Costs The advantages include concentrating on inventory planning and lowering storage costs while maintaining enough stockpiles. By adopting proper inventory management and control, the factor minimizes storage costs and boosts income, emphasizing the necessity of managing inventory levels. Efficient inventory management help avoid excess stocks or stockouts. Revenue Growth Inventory planning may be used to bridge the gap between increasing revenues and lower costs in any firm. A company's profitability may be increased by using efficient inventory management and control. If a company ignores the advantages of managing its inventory in its trade, sales, and manufacturing, it may find it difficult to maximize its operational efficiency. The cost of procurement and manufacturing of inventory has a significant impact on gross profit. A company's gross profit can be increased by lowering its manufacturing costs. As a result, appropriate inventory planning is necessary. And, with all things equal, such a corporation would report more revenues, which in turn leads to higher profitability, demonstrating the necessity of inventory management once more. Better Utilisation of Warehouse Space Proper management and control entail keeping track of all commodities produced, purchased, and sold to fulfil consumer demand. These inventory management advantages have an impact on the management approach that helps an organization's warehouse achieve better space management. It will always be tough to manage your inventory successfully if your warehouse is disorganized. Several firms choose to improve their fulfilment centres by grouping higher-selling items in conveniently accessible sections within the warehouse. This procedure helps to expedite order fulfilment while also ensuring client satisfaction. Simplified Cost Accounting Tasks Due to Inventory Control Better inventory management will undoubtedly land you in better financial situations. Internal plans and measurements are frequently developed by business owners to provide better management and planning of production and sales. Such approaches connect every participant in the firm, including managers, to providing actions that make accounting activities easier. Typically, these tactics assist industries in order, accounting for inventory values, maintaining inventory flow, and assisting in the control of stocks. Several organizations may effectively control their cash flow by using such approaches in inventory planning. Safety And Environmental Considerations When employees strain to walk on the shop floor, can't move things easily, and tumble off the shelves, having too much inventory in the warehouse can be a health and safety hazard. Efficient stock management results in less packing, which results in less waste generation and helps the environment. This is one of the strongest reasons to emphasize the necessity of inventory management. Increased Customer Confidence With improved methods in place, any business may employ inventory planning and management to boost cash flow by delivering better customer service at consistent prices. Small businesses may use an inventory control and planning tool to learn which goods sell well than others. They will be able to change their product range and make informed business decisions as a result of this phase. Better Human and Equipment Utilization If steps to control and manage inventory are properly implemented, it saves time in terms of human resources and equipment consumption. Less time spent maintaining inventory translates to improved productivity for both your company and your clients. With these advantages, your company will always be one step ahead of the competition and will always have adequate items on hand depending on inventory movements. Improved Product Quality Inventory management and control may help improve corporate efficiency and product quality significantly. These advantages help to reduce waste and improve emphasis on creating quality managing processes. It is undeniable that having an effective inventory management system leads to greater success and repeat customers. If you want your loyal clients to keep coming back, you must improve the quality of your products in every manner imaginable. 7 Step By Step Processes To Implement Inventory Management Examine Your Budget The ABC of inventory process management, the only basis of this approach, is planning and attentively monitoring your budget, as mainstream and widespread as it may appear. It is equally important since it dictates the breadth of your inventory management and the amount of raw inventory you can afford to spend. This can be accomplished in one of two ways: The first is manual budgeting and activity-based costing (ABC costing), which identifies and assigns a cost to raw materials so that you may plan. The second method is to use budgeting software that is specifically designed for this purpose. You may use it to automate this procedure and have the software assist you in managing your money more efficiently. Make a Warehousing Plan After analyzing your budget, the next step is to choose a place. Because some organizations have many sites, the warehouse where your items will be stored and await transportation is critical. It's also critical to choose the right storage for your merchandise. Different industries and raw materials necessitate different warehouse types. As a consequence, thinking about it ahead of time might save you a lot of trouble. The sort of warehouse determines where your high-demand raw materials go, how often they're carried and shipped, and how much lead time you can provide your customers. You'll be able to manage products and reduce logistics costs once you've chosen a facility or third-party logistics partner. This can be done manually or with the help of an inventory management solution. You'll be able to automate activities and make the process of shifting merchandise between various types of warehouses or organizing it in a precise sequence much easier with the latter.  Whether you're a small, mid-sized, or large business, using Inventory Management software will be less time-consuming and cost-effective than doing it manually. You'd be able to use it to automatically transfer items from one facility to another and rigorously control the present status of your products. Make a Preliminary Order List Create a preliminary order list based on the past level of demand for your items. This is critical since you'll be able to predict when a piece of your supply will be gone and act quickly to avert such disasters. You'll also find it easier to create cycle counting if you use this method. You should be able to start using the Inventory Management program once you've figured out the budget, the location, and the most critical items. Select and Implement The Appropriate Software Picking the proper tool for you can be a difficult undertaking, thus this is the phase where you should spend the most attention. With each passing day, it becomes increasingly difficult to pick inventory management software due to the plethora of products on the market. As a result, when selecting it, you should consider the following measures: Decide on a Pricing Range to Work With Remember what we discussed in the budgeting portion earlier? This is where it comes in handy: there are a lot of wonderful alternatives on the market, but the best one for you will be determined by your price constraints. As a result, you should have a pricing range in mind that you can use to limit your search. Recognize Your True Requirements Before you install software, you should know what you'll be utilizing it for. Different instruments on the market can meet a variety of demands and desires Are you planning to utilize it to create personalized product pricing? Do you want it to do inventory forecasting based on current stock levels? Or to keep track of orders and monitor every action in your warehouse? You must answer these questions before deciding on an integration option, since the objective may have a direct impact on the tool's efficiency. Determine Specific Integrations You'll Require It's critical to select a system that you can combine with your existing apps and tools. Otherwise, you'll have to manually enter all of this information, which will result in data time delays and data loss, negating the value of acquiring an inventory management system. As a result, you should be aware that different inventory management software products are appropriate for different circumstances - are you utilizing an Enterprise Resource Planning (ERP) system, a Customer Relationship Management (CRM) system, or something else? So, your choice is strongly reliant on these systems and their ability to work together. Taking these actions before entering into the deep area of inventory management, you'll be able to assess your internal demands and determine what you need to accomplish. However, as previously indicated, deploying such software might be pricey. As a result, even while analyzing the budget, keep in mind that, while it is an exceptionally advantageous option, it may not be appropriate for all small or mid-sized businesses. You may think of automation software as a supplemental service and do keep these factors in mind. 10 Best Practices Of Inventory Management for Online Businesses in 2022 The most important strategies for efficiently managing your inventory for greater profitability and cash flow management- Make A List Of Your Inventory's Top Priorities Organizing your inventory into priority categories will help you figure out which things you need to purchase more of and more regularly, as well as which are critical to your business but may be more expensive and take longer to move. Experts recommend categorizing your inventory into three categories: A, B, and C. The A category consists of higher-ticket things that you will need less of. Low-cost products with a high turnover rate fall into the C category. The B group consists of things that are modestly priced and move out the door slower than C items but faster than A items. Keep Track of All Product Details Keep track of the product details for each item in your inventory. SKUs, barcode data, suppliers, countries of origin, and lot numbers should all be included in this information. You might also want to keep track of the pricing of each item over time so you're aware of things like scarcity and seasonality that might affect the price. Examine Your Stock Once a year, some firms do a complete count. Others do spot inspections on their most popular goods on a monthly, weekly, or even daily basis. Many people engage in all of the aforementioned activities. Make it a habit to physically count your inventory regularly, regardless of how often you do it. Examine the Performance of Your Suppliers Your inventory may be harmed by an unreliable supplier. It's time to take action if your supplier is consistently late with deliveries or consistently under-delivers an order. Talk to your provider about the difficulties and figure out what's wrong. Prepare to change business partners or cope with erratic supply levels and the risk of running out of goods as a result. Follow the 80/20 Rule When it Comes to Inventories Generally speaking, 20% of your stock accounts for 80% of your profits. Make inventory management of this 20% of products a top priority. You should be aware of the whole sales lifetime of these things, as well as how many you sell in a week or month, and keep a constant eye on them. These are the goods that bring you the most money; don't let them go to waste. Maintain a Consistent Approach to Receiving Stock It may seem obvious to ensure that incoming inventory is handled, but do you have a standard procedure that everyone follows, or does each person that receives and processes new stock do it in their unique way? Small inconsistencies in the way new stock is received may leave you scratching your head at the end of the month or year, unsure why your figures don't match your purchase orders. Ensure that all employees who receive goods do so in the same manner and that all boxes are confirmed, received, and unpacked together, tallied precisely, and checked for correctness. Keep Track of Your Sales This may appear to be a no-brainer, but it entails more than simply totalling up revenues at the end of the day. You should know what things you sold and how many of them, and you should keep track of your inventory totals. But you'll also need to study this information. You should know when particular goods sell quicker or when they become obsolete. Is it a one-time thing or do you sell certain things on a given day of the week? Is it true that certain things usually always sell together? If you can answer these questions, you are on track to know your sales in your business. To keep your inventory under control, you must understand not only your sales totals but also the bigger picture of how goods sell. Order Restocks on Your Own Some suppliers provide inventory reordering services. On the surface, this appears to be a positive thing: you save money and time by delegating the procedure for at least a few of your products to someone else. However, keep in mind that your vendors may not have the same goals as you. They want to shift their inventory, but you want to stock the most profitable things for your company. Take the time to inspect inventory and place reorders for all of your goods. Invest in Inventory Management Software It's possible to manage the first eight items on this list manually, using spreadsheets and notes, if your company is small enough. However, if your firm expands, you'll need to spend more time on inventory than on your business, or risk having too much stock. All of these activities are made simpler by good inventory management software. Before you pick a software solution, make sure you know what you're looking for, that it has the metrics you need, and that it's simple to use. Use Technology That is Easy to Incorporate Inventory management software isn't the only tool you can use to keep track of your supplies. Mobile scanners and POS systems can assist you in staying on schedule. Prioritize systems that function together when investing in technology. It's not the end of the world if your POS system can't interact with your inventory management software, but it might cost you time to move data from one system to another, making it easy to wind up with wrong inventory counts. Conclusion Regardless of the size of your company, inventory management is essential. It reduces losses, storage expenses, and stock-outs for the firm. These technologies enable you to successfully manage various sites while maintaining accurate records. By recording everything methodically and quickly, an inventory solution saves you time and money; moreover, this strategy promotes customer happiness by eliminating errors along the route and providing them with the best possible experience. Better customer interactions lead to more successful businesses. As a result, inventory management systems have a significant and favourable impact on overall performance. You can start improving your inventory by finding the correct tool for your firm. How Can InventoryLogIQ Aid in Managing Inventory? Inventory planning can be tremendously complex, and if not executed adeptly can lead to a significant loss in sales. To simplify this, InventoryLogIQ uses advanced AI algorithms to generate deep SKU-level actionable insights which will enable you to enhance your inventory turns, and lower RTOs, by placing the right product at the right fulfilment centre at the right quantity. You may tackle inventory difficulties with the aid of InventoryLogIQ's multifaceted approach. Some of the ways we can assist you are as follows: Optimizing Your Inventory Management System Many parties involved in the supply chain have chosen to switch from just-in-time to just-in-case inventory management techniques. In order to prevent stockouts in the event of a disruption, this shift entails stockpiling extra goods. Unfortunately, carrying excess stock increases related storage and handling expenses, and figuring out how much safety stock you actually need can be challenging.  In order to maximise your profits by keeping the right SKUs in stock and avoiding overstocking and out-of-stock situations. InventorylogIQ offers AI-based monitoring software to identify and increase product availability and mitigate potential sales losses through smarter inventory planning.  Optimized Inventory Holding Costs You won't have money invested in idly present goods thanks to effective inventory management. InventoryLogIQ helps you detect inventory that moves slowly or that is out-of-date and won't sell at all, enabling you to get rid of surplus stock and save money on storage costs. Our analytics and straightforward reports help you find the best products and promotional bundles to sell non-moving goods and cut your inventory holding expenses by up to 40%. Solutions for Regional Distribution and Fulfillment Our fulfilment centre location suggestion engine analyses regional purchasing trends to help you choose the best fulfilment centre faster. When you integrate our technology with your online business, we help you quickly get up and running. Orders are instantly transferred to the fulfilment facility closest to the order's destination for picking, packing, and shipping as soon as we receive your goods. You can track inventory in real-time, examine order fulfilment and shipping analytics, estimate demand, and do much more from the InventoryLogIQ dashboard. Inventory Management FAQs (Frequently Asked Questions) What is the main goal of inventory control?Tracking your inventory and making sure you have the appropriate items in the proper locations is the process of strategic inventory management (at the right time). You can swiftly adapt to fluctuations in demand with an efficient inventory strategy, ensuring that you correctly satisfy each order. Isn't using spreadsheets to manage inventories a smart idea?Spreadsheets are ineffective inventory management tools because they must be manually updated, which takes time and results in data that is frequently out of sync. Spreadsheets also don't scale with your business, don't interact with your POS, and don't show you how well your things sell. How does InventoryLogIQ's platform help in inventory planning and management?InventoryLogIQ's platform has an ML (machine learning) based prediction engine that results in smart inventory placement. It helps in Inventory forecasting, identifying purchase trends, estimating purchase orders, and optimizing stock for multiple warehouses. What are the objectives of effective inventory management?Utilizing inventory management will help you save money and meet the demands of your clients. In other words, it makes it possible to successfully regulate operating costs. The foundation of every business is knowing what you have, what is in your warehouse, and how to manage the supply chain effectively. What are the primary benefits of managing inventory?Spend less money on management operations. The most fundamental benefit of inventory management is that it saves the firm money. Inventory is frequently a company's most valuable asset. Inventory is also costly to buy, placing a firm in the red until those things are sold for a profit. What is eCommerce inventory management?Ecommerce inventory management is a technique that assists merchants in growing their business in all areas through effective inventory planning & control. Business owners may use the technology to optimize warehouse operations and make better financial decisions. Everything else comes into place once you know how much inventory you have and how much inventory you need to have in order to prevent out-of-stock situations. What does the inventory 80/20 rule entail?According to the 80/20 rule, only 20% of efforts, consumers, or other units of the measurement result in 80% of results. The rule says that businesses make about 80% of their revenues on 20% of their inventory when applied to inventories. Which inventory management system is the most popular?ABC Analysis, Inventory Production Quantity, and Economic Order Quantity (EOQ) are three of the most often used inventory control methods. To determine how much inventory you should keep on hand, each inventory model takes a different technique. How is inventory managed?Using a reliable, user-friendly inventory management software system is the best method to keep track of your inventory. With inventory management software, you may automate normally time-consuming, error-prone operations, receive real-time notifications, add useful images to your inventory list, and scan barcodes and QR codes.

August 01, 2022