Managing inventory levels is crucial for companies as customer purchases are taken from cycle stock. Cycle stock is part of the inventory where items on store shelves and stock rooms are taken from. Regular orders cannot be satisfied without a well-managed cycle stock.
In order to account for the items in a cycle stock, companies have decided to use the cycle inventory method. This method tracks inventory through constant inventory counts. By accounting for the number, price, and status of items, inventory is managed efficiently and accounted for before they are loaded on trailer skates and sent away from warehouses or showrooms to customers.
Some of the better inventory management techniques include:
Keeping Up with the Season
Seasonal stock is just that: stock that enters your warehouse for certain seasons. The nature of seasonal stock demand and supply means companies must be aware at all times of their safety stock in their business cycles. Too much seasonal stock that could not be phased out is a loss, and so is having too little of the in-demand item.
Businesses must always be wary of the time of the year in addition to other analytical variables, such as fluctuations in supply and demand, lead times, and frequency of deliveries.
Safety Stock
Safety stock is another word for buffer inventory. This type of inventory is used by manufacturers and retailers in different ways. For manufacturers, safety stock means having raw materials and pre-made or half-completed components; safety stock for retailers implies having enough stock to prevent lost sales. Both sides of the supply chain also use safety stock in case of natural or man-made errors.
Keeping a healthy safety stock is crucial to keep a business in tip-top shape. It’s also a form of insurance: emergencies will necessitate the consumption of safety stock, and if your company is ill-equipped, you’ll lose out on sales. In connection with the seasonal supply, having a set amount of stock of seasonal items will make procurement of said items less of a pressing need.
Bulk Shipments
Sure, bulk shipping means companies have to shell out extra cash to store their inventory, but it means selling huge chunks of products in bulk. Bulk shipping relies on the principle of buying large quantities of products at once at a lower price, in hopes that all the stock could be sold off quickly and return huge profits.
Businesses agree that while carrying a huge risk for their capital, bulk shipping has the biggest profitability quotient. Shipping in large quantities also means fewer deliveries. Bulk shipping also works better for staple products that are sure to sell out quick. Selling out inventories quickly can offset the possible difficulties involved in adjusting to the changes in demand.
Establishing a department solely in charge of logistics and inventory can be useful for businesses. As a company grows, so does its need to keep a consistent inventory, which may grow unruly without in-depth management. Dedicated logistics and inventory teams can link up with sales and marketing to determine which campaigns need to happen.
Inventory teams that discover low prices among competitors for your current stock can advise the sales team to hold a sale event. In the same line, they can also advise creating an exclusive campaign for stocks that are considered rare and desirable for a market. Good inventory management can mean an increase in sales and business efficiency.
