What is Inventory Management?

Inventory management is the management of stock and management. Inventory management is an element of supply chain management. It includes aspects such as overseeing ordering management, controlling management, storage of inventory and managing the number of items for sale. Below are some of the techniques of inventory management that can get you good results for your business.

1. How to estimate the right number of stock?

Stocking the appropriate amount of inventory is essential, failure to do that your customers might start looking elsewhere for products. If you order a lot of items, you might end up having too much stock and later end up selling them at clearance prices or have dead stock.

In a poll conducted by GetApp business owners were asked the methods they used when reordering inventory. About 46% of them said they reordered based on the stock of the previous months. If by any chance you fall into that category of 46% you want to have the right data when it comes to reordering inventory. Which means that you are required to look for solutions that will help you in tracking data of your stock.

Even if you decide to use inventory software or excel formulas fact is that you will still be needed to use the information of the previous months.

2. How to determine the right price for your inventory?

You don’t want to pay high amounts of money than the required, but low rates aren’t always the best. In most instances, suppliers promise quantity breaks. All you have to do is to order about 20% of the stock and save about 10%. You might find yourself using a lot of money to purchase that stock.

Truth be told that isn’t the wisest decision for your business. Buying the stock is just a tip of the iceberg, other costs will be attached to your products. The higher amount of stock that you have the more money you will spend on storage facilities and also it will increase the chances of having dead stock. This is where the EOQ formula comes in. Economic order quantity is a formula used by business owners to calculate the number of stock your business should add to the inventory order.

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3. How to know the reorder time of new inventory?

Knowing your economic order quantity lets you know the number of stock that you want to maintain. But how do you determine the right time to make a new order? You want your new stock to arrive in time when the old batch is about to get finished.

Opening backorders create mediums of dealing with situations such as lack of stock. But the chances are that your customers will opt to look elsewhere for the products if they are out of stock in your store. So it’s vital for you always to have stock.

When it comes to reordering time, you have to consider the following:

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4. How to determine the best place to distribute and sell inventory?

You can start by selling your products on the online platform. With selling online, you don’t have to stress about the number of items that you want to allocate to personal sales channels. But selling online has its challenges also. If you post five items are available, then you have to make sure they are there.

Conclusion

Inventory management is essential to any business. The most important thing in inventory management is to know how to calculate the stock, determine the correct price of the inventory, know when to rearrange the stock and how to determine the best places to sell and distribute your products and have a good point of sale software to make all processes even easier to perform. .

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