Inventory management is the process of ordering, storing, using, and selling stock. Effective inventory management ensures you have the right products in the right quantities at the right time, minimising costs while maximising service levels.
Key methods include: FIFO (First In, First Out) — oldest stock sold first; LIFO (Last In, First Out) — newest stock sold first; JIT (Just In Time) — receive goods only when needed; ABC Analysis — classify inventory by value; EOQ (Economic Order Quantity) — calculate optimal order size.
Safety stock acts as a buffer against demand fluctuations. Reorder points trigger new orders when stock reaches a predetermined level. Cycle counting involves regularly counting portions of inventory. Batch tracking helps trace products through the supply chain.
1. Classify inventory using ABC analysis.
2. Set accurate reorder points and safety stock levels.
3. Conduct regular cycle counts.
4. Use barcode or RFID technology.
5. Monitor inventory turnover ratios.
6. Build strong supplier relationships for reliable replenishment.
2. Set accurate reorder points and safety stock levels.
3. Conduct regular cycle counts.
4. Use barcode or RFID technology.
5. Monitor inventory turnover ratios.
6. Build strong supplier relationships for reliable replenishment.
Modern inventory management uses ERP systems, warehouse management software, IoT sensors for real-time tracking, AI-powered demand forecasting, and cloud-based platforms for multi-location visibility.