As far as technology is concerned, everything is now being molded according to the new methods that are being invented day by day for the ease of human beings. Likewise, modern techniques have also greatly affected the methods of production of the firms. Which have in turn resulted positively in the increase of profit ratios of the businesses either online or physical. Now you must be wondering which is the most important process when it comes to doing business? Inventory management of course! And related to it, the correct inventory forecasting is also very crucial for your business’s success.
Importance of inventory management:
When you are aware of what is coming your way, it is always easy to handle it with good planning. Similarly, when you have planned everything about your inventory management system, it is much easier for you to recognize the hindrances coming towards you in the future. In addition to this, when the planning is correctly done, it is very likely that you are able to do inventory forecasting management more efficiently.
It is no secret that a good and correct forecast about the future could save you from several problems relevant to your business’s inventory. Therefore, you need to be careful enough that what technique are you going to use for the effective inventory forecasting management of your business. However, there are many techniques invented by the experienced business officials that has guided really well in terms of increasing ROI (Return on Investemnet) of the business, but still some of them outshine the others.
Inventory Management Techniques:
In the inventory management system, all the aspects relevant to your company’s stock are involved either it is production, manufacturing, delivering, shipping or the supply chain. Therefore, it is even broader than that of inventory control system. But as broad as the system, the great management is needed because your slightest mistake could affect the whole system which will let you down in front of your customers. In addition to this, you employed inventory management technique must be stable enough so that you could predict about the future conditions of the market. It should guide you well enough to stand through all the thick and thick of your inventory forecasting management system.
Moving on, let us now dive into what are the 3 major inventory management techniques that will help you manage the inventory of your business effectively;
JIT (Just-in-Time) Inventory:
The first and the most frequently used technique for the inventory management technique is JIT system. It is all in the name people! In Just-in-Inventory system technique, all of the decisions related to the inventory of your business are made at the right time just when the purchase or the sale in incurred. The main advantage of using technique is that you are always aware of conditions of inventory of your business. Every step is taken at the right time about the order points, stock-outs, handling excess inventory, and also inventory forecasting management is done very effectively.
Following are the features of the JIT technique that will enable you to work on the point for the inventory management system of your business;
- Time is saved.
- All your sales are recorded just when they occur.
- Profit and loss statements are being checked from time to time.
- JIT system helps a lot in inventory forecasting management and guides you to take necessary precautions earlier.
Another most common yet important inventory management technique is ABC Analysis. It is much simpler than the other ones, as your inventory is categorized and divided into segments. A class represents those goods that are the profit-yielding ones and need your most attention. Whereas in the B group, there are placed less important inventory than A group, but they represent the growing products and services.
However, in the C group, there are those products that are just eating up the costs of your business without yielding any profit. By using this inventory management technique, you can establish some important ways to eradicate those parts of inventory which is only causing you to cost. In addition to this, using ABC analysis plays a great role in the inventory forecasting management of your business, as it provides you the basis of which product category will be popular in the future and which one should be removed to save your costs.
Dropshipping is the inventory management technique through which you can easily sell your stock without even storing or keeping it within your business. You are at ease in not storing the inventory yourself and worry about the delivery or shipping details. You can hire an outsourcer, a retailer, or a wholesaler who is responsible for the effective production as well as shipment of your inventory as per the needs of your customers.
Moreover, dropshipping is a very favorable technique when it comes to inventory forecasting management, as you are not keeping the stock yourself therefore, whenever the trend changes, you can ask your supplier according to the needs of your customer.
Inventooly – A software to manage your inventory:
As we are aware of the fact that technology has been increasing and making the work of humans easy day by day. New software systems are being invented to handle every aspect of the business.
Similarly, Inventooly is an inventory management tool that helps you to a great extent in order to manage the inventory of your business. In addition to this, this tool guides you when your stock reaches above the maximum level and generates alerts when there is a danger for the stock-out. Using Inventooly as your inventory management tool can also be helpful for you to carry out some effective ways for inventory forecasting management also.