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8 Inventory Management Techniques

Inventory management is an extremely complex process, and, in the omnichannel world, it includes managing multi-site distribution networks, and inventory on store shelves, in the warehouse, and on the move. Regardless of the system you are currently using, inventory management can always be a source of renewed growth and greater revenue. Warehouse managers need to know why inventory management techniques are valuable, how they can enable omnichannel distribution, and the value of technology in developing a winning inventory management strategy.

The Problem: Inventory Management Contributes to Delays and Added Expenses

Inventory carrying costs account for 20% of business costs, but their calculation is getting more complicated. Labor, technology, and risk play into inventory carrying costs, and pinning down an exact amount is nearly impossible. However, warehouse managers can bypass this problem by taking advantage of lean inventory management techniques.

The Solution: Innovative Inventory Management Techniques Are Built for Omnichannel Distribution

In the digital era, managing the inventory visually is inefficient, costly, and it increases risk. As explained by TradeGecko, top inventory management techniques should enable better supply chain management and reduce costs. Some of the leading techniques in the industry include the following:

  1. Just-in-time, involving procuring stock just days, if not hours, before it is expected to be sold. This strategy pushes carrying costs down to less than 48 hours, but it carries higher risks.
  2. ABC analysis, considering items according to three characteristics: those of high value and low quantity; moderate value and moderate quantity; and low value with high quantity. This technique keeps line-item profitability in mind.
  3. Ongoing slotting optimization and reslotting, reducing the risks of overlooked merchandise, wasting time during picking, and streamlining replenishment.
  4. Real-time inventory management improves visibility. This strategy has great benefits for eliminating overstocking, understocking, and out-of-stock issues, asserts Inbound Logistics.
  5. Crossdocking is a relatively inexpensive way to keep carrying costs in check. However, it requires the movement of stock from an inbound trailer to an outbound shipping container, whether it’s a truck, trailer, rail cart or LTL delivery van.
  6. Using the yard as a warehouse increases the available space, which can have major implications for warehouse managers engaging in bulk-buying and bulk-selling strategies. Similar to crossdocking, use of this technique involves storing products in trailers, as well as in the warehouse, until pulled.
  7. Supplier-seller relationship management reduces delays in replenishment and may open the door to discounted prices and benefits in the future.
  8. Dropshipping puts the risk of carrying inventory in the hands of suppliers, who ship products directly to consumers, creating profits without the risk for the middleman or reseller.

To Realize the Reward of These Inventory Management Techniques, Use Technology

All the techniques for proactively managing inventory have a common factor, that is reducing the reseller’s risks. Using technology, including software-as-a-service, the cloud, big data, and analytics, is crucial to getting the most value for money in any inventory management strategy. Also, integrating systems allows warehouse managers to combine techniques to create even more efficient and productive processes for inventory management, including reducing risk of perishable stock, explains Shopify.

Uncover the Issues Hindering Your Operation, and Put These Inventory Management Techniques to Work Today

Understanding your warehouses’ strengths and weaknesses is key to reducing overhead costs, speeding order fulfillment, and increasing profitability. By implementing these inventory management techniques, your organization can ensure scalability and survival in the digital age; having a partner with a treasure trove of experience in such endeavors helps.

Veridian is experienced in working with a variety of warehouses, ranging from small operations to national retailers, and can help your organization to develop winning inventory management strategies. 

Veridian can help you realize your supply chain success. Fill out the contact information below in order to schedule a consultation call with one of our supply chain professionals.