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Inventory Management – Techniques and Methodologies

Last updated on January 20th, 2022 at 12:39 pm

Managing an inventory can be quite a tedious and cumbersome task to handle without the help of a proper software solution. Recording units, item numbers, and location of items, while making sure that there is enough stock for all of the orders your customers placed is often just the beginning. 

However, keeping immaculate records of your stock volumes and inventory is mandatory, and potentially punishable with a fee if found incorrect. Of course, we are only human and even the best of us make mistakes, so it’s safe to assume that the only way to properly manage your open-source inventory is by utilizing an inventory management solution that will eliminate the factor of human error.

There are quite a few different inventory management techniques and methodologies you can practice and all of them aim to improve the overall accuracy. Here are some of the most popular techniques that businesses practice:

  • ABC Analysis – Done by identifying the most and least popular types of stock in your inventory.
  • Batch Tracking – Relies on grouping items of similar nature to track expiration dates more easily and trace defects.
  • Consignment – An agreement between your business and the supplier in which the supplier retains ownership of the inventory until a product is sold. Until then, your business does not pay the supplier.
  • Cross-Docking – This method eliminates warehousing by unloading items from the supplier truck, directly into the delivery truck.
  • Demand Forecasting – Conducting a predictive analysis to predict the customer demand ahead of time.
  • Economic Order Quantity (EOQ) – A formula used to calculate exactly how much inventory your company should order to minimize holding and other types of costs.
  • FIFO – First In, First Out. This technique dictates that the oldest stock should be the first one to move.
  • LIFO – Last In, First Out. Contrary to FIFO, LIFO dictates that because prices are constantly rising, you should look to move the more-recently purchased inventory first, as it is the most expensive. 

What Is The Easiest Way To Manage My Open-Source Inventory?

The easiest way to manage an open-source inventory would be to find a software solution that can automate many of the manual processes suitable for your business. It will give you the needed coordination that will ensure there are no chain inefficiencies with your stock. 

So, in this context, a tool can track your inventory stock with great accuracy in real-time. It will eliminate the need to always check on your stock levels and also put an end to human error. All the information you need will be presented to you on a single dashboard which will give you the needed clarity and visibility to provide you with insights at a glance.

What Should I Look For In An Open-Source Inventory Management Solution?

If you have decided to get an open-source inventory management solution for your business, but you are not sure which one you should go for, there are a few important features to note:

  • Real-time inventory tracking – an essential feature you need to always keep you updated with all of the stock movements and allocations.
  • Real-time inventory value – while tracking is the most important for the warehouse and operations managers, the finance team needs to know the worth of your stock.
  • Reorder and low stock alerts – a convenient feature that will alert you every time you are low on any stock and prevent you from running out of stock.
  • Purchase and supplier management – a useful tool that can automate many of the processes, like autofilling purchase orders, storing supplier details, and generating discounts.
  • Unlimited SKUs – consider getting a software solution that will allow you to add an unlimited number of products.
  • Proper inventory reporting – the best inventory management solutions should be able to give you detailed reporting which includes turnover and backorder rates, unit sales, stock age, margins, and more.

Conclusion

We live in modern times where most businesses are incredibly fast-paced, and not being able to keep up can be detrimental to your business. In this era of automation, you should be looking to reduce repetitive and manual tasks that take up a lot of time everywhere, even in inventory management. With the help of an open-source inventory management solution, you can always stay up to date with your inventory with the minimum of effort and eradicate the possibility of human error fully. 

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