ABC inventory managementis a technique that’s based on putting products into categories in order of importance, with A being the most valuable and C being the least. Not all products are of equal value and more attention should be paid to more popular products.
Although there are no hard-and-fast rules, ABC analysis leans on annual consumption units, inventory value, and cost significance. Categories typically look something like:
Category A
Items of high value (70%)
and small in number (10%)
Category B
Items of moderate value (20%)
and moderate in number (20%)
Category C
Items of small value (10%)
and large in number (70%)
The key is to operate each category separately, particularly when selective control, allocation of funds, and human resources are required.
Backordering是指一个公司的决定和命令receive payments for out-of-stock products. It’s a dream for most businesses but it can also be a logistical nightmare … if you’re not prepared.
When there’s just one out-of-stock item, it’s simply a case of creating a new purchase order for that one item and informing the customer when the backordered item will arrive. When it’s tens or even hundreds of different sales a day, problems begin to mount.
Nonetheless, enabling backorders means increased sales, so it’s a juggling act that many businesses are willing to take on.
As a general rule, the bigger the item value (physically and monetarily), the more “delivery tolerance” you get from customers.
If you’re a small retailer, it may not be feasible to risk overstocking. In this case, you might consider labeling the item’s “Buy now” button as “Pre-order” or “Get yours when it comes back in stock.” This creates a reasonable expectation for customers that it will take a bit longer to arrive.
Alternatively, some businesses run with a “no-stock” approach which involvestaking only backordersuntil they’ve generated enough sales to then place a large bulk in order with a supplier.
Just In Time (JIT) inventory managementlowers the volume of inventory that a business keeps on hand. It is considered a risky technique because you only purchase inventory a few days before it is needed for distribution or sale.
JIT helps organizations save on inventory holding costs by keeping stock levels low and eliminates situations where deadstock - essentially frozen capital - sits on shelves for months on end.
However, it also requires businesses to be highly agile with the capability to handle a much shorter production cycle.
If you’re considering adopting a Just in Time inventory management strategy, ask yourself the following:
Consignmentinvolves a wholesaler placing stock in the hands of a retailer, but retaining ownership until the product is sold, at which point the retailer purchases the consumed stock. Typically, selling on consignment involves a high degree of demand uncertainty from the retailer’s point of view and a high degree of confidence from the wholesaler’s point of view.
For retailers, selling on consignment can have several benefits, including the ability to:
While most of the risk in selling on consignment falls on the wholesaler, there are still a number of potential advantages for the supplier:
If you consider selling on consignment — as either a retailer or wholesaler — set terms clearly regarding the:
This inventory management technique eliminates the cost of holding inventory altogether. When you have a dropshipping agreement, you can directly transfer customer orders and shipment details to your manufacturer or wholesaler, who then ships the goods.
类似于dropshipping,直接换装practice where incoming semi-trailer trucks or railroad cars unload materials directly onto outbound trucks, trailers, or rail cars.
Essentially, it means you move goods from one transport vehicle directly onto another with minimal or no warehousing. You might need staging areas where inbound items are sorted and stored until the outbound shipment is complete. Also, you will require an extensive fleet and network of transport vehicles for cross-docking to work.
Cycle countingor involves counting a small amount of inventory on a specific day without having to do an entire manual stocktake. It’s a type of sampling that allows you to see how accurately your inventory records match up with what you actually have in stock.
This method is a common part of many businesses’ inventory management practices, as it ultimately helps ensure that customers can get what they want, when they want it, while keeping inventory holding costs as low as possible.
How often you do a cycle count and how much stock you count will depend on the types of products you sell and the resources at your disposal. For example, you might do anABC inventory analysisto determine your class A products, and do a cycle count on your most high-value items more frequently than your other items.
Regardless of your specific approach to inventory counts, here are some best practices to follow:
There are three main types of inventory cycle counts that you can use:
IKEAis a great example of a business that uses both a sophisticatedinventory management systemand sporadic cycle counts to optimize inventory.
Using the company’s proprietary inventory system, on-site logistics managers can view their store’s stock levels and monitor any discrepancy in expected sales (unique to each store) versus inventory levels.
For example, let’s say that IKEA’s MALM bed frame has been selling much slower than expected. In this case, the logistics manager can manually check and confirm the stock of the bed frame. This means logistics managers only need to cycle count if the system catches a discrepancy.
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