Real earnings and fast without replenishment, 11 Inventory Management Techniques to Save You Money
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- Woolworths Supermarket Replenishment Associate monthly salaries in Australia
- Guidelines & Policies
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- Guide to warehouse inventory replenishment: best models, systems & processes - 6 River Systems
Inventory control is the process of managing and regulating the supply, storage and distribution of stock.
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Inventory control is a key function of supply chain management that maintains appropriate quantities of stock to meet customer demand. What is stock optimization? The objective of stock optimization is to have the right products in the right place at the right time — as efficiently and cost-effectively as possible.
Stock optimization also known as inventory optimization plays a key role in ensuring inventory control techniques can be carried out effectively. This is done by forecasting demand and managing supply variables while dynamically adjusting stock rules and inventory parameters. We all know that inventory takes up valuable warehouse space and ties up capital. Understand your demand Our first inventory control technique is all about demand forecasting. The key to controlling your stock levels is knowing what products to carry to satisfy market demand.
Effective forecasting should consider: Product lifecycles: every item in your warehouse is sitting at a specific stage in its product life cycle. Read our blog on demand forecasting accuracy for more details.
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Seasonality: identify any products in your portfolio that have seasonal demand variations. This keeps the data clean and easier to use for forecasting going forward.
- 6 Inventory Control Techniques for Stock Optimization
- Best Practices for Managing Grocery Retail Supply Chains
- Best practices for warehouse inventory replenishment Definition of inventory replenishment Essentially, inventory replenishment is a combination of models, practices, and technologies that help manage the movement of stock from a central location to another location downstream to ensure that stock continues to flow efficiently along the supply chain.
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- 11 Inventory Management Techniques to Save You Money
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Trends: Product demand is influenced by fashion, technology, social, economic and legal factors. Look out for such trends in your historical demand data and adjust your forecasts accordingly.
Qualitative factors: Add any qualitative forecasting factors into your data, such as sales promotions, competitor activity or external market events. Know your star products! ABC analysis is a good inventory control technique to segment your warehouse stock based on the value it brings to the company.
Every item in your warehouse has a different value in terms of how much money it makes the business. Choose one that works for you.
Guidelines & Policies
Then split your stock into categories: A, B, and C. ABC classification is a simple way to identify your most important products so you can focus your time in terms of stock control and management. In addition, it can help you set out more focused stock control parameters see next point! It is, however, a very simplistic framework and fails to account for supply and demand variables.
For more complex inventory classification, use inventory optimization softwarewhich carries out multi-dimensional item categorization. By segmenting SKUs based on their demand, inventory turnover and their profitability you can get a much greater insight into controlling your stock levels.
Inventory classification, such as ABC analysis, will help with this.
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For example, you should consider setting different service levels, safety stock levels and reordering parameters for each category. For example, if real earnings and fast without replenishment seven day lead time is acceptable to your customers, then you might be real earnings and fast without replenishment to lower your inventory levels and rely on smaller purchase quantities, reducing tied-up capital, or you could place on-demand orders with your suppliers if they have short lead times to you.
Remember — providing higher service levels than required costs your company money. Failing to meet customer expectations, however, can lead to lost sales and a damaged reputation.
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So you need to find a balance! Service levels will also influence your stock turnover rate — aim for higher service levels on faster moving items and lower them for those with less demand, so you can keep your turnover rate high and avoid tying up capital unnecessarily. Fine-tune your stock replenishment strategies You can only optimize stock levels when you have informed inventory purchasing practices.
Most businesses will reorder either when they hit a fixed date or when stock drops to a specified level — the defined reorder point. The amount they reorder is usually either a fixed amount or variable to meet a minimum or maximum stock capacity.
Guide to warehouse inventory replenishment: best models, systems & processes - 6 River Systems
However, if these methods are leading to stockouts or excess stock scenarios, you need to look for a smarter way to carry out replenishment. Carry safety stock to reduce risk of stock outs Safety stockalso called buffer stock, is the layer of inventory kept to prevent stockouts and back orders in situations where the forecast is exceeded or supply is delayed.
Safety stock minimizes disruptions caused by demand, supply chain or fulfillment disruptions — while investing the lowest possible amount of capital in inventory. The more accurate you can make safety stock calculations, the less likely you are to experience out-of-stocks or overstocking situations.
Reorder point 1. Set par levels Make inventory management easier by setting par levels for each of your products. Par levels are the minimum amount of product that must be on hand at all times. Par levels vary by product and are based on how quickly the item sells and how long it takes to get back in stock. Not only will it be easier for you to make decisions quickly, it will allow your staff to make decisions on your behalf.
Effective inventory control techniques therefore rely on stock optimization tactics. Many businesses use standard ERP or WMS systems to execute their stock control procedures while others still resort to spreadsheets. Both approaches, however, have their limitations in terms of functionality.
More and more businesses are therefore turning to inventory optimization software to automate their processes and improve efficiency. Inventory optimization tools use advanced algorithms that are simply not available elsewhere to bring accuracy and speed to inventory management calculations.
However, EazyStock is a best-in-class solution — born from one of these larger platforms — that is specifically designed for businesses of all sizes. It is affordable and still delivers sophisticated, dynamic functionality.