In this article, we will explain in detail what inventory management is, what techniques it uses, and its types.<\/p>\n\n\n\n Inventory management is the strategy used to control inventory flow \u2014 from purchasing, stocking, and organizing to using and selling.<\/strong><\/p>\n\n\n\n Good inventory management recognizes market trends and ensures that orders are fulfilled and shortages prevented. It improves the business\u2019 internal organization, as well as its customer relations.<\/p>\n\n\n\n Customer satisfaction is especially crucial in the retail business. This is because this industry aims to meet customer demands all the time while minimizing stock shortages and overstock.<\/p>\n\n\n\n Efficient retail inventory management considers the following aspects:<\/p>\n\n\n\n The inventory management process has 5 stages, and each requires strict control and organization. These stages are:<\/p>\n\n\n\n Track and manage your stocks, from collection to final delivery \u2014 with Plaky by CAKE.com.<\/p>\n We spoke to Robert Khachatryan<\/a>, CEO of Freight Right Global Logistics, about the benefits of managing inventories, and he immediately pointed out its impact on customer satisfaction:<\/p>\n\n\n\n \u201cBy maintaining optimal stock levels, we ensured timely order fulfillment, resulting in a significant increase in customer satisfaction scores.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n When your inventory management is effective, customers don\u2019t have to wait long to get their orders, so their buying experience is improved.<\/p>\n\n\n\n There\u2019s another, more immediate benefit Robert pointed out:<\/p>\n\n\n\n \u201cEffective inventory management led us to significant cost savings, particularly in warehousing and spoilage costs, improving the bottom line.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n So good inventory management can have a positive impact on your budget.<\/p>\n\n\n\n However, there are even more benefits to inventory management, some of which are:<\/p>\n\n\n\n Inventory management does come with its own difficulties, the most common among them \u2014 according to Robert \u2014 being supply chain disruptions:<\/p>\n\n\n\n \u201cWe faced challenges with unexpected supply chain disruptions, leading to stockouts of critical items. We required agile responses and diversified supplier networks to mitigate impact.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n If your supply chain management is poor, you won\u2019t be aware of the changes in supply chains, and your inventory will suffer. In a critical situation such as the one Robert pointed out, it can make all the difference.<\/p>\n\n\n\n Robert also warned us about the other side of the coin, where customer demand changes can affect your business:<\/p>\n\n\n\n \u201cWe experienced difficulties in forecasting demand for new products, leading to either excess inventory or stock shortages.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n This challenge calls for a constant understanding of trends. Being able to keep up with and predict the market shifts is key.<\/p>\n\n\n\n Some other common challenges of inventory management are: <\/p>\n\n\n\n \ud83d\udca1<\/strong>Plaky Pro Tip<\/strong><\/p>\n\n\n\n Simplify everyday inventory tracking with our daily inventory report template. Get access in the post below:<\/p>\n\n\n\n Any business that involves inventory management chooses the techniques of inventory control that suit it best. The techniques of stock organization used by one retailer or manufacturer might not be right for their partners or competitors. <\/p>\n\n\n\n Let\u2019s have a look at some of these techniques.<\/p>\n\n\n\n ABC analysis is based on the status of a particular item, i.e. its level of popularity. Items are divided into A, B, and C categories, so that: <\/p>\n\n\n\n It is estimated that category A represents 20% of the inventory, and categories B and C have an equal share of the rest.<\/p>\n\n\n\n Robert has also used this method, and claims it\u2019s quite effective: <\/p>\n\n\n\n \u201cWe adopted ABC analysis to prioritize inventory, focusing resources on high-value items (A items). This strategy improved stock turnover rates by up to 15%, enhancing overall efficiency.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n Just-in-time (JIT) is the method that implies keeping low levels of stock and making new orders just in time when you need them for production. <\/p>\n\n\n\n This way, you need less storage space, efficiently spend money, and reduce waste by keeping only the inventory you need at the moment.<\/p>\n\n\n\n This technique can be used to reduce costs, as Robert\u2019s experience tells us:<\/p>\n\n\n\n \u201cWe implemented JIT to reduce inventory holding costs, which led to a 25% decrease in storage expenses. This method required precise coordination with suppliers to ensure timely delivery of goods.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n This model is usually applicable to smaller businesses, which means that ordered items are sent from warehouses, wholesalers, or bigger suppliers \u2014 directly to the customer. <\/p>\n\n\n\n A retailer represents an intermediary between the customer and the supplier. <\/p>\n\n\n\n Batch tracking is a technique that enables the grouping of items and tracking them in matters of expiration date and defectiveness. <\/p>\n\n\n\n This technique is widely used in the food industry because many food items have expiration dates or decay rapidly. <\/p>\n\n\n\n\n Track and manage your stocks, from collection to final delivery \u2014 with Plaky by CAKE.com.<\/p>\n Bulk shipments are considered a cheap method of transporting goods as goods are directly packed into trucks or ships. <\/p>\n\n\n\n It is a great solution for managing goods with long service life.<\/p>\n\n\n\n The consignment technique refers to the situation where goods are sent to a company by a wholesaler, but those goods are not paid to a wholesaler until they are sold to customers. <\/p>\n\n\n\n It is usually used with seasonal goods and those liable to rot.<\/p>\n\n\n\n The Six Sigma method<\/a> is one of the project management techniques that can also be applied to inventory management. Based on data, this method can help improve services and eliminate defects in the inventory management process. <\/p>\n\n\n\n The principles of Six Sigma are usually applied to production, product development, and many other areas. <\/p>\n\n\n\n The cross-docking technique is used to avoid holding inventory in a warehouse for days. <\/p>\n\n\n\n When goods arrive at a warehouse, they are immediately rearranged and loaded into other trucks or ships. This minimizes transportation costs and the number of warehouse workers. <\/p>\n\n\n\n FIFO stands for first in, first out, and this method is used if you tend to sell the oldest items first. LIFO stands for last in, first out, and this method strives to sell the newest inventory first because it is the most expensive. <\/p>\n\n\n\n Both techniques are used in inventory valuation.<\/p>\n\n\n\n Demand forecasting or demand planning is a highly useful technique that requires analyzing past trends based on previous sales figures. <\/p>\n\n\n\n Once again, Robert confirms from experience just how effective this method is:<\/p>\n\n\n\n \u201cWe utilized advanced analytics for demand forecasting, achieving a 25% improvement in order accuracy and reducing overstock situations.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n Being able to predict demand shifts can greatly improve the accuracy of your inventory management. Generally, forecast intervals are 30 days, 3 months, and one year.<\/p>\n\n\n\n Economic order quantity (EOQ) is a formula that\u2019s used to determine the optimal order quantity and thus cut costs of overhead and storage. This technique, however, assumes that demand and holding costs remain stable.<\/p>\n\n\n\n To mitigate demand changes, you can keep a safety stock on hand for emergencies.<\/p>\n\n\n\n\n Track and manage your stocks, from collection to final delivery \u2014 with Plaky by CAKE.com.<\/p>\n Backordering represents a management method that enables customer orders even though some items are currently unavailable or will be available for the first time in the near future. <\/p>\n\n\n\n This technique is effective because sales go up and customers remain loyal. <\/p>\n\n\n\n According to this model, a company orders minimum amounts of a certain product. The minimum order can have its set price or a certain number of items. <\/p>\n\n\n\n This technique is a great choice for small businesses, especially when it is used in the long run. <\/p>\n\n\n\n \ud83d\udca1<\/strong>Plaky Pro Tip<\/strong><\/p>\n\n\n\n If you want to improve the way you track inventory and the parameters you use, check out these inventory management templates:<\/p>\n\n\n\n It is difficult to handle raw material purchases, follow trends, respond to customer demands, and organize the distribution of goods. This is where inventory management systems come into play. They are essential for any business, and managers choose them depending on the needs and cost.<\/p>\n\n\n\n There are 2 main types of inventory management systems: <\/p>\n\n\n\n This system is usually used by smaller businesses that don\u2019t have loads of inventory. It involves individually counting every piece of physical inventory.<\/p>\n\n\n\n This is referred to as inventory counts \u2014 it\u2019s based on the manual counting of items and recording on a spreadsheet or some other document. This is done at specified intervals, such as monthly, quarterly, or annually. <\/p>\n\n\n\n This system is very simple, but it isn\u2019t the right fit for larger businesses. Also, it is error-prone, and it is advisable to do the counting more often to avoid mistakes.<\/p>\n\n\n\n This type of inventory management system is ideal for large businesses and corporations that have warehouses and serious transportation logistics. It involves the use of software. <\/p>\n\n\n\n Items are constantly tracked and information about them is updated in real-time. This is because the software is often connected to points of sale, and it immediately sends data on the item’s availability and location. <\/p>\n\n\n\n These systems require special equipment, such as barcode scanners or radio frequency identification systems (RFID), which use fixed tag readers.<\/p>\n\n\n\n Regardless of how much inventory you have, it is vital to document each item, know where it is, and track how many items you have left.<\/p>\n\n\n\n Plaky<\/a> by CAKE.com<\/a> is customizable and secure inventory management software<\/a>.\u00a0<\/p>\n\n\n\n It helps you manage your inventory, provides end-to-end tracking, and allows you to categorize your stock according to relevant categories. What\u2019s more, you can get notified of any status change, so you and your team members are always up-to-date.<\/p>\n\n\n If creating a board from scratch sounds like too much work, you can make use of Plaky\u2019s customizable inventory management template<\/a> to get you started. <\/p>\n\n\n\n It can be adjusted to your needs, and you can keep data on product IDs, prices, invoices, and suppliers. <\/p>\n\n\n\n Plaky also provides many features that improve inventory management, such as:<\/p>\n\n\n\n Besides inventory, Plaky can be used to track other resources as well \u2014 like your budget and human resources. Because of this, you can use it for effective resource allocation<\/a> in general.<\/p>\n\n\n\n We mentioned retailers as the industry that needs inventory management most of all \u2014 they will also find Plaky useful for their operations. As great project management software for retail operations<\/a>, Plaky can also be utilized in this specific industry. <\/p>\n\n\n\n As tracking inventory is most important in retail, using PM software can be much more beneficial and streamlined than spreadsheets, or pen and paper.<\/p>\n\n\n\n As you can see, inventory management software can be useful in many ways. It offers tools that can help you optimize your inventory type, deliver tasks, fulfill orders, and analyze financial data. So, help your inventory management improve and <\/em>sign up for a free Plaky account today<\/em><\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Inventory management involves tracking the flow of stock from the suppliers to the customers.<\/p>\n","protected":false},"author":14,"featured_media":10464,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-1372","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-project-management"],"acf":[],"_links":{"self":[{"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/posts\/1372","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/comments?post=1372"}],"version-history":[{"count":24,"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/posts\/1372\/revisions"}],"predecessor-version":[{"id":16935,"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/posts\/1372\/revisions\/16935"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/media\/10464"}],"wp:attachment":[{"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/media?parent=1372"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/categories?post=1372"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/plaky.com\/blog\/wp-json\/wp\/v2\/tags?post=1372"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Inventory](\"https:\/\/plaky.com\/blog\/wp-content\/uploads\/2022\/11\/Inventory-management-cover-1110x555.png\")
<\/figure>\n\n\n\nWhat is inventory management?<\/h2>\n\n\n\n
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5 stages of inventory management<\/h2>\n\n\n\n
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![\"Plaky](\"https:\/\/plaky.com\/blog\/wp-content\/themes\/cake-blog\/theme\/images\/banners\/default@2x.png)
\n <\/picture>\n <\/div>\n<\/div>\n\n\n \n\n\n\nBenefits of inventory management<\/h2>\n\n\n\n
![\"Robert](\"https:\/\/plaky.com\/blog\/wp-content\/uploads\/2022\/11\/Robert-Khachatyan-headshot.jpeg\")
<\/figure>\n<\/div>\n\n\n\n<\/figure>\n<\/div>\n\n\n\n\n
Challenges of inventory management <\/h2>\n\n\n\n
<\/figure>\n<\/div>\n\n\n\n<\/figure>\n<\/div>\n\n\n\n\n
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13 Inventory management techniques<\/h2>\n\n\n\n
Technique #1: ABC analysis<\/h3>\n\n\n\n
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<\/figure>\n<\/div>\n\n\n\nTechnique #2: Just-in-time (JIT)<\/h3>\n\n\n\n
<\/figure>\n<\/div>\n\n\n\nTechnique #3: Dropshipping<\/h3>\n\n\n\n
Technique #4: Batch tracking<\/h3>\n\n\n\n
\n <\/picture>\n <\/div>\n<\/div>\n\n\n \n\n\n\nTechnique #5: Bulk shipments<\/h3>\n\n\n\n
Technique #6: Consignment<\/h3>\n\n\n\n
Technique #7: Six Sigma<\/h3>\n\n\n\n
Technique #8: Cross-docking<\/h3>\n\n\n\n
Technique #9: FIFO and LIFO<\/h3>\n\n\n\n
Technique #10: Demand forecasting<\/h3>\n\n\n\n
<\/figure>\n<\/div>\n\n\n\nTechnique #11: Economic order quantity<\/h3>\n\n\n\n
\n <\/picture>\n <\/div>\n<\/div>\n\n\n \n\n\n\nTechnique #12: Backordering<\/h3>\n\n\n\n
Technique #13: Minimum order quantity<\/h3>\n\n\n\n
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2 Types of inventory management systems<\/h2>\n\n\n\n
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Type #1: Periodic inventory management system<\/h3>\n\n\n\n
Type #2: Perpetual inventory management system<\/h3>\n\n\n\n
Use Plaky by CAKE.com to streamline your inventory management <\/h2>\n\n\n\n
![\"Plaky\u2019s](\"https:\/\/plaky.com\/blog\/wp-content\/uploads\/2022\/11\/Inventory-management-template.png\")
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