Inventory Management Techniques
Anyone who keeps up with packaging supplies has to use some strong inventory management techniques to make sure everything is in order. There are multiple ways to manage an inventory of products, so how do you know which is the right option for your company? It’s a tough decision, but first you have to know what techniques are out there. Here are some top inventory management techniques to consider for your packaging materials.
One of the easiest ways to cut packaging costs is to order in bulk. Bulk ordering requires you to get large quantities of an item all at once. While it may seem like a great option, you need to carefully consider how quickly you can move through your inventory before considering a bulk order. Purchasing in bulk ensures you have plenty of supplies for a good price, but it can also cause you to lose money in the long run if you aren’t thinking ahead. Any changes to a product or service might cause you to need different packaging, so if you’ve already bulk ordered everything beforehand, you’ll be out of luck.
The opposite of bulk ordering is minimum ordering. This is when you choose to buy the bare minimum that a vendor will sell you. Every vendor has a certain threshold you have to meet to complete an order. When you use this inventory management technique, you get the lowest quantity possible. This is good for small businesses who may not need supplies as often or who are limited in warehouse storage space. But, if you’re a larger company or you expect exponential growth in the near future, you may run the risk of depleting your supplies before you can place another order.
With this technique, you order supplies a few days ahead of when you’d run out, which is exactly just in time for what you need. This helps lower the amount of stock kept on hand and can eliminate deadstock, or stock that sits on shelves for months on end. However, a business who uses this strategy needs someone who is extremely agile to make sure things arrive on time. If the person in charge of tracking when it’s time to order supplies is off by any amount of time, you could be left without supplies a few days before the new stock arrives.
The ABC Method
ABC inventory management involves separating products and supplies into different categories ranked from most important (A) to least important (C). This method is great for keeping up with product demand because you can categorize things based on what’s popular now and prioritize it first. To use this method, you need excellent tracking capabilities to keep up with all the moving parts of each category. The key to this method is to manage each category on its own, which will require more personnel and more time. You also need to stay aware of potential increasing trends in lower ranked categories, or you might miss out on opportunities to push more sales.
Perpetual Inventory Management
A perpetual or continuous inventory management system gives you the benefit of real time updates. This type of system tracks when something sells, when the inventory for a sale is shipped, and when new stock arrives. To successfully run a perpetual inventory management system, you’re going to need barcodes to help scan items into the system and a Point-of-Sale tracker that reports when something needs to be shipped out. This inventory management technique is a great option for companies running multiple locations, and it also improves your future forecasting because the information can be followed in real time.
Periodic Inventory Management
Periodic inventory management is essentially the opposite of a perpetual system. As the name would suggest, this technique involves tracking inventory periodically by physically counting every item in stock. This type of inventory management can tell you the numbers at the beginning and the end of a given period of time, but it won’t provide any day-to-day activity. You can choose how frequently you wish to check inventory with this method, but keep in mind this is usually completed with good old-fashioned pen and paper tracking.
Demand forecasting allows you to predict what customers are going to buy and when This is a tricky technique to manage, especially if you don’t define your measurements in the beginning. You also need to figure out how often each measurement should be taken, that way you’re always keeping up with the latest trends. Once you know what to track and when, you can focus on predicting the future of your business and making sure you order excess supplies when a big push is coming.
First In, First Out (FIFO)
This inventory management technique involves using up the first round of supplies before you start touching the second. If you work with inventory on a daily basis, you know that over time stocked items get dusty and start to wear down if left alone for too long. By managing inventory with the first in, first out method you can keep your supplies fresh for the customer and ensure everyone gets a quality product.
Hopefully, this article has given you a new understanding of some inventory management techniques you can use for your packaging supplies. Tracking inventory is a critical part of any business, whether you’re shipping hundreds or thousands of products every month. Each of these available techniques offer unique advantages to your business. You just have to decide which is best for your specific needs and run with it.