{"id":1629,"date":"2023-06-01T12:16:06","date_gmt":"2023-06-01T06:46:06","guid":{"rendered":"https:\/\/rzplearn.com\/?p=1629"},"modified":"2024-12-30T12:24:04","modified_gmt":"2024-12-30T06:54:04","slug":"best-inventory-management-tips-techniques","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/","title":{"rendered":"Best Inventory Management Techniques You Need to Know"},"content":{"rendered":"<blockquote><p><span style=\"font-weight: 400;\">Inventory management includes aspects such as controlling and overseeing purchases, both from the suppliers and from the customers. This includes maintaining stock, controlling the amount of product for sale and order fulfilment.<\/span><\/p><\/blockquote>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d1fad6731cf\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d1fad6731cf\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#What-is-inventory-management\" >What is inventory management?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#Why-do-you-need-inventory-management\" >Why do you need inventory management?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#Avoid-spoilage\" >Avoid spoilage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#Avoid-deadstock\" >Avoid deadstock<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#Save-on-storage-costs\" >Save on storage costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#Improper-stocks\" >Improper stocks<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#Top-inventory-management-techniques-for-your-business\" >Top inventory management techniques for your business\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#1-Set-par-levels\" >1. Set par levels<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#2-First-in-first-out-FIFO\" >2. First-in first-out (FIFO)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#3-Build-manage-relationships\" >3. Build &amp; manage relationships<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#4-Regular-auditing\" >4. Regular auditing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#5-Using-the-ABC-method\" >5. Using the ABC method<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#6-Accurate-forecasting\" >6. Accurate forecasting<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/#Best-inventory-management-tools\" >Best inventory management tools<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-inventory-management\"><\/span><span style=\"font-weight: 400;\">What is inventory management?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Inventory management is the process of efficiently tracking, organizing, and controlling a company&#8217;s stock of goods. It involves optimizing inventory levels, minimizing costs, and ensuring timely availability to meet customer demand, ultimately maximizing profitability and customer satisfaction.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why-do-you-need-inventory-management\"><\/span><span style=\"font-weight: 400;\">Why do you need inventory management?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Proper inventory management is the fundamental building block to your company\u2019s longevity. When your inventory is properly organised, your entire supply-chain will be on the right track. Not having your inventory in place can lead to issues like mis-shipments, out of stocks, overstocks, etc.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are quick pointers as to why inventory management is so important:<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Avoid-spoilage\"><\/span><b>Avoid spoilage<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\"> If your business sells perishable products or the products that come with an expiry date, like food or makeup accessories, it is highly possible that it will spoil if you do not sell it in time. Solid inventory management helps you avoid unnecessary spoilage.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Avoid-deadstock\"><\/span><b>Avoid deadstock<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Deadstock does not only refer to expired material but also the stocks that can no longer be sold because it could have gone out of style or out of the season\u2019s demand. By managing your inventory in a better way, you can avoid issues like these.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Save-on-storage-costs\"><\/span><b>Save on storage costs<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Oftentimes, warehousing brings in a variable cost. This means you have to pay on the basis of the weight or size of your products. A thorough study of your inventory report over time will help you understand what products are sold best and when and hence, you will save on spending excess on the storage houses.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Improper-stocks\"><\/span><b>Improper stocks<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Usually, out of stocks and overstocks occur when a company uses manual methods to place orders, without overseeing the state of their inventory. This certainly is not a good predictor for inventory forecasting and hence results in too much stock or too little stock.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">All of these mistakes will not only cost you money but also cost you wasted labour to load and unload in the beginning and then rectifying the mistakes later. Simply put, when you don\u2019t implement proper inventory management techniques and tools, your risk of human error mistakes keeps going up. Not just monetarily, this also makes a direct impact on your customers\u2019 experience. Poor inventory management techniques can cost you negative customer reviews and your loyalty might take a negative hit as well.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Top-inventory-management-techniques-for-your-business\"><\/span><span style=\"font-weight: 400;\">Top inventory management techniques for your business\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Each business must try to remove as much human error as possible. Regardless of whichever inventory management tool you are planning to use, listed below inventory management techniques will help you improve your inventory <\/span><i><span style=\"font-weight: 400;\">(and cash flow too)<\/span><\/i><span style=\"font-weight: 400;\">!<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"1-Set-par-levels\"><\/span><span style=\"font-weight: 400;\">1. Set par levels<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Make the process simpler by setting a &#8216;par level&#8217; for each of your product. Par level refers to the minimum quantity of a particular product that must be on hand, all the time. Whenever your inventory stocks dip below a predetermined value, you know it\u2019s time to place an order.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Par product value may differ from product to product and also by how quickly is an item sold or how long does it take to get it sold.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Setting up a par value will take some time initially- you will have to conduct research for each product based on the season and other factors but after setting it up ones, it will simplify the entire process of ordering!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Remember to keep checking on your par values from time to time, to check if your assumption still makes sense or you need to tweak it a little.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2-First-in-first-out-FIFO\"><\/span><span style=\"font-weight: 400;\">2. First-in first-out (FIFO)<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">As the name suggests, this principle means that the first stock that comes in goes out first. This is especially important for perishable products so that you don\u2019t end up with spoiled or expired products. It is also a good idea to practice FIFO for non-perishable products. The reason is, if boxes are kept in for long, they are likely to get worn-out. You certainly don\u2019t want to end up with something obsolete that you can\u2019t sell.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In order to have a proper FIFO in place, all you need is an organised warehouse. Typically, this means adding the product from the back and pushing the existing products to the front.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3-Build-manage-relationships\"><\/span><span style=\"font-weight: 400;\">3. Build &amp; manage relationships<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Building a strong and reliable network plays an important role in a healthy inventory. This inventory management technique goes a long way whether you need to return a slow-selling item or restock a fast seller quickly or trouble manufacturing issues or temporarily expand storage space. It is important to have a strong relationship with your suppliers. That way, they will be more cooperative with you and help you find solutions quickly.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Please note, a good relationship is not just about being friendly. It is about clear, proactive and open conversations.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4-Regular-auditing\"><\/span><span style=\"font-weight: 400;\">4. Regular auditing<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Even if you have a tool or software to manage your inventory, it is a good idea to make sure that the screen data matches the actual facts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Find out ways to have a quick check on all of your products and if they are in sell-worthy condition.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"5-Using-the-ABC-method\"><\/span><span style=\"font-weight: 400;\">5. Using the ABC method<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Out of all your products, there are some products that need more attention than others. Using an ABC analysis lets you prioritize your inventory management by separating out the products that require a lot of attention from those that don\u2019t. You can do this by listing your products in one of the three categories:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">High-value products with a low frequency of sales (Category A)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Moderate-value products with a moderate frequency of sales (Category B)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Low-value product with a high frequency of sales (Category C)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Your Items in category A require regular attention since they have huge financial impact but the sales are unpredictable. The items you list in Category C require less attention since they have a smaller financial impact and they are constantly getting sold. The items you list in Category B fall somewhere in between.<\/span><\/p>\n<p><em><strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Also Read <a href=\"https:\/\/razorpay.com\/learn\/balance-sheets-types-objectives-formats\/\" target=\"_blank\" rel=\"noopener noreferrer\">All You Need To Know About Balance Sheets\u00a0<\/a><\/strong><\/em><\/p>\n<h3><span class=\"ez-toc-section\" id=\"6-Accurate-forecasting\"><\/span><span style=\"font-weight: 400;\">6. Accurate forecasting<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">One of the most important inventory management techniques is to have precise and reliable forecasting in place. Even though your prediction might not be 100 percent accurate, you will be prepared for something that might happen. Make accurate predictions by looking at the following:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Current market trends<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Last year\u2019s sales during the current time<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Current year\u2019s growth rate<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Seasonality of your products<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Overall economy<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Best-inventory-management-tools\"><\/span><span style=\"font-weight: 400;\">Best inventory management tools<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Now that you know what is inventory management, why you need it and have a hold of best inventory management techniques, it\u2019s time you know about the best tools to help you get started. Here are the top inventory management tools to assist your business growth:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">NetSuite ERP<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Zoho Inventory\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">QuickBooks<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Systum<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">SellerCloud<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">With the above mentioned powerful inventory management techniques in place, you can reduce additional costs while helping your business to stay profitable. You can also analyze sales patterns and predict future sales and get yourself and the business prepared for the unexpected.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s time you take control of your inventory management and stop losing money and for the same, we hope this article helps you throughout!<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Inventory management includes aspects such as controlling and overseeing purchases, both from the suppliers and from the customers.<\/p>\n","protected":false},"author":151156465,"featured_media":11586,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3367,1383],"tags":[3259],"class_list":{"0":"post-1629","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-glossary","8":"category-business","9":"tag-inventory-management"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156465"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=1629"}],"version-history":[{"count":7,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1629\/revisions"}],"predecessor-version":[{"id":8065,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1629\/revisions\/8065"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/11586"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=1629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=1629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=1629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}