Safety stock is important if you want to avoid stockouts. Safety stock represents the amount of extra inventory you keep on hand to cover unexpected demand or delays in future deliveries. C Items: The least important items that account for 50% of the inventory items but only around 5% of the inventory value.B Items: Items with medium importance to the business that account for 30% of the inventory items and roughly 15% of the inventory value.A Items: The most important items that account for 20% of the inventory items but up to 80% of the inventory value.When conducting an ABC analysis, divide your inventory into three categories: This is most helpful when a business needs to prioritize which items to order and store, allowing for more oversight on certain inventory items. ABC AnalysisĪBC analysis is an inventory management technique that ranks inventory items based on their importance to your business. Regardless of the technique you choose, it’s important to note that demand forecasting will never be exact, which may lead to stockouts or overstocks. The right technique will depend on your unique business. Some of the top ways to forecast your demand include a moving average, exponential smoothing, time series analysis and judgmental forecasting. If you forecast demand well, you ensure that you’ll have the right amount of inventory on hand to meet customer demand. Demand Forecastingĭemand forecasting is the act of accurately predicting future demand for your products and is something every business should do. Here are the top 17 inventory management techniques and why they’re important: 1. When choosing the best techniques for you, make sure to consider the type of product you sell, the size of your business, your overall budget and the level of accuracy needed to run an effective supply chain. There are many inventory management techniques, each with its own benefits and drawbacks. With this in mind, let’s take a look at the top inventory management techniques to help you manage your inventory more effectively. If you do it right, you’ll be able to increase sales, lower costs and better serve your customers. The benefits of inventory management are numerous.
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