Viewing entries tagged how to effectively manage inventory

Inventory Planning

Posted by Super User
Super User
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on Wednesday, 04 June 2014
in Blog Posts

Companies can find great benefit in effectively managing their inventory, just as they can find great peril in ineffectively managing inventory.

For the small business, or for a business just starting out, planning initial inventory levels, setting up inventory control processes, and managing logistics can seem like daunting tasks.  To make matters even more difficult, folks in inventory and logistics management often communicate using language that’s challenging, at best, for the novice to understand (just what did he mean when he referred to our shipment as “JIT via 3PL, FOB Origin”?).

As intimidating, and not doubt boring, as it may seem, however, inventory planning is very important, and should be given great consideration.

Let’s take a brief look at the importance of determining the amount of inventory your company should have on hand.  There are many companies that have struggled greatly from overloading their inventory to address every possible scenario that could possibly happen (and some scenarios that couldn’t happen), and there are those companies that wrestle with having too small an inventory of fast-rotating items, thus limiting production & increasing transportation costs.  The key to finding the correct inventory levels for your company is determining the right balance between tying up your assets in slow-moving inventory, and being unable to meet your company’s production requirements.  In all cases, however, avoid the “yeah, that looks about right” method of determining inventory levels.  Instead, utilize quantitative measurements, and well-considered forecasts.

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