Currently, an enterprise cannot exist without taking into account current reserves. The number and level of goods determine the business results of the enterprise. Stockpile management is an increasingly important issue for every enterprise. The level of inventories influences the costs of production and sales, and consequently the competitiveness of products on the market.
Inventory management is a common task for enterprises and firms in any niche. Reserves need to be created in the production sector, retail trade, etc. The statistic speaks that there is a lack of visibility in inventory management workflows across industries and inventory accuracy in retail business is only 63%. Good inventory management can significantly improve the position of your business, so many companies decide to build an efficient inventory system. Let us move on to stockpile management strategies and their benefits.
Reducing Inventory Management Costs with Just-In-Time Strategy
What is a Just-In-Time Strategy? JIT is a production management concept that aims to reduce the number of reserves. According to this concept, the necessary components and materials are delivered in the right quantity at the right place and time. Just-In-Time increases production efficiency by reducing losses. Losses refer to any action that does not add value to a product – unnecessary movement of materials, excess inventory, Modula vertical lift modules.
By using this strategy, you are reducing the money needed for inventory management. By reducing production you are able to react quickly to changes in the market. This also results in a reduction in unsold goods in case of a decrease in demand.
Reducing Storing Costs with Fixed Size Ordering System
How does it work? This system provides the delivery of materials in equal, predetermined, optimal batches at changing time intervals. The order for delivery of the next shipment is given when the size of the order in the warehouse is reduced to the specified critical level – «points of order».
The advantage is a low level of the maximum desired order. As well as reducing the cost of storing stocks in warehouses due to a reduction in the area of understock.
Reducing the Risks of Shortage with Fixed Period Ordering System
A fixed period ordering system means that orders are made at a fixed time at the same time intervals. The order period is predefined and cannot be changed. Order size is determined according to the principle of reserve replenishment up to the most desired value
You don’t have to hire someone to keep a constant check on the quantity of the product. It reduces the risk of shortages in case of unforeseen situations such as COVID-19.
Using these strategies you will be able to organize your warehouse, which will allow you to manage your stock without any unnecessary effort. If the software is implemented, the performance and efficiency will also increase as it will eliminate manual processes. When you add all this up, you get two main benefits. The first is that these models can save on the costs of managing the warehouse. And second, and most importantly, are loyal customers who will come back to you again and again because you will always have the goods available and the price will be competitive because there will be no extra cost.