Inventory management is a critical component of any business operation. To ensure that customer demand is met, it is essential to have the right techniques in place. Four main methods of inventory management include just-in-time (JIT) management, material requirements planning (MRP), economic order quantity (EOQ), and daily inventory sales (DSI). Each of these techniques offers its own advantages depending on the type of operation.
Let's take a closer look at each of these four methods. Just-in-time inventory management (JIT) is a system in which companies receive inventory when they need it, instead of ordering too much and running the risk of having dead stock. This helps to reduce costs and keep stock levels minimal. Additionally, safety stock inventory management is an additional inventory that is requested and reserved in case the company does not have enough to be resupplied.
ABC inventory analysis is a method used to categorize items based on their importance, allowing businesses to prioritize their stock. Economic order quantity (EOQ) is a formula used to determine the optimal order size for a given product. This helps businesses to minimize costs by ordering the right amount of stock at the right time. Repeat points are the points at which a business should reorder stock, based on the rate at which it is being sold.
This helps businesses to ensure that they always have enough stock on hand. Inventory management evaluations are also important for operations managers. This evaluation assesses the efficiency and flow practices of the inventory process, helping managers to identify areas where improvements can be made. Order management is also an important part of inventory management, as it involves tracking customer orders and stock levels.
Finally, MRO inventory focuses on the small details such as maintenance, repair and operating supplies. By properly managing your inventory, your company will know if it has enough stock to meet customer demand and exactly when it's time to place another order.