8 Common Inventory Management Techniques

The inventory management system is the process of continuously monitoring inventory from the point of manufacture to the point of fulfillment. Numerous stock control practices can help your product function more effectively while also giving you more oversight.

Choosing the best inventory management solution for your company is a tough challenge. Thus the quickly your company expands, the further complicated inventory management becomes. This is why laying the firm base from the beginning is important.

Several inventory management techniques can increase the quality and reliability of your company. Let’s have a look at those techniques:

Shipments in bulk  

It is based on the idea that purchasing and shipping goods in volume are usually cost effective. Bulk shipment is a prevalent technique in the industry that can be used for products with higher customers’ needs. Shipping everlasting items in bulk could be an excellent option for your company.

Shipping items in bulk results in several benefits which may include revenue growth propensity being the greatest, and limited shipping costs.

Keeping count of Inventory Cycles

Cycle counting is the practice of tallying a limited amount of inventory on a particular day instead of performing a traditional full manual inspection. It is a sampling technique that involves determining how well your inventory levels meet what you currently have in stock.

Keeping count of the inventory cycle has its benefits: first it helps to keep inventory holding expenses to a minimum secondly it could be performed without interfering with operations moreover it is less time-consuming and less expensive than conducting a full stock inspection.



Dropshipping is a type of inventory management system in which a business does not retain the items it sells in inventory. Such an inventory management technique completely reduces the expense of excess inventory.


ABC method analysis.

ABC inventory management system is a method that involves categorizing product lines in terms of priority, with A being the most useful and C being the least important. Not all items are similar, and thus more emphasis should be placed on much more profitable products.

This inventory categorization method transforms subjects into 3 groups to determine products that have a potential of increasing inventory costs.


Inventory management that is just-in-time.

JIT inventory management solution reduces the amount of stock that a company keeps on the side. It is regarded as a challenging method as inventory is only purchased just a few days before it is required for dispersion or sale.

JIT saves organizations money on inventory holding costs by maintaining stock levels low, and it prevents circumstances where deadstock – frozen capital – stays on the shelf for extended periods.

This technique leads to several benefits which may include reduced inventory storage expenses, reduced deadstock and Increased cash flow


The principle of first-in-first-out (FIFO) is vital in inventory management because it makes sure that the aged stock is offered to sell first.

The concept of FIFO is rather straightforward: the earliest items (first in) should be the first in your storage system, where they are easily accessible (first out). As a result, you’re continuously cycling through your stock, from earliest to latest.

It’s a valid approach for eateries, pharmaceuticals and other large corporations that deal with perishable items. The item becomes more worn out as it ages. Hence, give value to your customers by providing them with incredible service as much as possible so they will return!

LIFO Method: Last-In-First-Out

LIFO, as opposed to FIFO, aims to sell the most newly acquired products from inventory first.

This implies that price levels are steadily increasing, and the most recently bought item will also be the most expensive. That is, rising prices lead to lower revenues and, as a result, lower taxable income—this is probably the only reason to use LIFO.

This method is thought to be suitable for non-perishable items including rocks, concrete blocks, and so on.

Auditing regularly

Reconciliation must be conducted regularly. In most instances, you’ll have to rely on software and documents from your warehouse control system to determine how often the product you have on hand. However, it is critical to ensure that the statistics are consistent. There are many ways to accomplish this.

Summing Up

A successful company has an inventory management system that forecasts sales, predicts plans and generates revenue by planning for the unforeseen.

A company’s chances of success and sustainability improve with the proper inventory management system through these techniques.


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>