Suppose you run a bar, pub, or any other establishment that sells a lot of drinks and snacks. In that case, you are probably already familiar with one of the most tedious and time-consuming tasks in this industry: inventory management. As a result, you’ll need to raise the “bar” (yes, pun intended) when tracking your inventory so that you can focus more on the areas that need work.
While we would agree that using the more traditional methods would be more comfortable to use since that’s what you’re already used to, it would be a lot more comfortable. However, with the technological advancements that we have in our company today, don’t you think it’s time to adapt to the rapid change that is happening around you, especially since inventory tracking would be a land rich in human error!
What is inventory management and monitoring?
Inventory management is pretty literal with the name it goes by. You will manage your inventory, from ordering new inventory to storing it and finally using it when you need it. This can be done for all the different components, raw materials and finished products.
If you are running the business, you are probably going to think about the different inventory management techniques like the just-in-time method or “JIT” for short. While you don’t have to limit yourself to that, if you wish, you can even opt for the material requirements planning or MRP method if you are more in favor of computerized management.
The different techniques of inventory management
Depending on the workload, the size of your business, and the product (s) being sold, the type of inventory management you will need will change. It could also depend on your choice if you are running the business and want to avoid compiling trash. Or maybe you prefer a more time-based management technique where the days your business uses inventory will be calculated?
The just-in-time management method
This is probably the optimized method (by the Japanese at Toyota Motors) to produce the least amount of waste when creating their products. It allows companies to save a lot of storage space and money by reducing the number of components they would need and to focus more on hitting a quota. This method then makes it possible to liquidate or dispose of their excess components and materials.
While this is a very suitable method of inventory management, it can be risky for your business if the demand for your products suddenly skyrockets and your manufacturers cannot meet the supply. your business needs. So, if you cannot meet the wants of your customers, it will hurt and damage your reputation and could even cost you their loyalty.
The method of planning material requirements
This method can be simply performed as long as you have accurate data and records about your sales with your products. Meaning, the MRP method highly dependent on your sales forecast. With the material requirements planning method, you can develop a better relationship with your manufacturers, which is a big advantage, as well as strong inventory management.
Once your manufacturers have accurate records of all of your business’s sales, they can work with you to average out all of the components and raw materials they need to produce. Do not mistake yourself. What they replenish for your inventory should only be what you need. The extras are all yours.
The Economical Order Quantity Method
The economical order quantity method will require you to do some math and make sure all of your inventory of components and raw materials are all filled to the brim. This means that you are going to have to set a limit for the stocks you want in your inventory so that there is an “edge” in your storage.
The way this method works is that you are going to calculate how much of your raw materials and components have been subtracted throughout the week or month. So, with your next batch of orders, you will only replenish stock to the particular limit that you have already set. No additional orders, no overage and waste.
The inventory method of days of sale
This method allows you to count the average number of days it takes your business to “renew” inventory. This includes finished products, and the products are still in progress. the DSI is more like a report that you want to keep low – the lower your ratio, the better. This means that your business needs fewer days to renew its inventory.
To take with
Depending on your business, your workload, and your product demands, you are going to carefully consider the inventory management technique you are going to apply to your business. If you are constantly switching between the many techniques, it would mean that your business is struggling to renew stock due to low demand for what you are selling!
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