Starting inventory management practices might be a little hard. Not only are you not totally sure how it all works, you also don’t know the terms that will come with the job. Here is a quick list of terms that are a must know in order to have successful inventory management. These terms are essential for anyone who is creating an inventory management plan or picking software to help them.
Demand forecasts show you the possible sales for the next few months or years. The forecasts are based on what information you have right now as well as historical trends. There are a few models you can try to find what works for your business.
Bulk shipments are the shipments that are inbound form your manufacturers and wholesalers to the warehouse or 3PL you are using. Freight shipments are close to the same. Buying in bulk will save on costs per unit and helps reach freight rates, ultimately reducing inbound shipping costs.
Cycle counting is a method of counting your inventory. This is a check to verify that the numbers that are in the software match up with the inventory in the warehouse. This is common for high selling items as well as high value goods.
FIFO means first-in, first-out. Its an inventory utilization technique. You make sure to use the oldest product to fill the next order. This minimizes spoilage by making sure the goods are moved before they reach the expiration date or go bad.
Economic Order Quantity
Economic order quantity (EOQ) is a formula to help you figure out how much of your product you should be stocking to fulfill orders during the year ahead. Making sure you get this right can help you reduce how much money you waste buy wasting inventory.
A reorder point is the level of stock you have that tells you that you should be ordering more goods. Your inventory tools will help you find the point so that forecasted orders don’t deplete your inventory to nothing before the next shipment comes in.
These will help you understand inventory management that much more. If you have any questions at all, don’t hesitate to contact us here at Launch Fulfillment. We are here to answer any questions you may have.