3 Approaches to Inventory Management
Efficient inventory management is vital to any business’s operations. Demand for this software has nearly doubled over the past five years. There are many different options when it comes to managing products and the choice depends on your goals and the resources you have available. The goal is to find the right balance between buying enough products and selling them at the right time to maximize their value and return. With so many options, it can be overwhelming to choose. Let’s review the pros and cons of three popular inventory methods.
Order Inventory in Bulk
Ideally, ordering in bulk is a great option. There is potential to receive discounts when ordering large quantities and, if space is no issue, there are few downsides to this solution. This option also has the highest potential for profit. This strategy is great for retailers with ample space and resources, but there is a potential risk of excess stock. The excess, essentially, becomes frozen capital.
Just-In-Time Inventory (JIT) Management
The “Just-In-Time” (JIT) strategy involves placing orders for products only when necessary. This prevents excess inventory that can lose value over time. JIT inventory management is great for making money, but it only works well if you can accurately predict how much product you will need and get it in time. This strategy comes with a higher risk, if there are any problems with the product or sudden changes in demand, it can bring operations heavily relying on this strategy to a standstill.
Drop shipping is the safest option when it comes to managing inventory. There is no need to buy or store any of the products yourself. Instead, customer orders can be transferred to a third-party service that handles the storage and shipping. However, one downside is that there is not much profit using this tactic. Suppliers will often charge a premium to acquire inventory, so the potential for profit is considerably smaller.
Choosing the right inventory management software is critical to the success of your business. Regardless of the approach, SalesWarp’s Robust Inventory Management System integrates seamlessly with your multichannel operations. Schedule a demo today to learn more about what SalesWarp can do for you!