Choosing the best inventory management practices and sticking to the method selected is essential for the success of almost any type of business – if you are just getting started and you feel overwhelmed, here are a few of the most common methods and their benefits:
- Just-in-Time (JIT) – the inventory management method preferred by many retailers, especially by drop-shippers and retail businesses that are exposed to changing buying habits, JIT means that you buy the products that you need only when a customer places an order for the items. It is a method that a Colorado soda company chooses to satisfy the demand.
- Keeping minimal stock level – this method will require you to determine the inventory that you want to be able to offer your customers any time, such as windshield wipers or motor oil, if you are in charge of a car part retail shop.
- First-In-First-Out (FIFO) – the method involves the selling of the oldest products first and is the technique preferred by retailers that sell perishable goods. The practice requires accurate documentation to allow you to know which products need to be sold first.
- Last-in-First-Out (LIFO) – the method used mostly by companies that sell heavy materials, such as sand. The materials are stored in large piles and customers buy the bags or the batches on the top of the piles.