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    Techniques for inventory control

    It is no easy thing for your company to choose the right inventory management techniques. If the organization expands further, the inventory becomes more difficult to handle. This is why it is so important to set the correct basis from the outset. In this guide, we outline resource management strategies , procedures and best practices.

    Bulk carriages

    The theory is that buying and selling goods in bulk is almost always cheaper. Bulk shipping is one of the predominant technologies for products with strong consumer demand in the market.

    The downside to bulk shipping is that more capital has to be spent in the stock, which most certainly would be paid for by the money saved from vast quantities of goods and quickly sold.

    • Bulk shipping pros Pros
    • Maximum profitability capacity
    • Reduced travel costs are reduced
    • Well works for staples with stable demands and long life.
    • The drawbacks of bulk shipping
    • Maximum future capital risk
    • Had increased computing costs
    • It is hard to adapt fast if there is a difference in demand

    Regulation of inventory of ABC

    The control of inventories by ABC is focused on the ranking of items, the most important being A and the least C. Although hard and fast rules do not apply, an ABC review is based on annual units of use, inventory value and cost importance.

    It is vital that individual categories function individually, especially if selective controls, funds and staffing are required.

    ABC Operations Inventory Pros

    • The provision of help demand by evaluating the success of a commodity over time
    • Enables efficient control of time and distribution of capital
    • Assists in describing an equitable approach to customer care
    • Permit accuracy of inventory
    • Encourages strategic pricing

    Cons of ABC inventory management

    • Should I disregard goods which are just beginning to develop?
    • Conflicts also with other stock techniques
    • Time and staff are needed


    Backordering related to the decision of a corporation to accept orders and collect out-of-stock fees. For many companies, it’s a fantasy, but if you are not prepared, it can also be logistic nightmare.

    If there is only one out of stock item, it is just the case where a new buying order is produced and when the back-ordered item arrives, it alerts the buyer.

    However, backorders are funded by improved revenue, but many firms are prepared to take on the balancing act.

    As a general matter, more you get “spending tolerance” from the consumers the greater the object worth (physically and monetarily).

    It might not be practical to unnecessarily risk if you’re a small retailer. In this scenario, the “Buy Now” button of the item might be labelled “pre-order” or “Get yours when it returns in stock.” This provides an acceptable anticipation for consumers that it may take a little longer to come in.

    Alternatively, certain firms use a “no stock” strategy, which only includes back orders, before adequate profits are produced and then a large bulk is purchased by a retailer.

    Backordering benefits

    • Improved cash and profits
    • Small companies greater versatility
    • Reduced cost of ownership and lower surplus risk

    Backorder drawbacks

    • Greater chance of insatisfaction with customers
    • Longer fulfillment

    Just in Time (JIT)

    Inventory management Just In Time (JIT) decreases the inventory volume of a company. It is seen as a dangerous strategy, since it is not required for delivery or selling until a few days before you buy stock.

    JIT allows organisations, by keeping their stock levels down, to save product expense and avoids circumstances where deadstock, mostly frozen money, is sitting for months at the end of the shelf.

    However, it allows enterprises to be very flexible and able to manage a much shorter period of output.

    If you intend to follow a method for maintaining a Just-in-time inventory, ask:

    • Are my vendors enough reliable to get goods to me on time?
    • Are my business demand, revenue cycles and seasonal variations thoroughly understood?
    • Does my order execution system render orders available to clients in a timely manner?
    • Is the versatility needed for my inventory management system to upgrade and handle inventories on fly?

    JIT Pros

    • Cost of keeping less product
    • Cash Flow Improved
    • Underdeadly

    JIT ‘s Cons

    • Problems in order to follow instructions
    • Error space limited
    • Availability vulnerability


    The consignment consists of the wholesaler putting products in the hands of a dealer, but holding control until the commodity is delivered and the distributor buys the stock consumed. Sale on arrival usually entails high demand insecurity from the point of view of the manufacturer and a high degree of trust from the perspective of the wholesaler.

    For manufacturers, shipping sales may have many advantages, including the potential to:

    • Give to consumers a broader variety of goods without money
    • Reduce delay in quality reconstruction
    • Return products sold free of charge

    While the bulk of the cost of shipping to the wholesaler disappears, the retailer still have a range of possible benefits:

    • Fresh model testing
    • Marketing move to the manufacturer
    • Gather valuable commodity output information

    If, as a retailer or as a wholesaler, you consider shopping for the consignment, set strict requirements for the:

    • Return, cargo and policies for insurance
    • If, where, and what data are transmitted by customers
    • The sales commission of a percentage of the buying price manufacturer

    Cross-docking and Dropshipping

    This method of inventory control reduces the expense of keeping inventory. You will pass consumer orders and shipping information directly to the retailer or wholesaler, who can then ship the products.

    Cross-docking is similar to dropshipping as inbound semi-trailers or train cars unload material directly to outbound trucks , trailers or railway cars.

    Essentially, this ensures you transfer goods immediately with little to no storage from one transport vehicle to the next. You may need to set up areas for sorted and processed incoming goods before the outgoing shipment is complete. You will also need a broad fleet and transportation vehicle network to work cross-docking.

    Cycle counting of inventory

    Cycle counting or a limited number of inventories are counted on a given day without a full manual inventory. It is a sample form that helps you to see how accurately the stock documents represent the stock.

    This is a standard feature in the product management practices of many organizations as it essentially allows consumers to purchase what they want, whether they want it, while retaining their inventory cost as low as possible.

    Cycle counting benefits

    • Both time and effort than a complete warehouse
    • Can be done without processes being disrupted
    • Maintains low inventory prices

    Cycle count cons

    • More complete and detailed than a complete inventory
    • Can not take seasonality into account

    Best practices regarding product numbers

    How long you count a period and the amount of stock you count depends on the kinds of goods that you market and the capital available. For eg, you might do an inventory review of your class A goods by ABC and focus more often on your highest-value items than your other items for a loop.

    Regardless of the unique inventory statistics strategy, here are few best practices:

    • Count one group at a time – Hopefully the whole inventory will be rounded off over a period. The best thing is to concentrate on one segment in the course of working hours so that organizational downtimes are not hindered.
    • Choose seasonal counting groups – The purpose of counting inventories is to correct any product differences when and when they arise. It is better to count items at their height such that any problems can be resolved instantly.
    • Mix your period count schedule – It is a disgraceful fact that stock failure is often caused by fraud, so you want to adjust your schedule so that customers do not choose to play the system.

    Cycle counting types of inventory

    Triple inventory cycle counts are available for you:

    • Group loop counting control – This method of cycle counting is programmed to count the same elements many times over a limited period of time. The repeated counting shows flaws in the counting technique that can be reversed for a detailed counting method.
    • Random cycle counting – You can randomly pick a number of items to be counted at each cycle count because your warehouse has a large number of like items. This eliminates the disruption of one category at once, which ensures that during working hours a count can be done.
    • ABC cycle counting – As mentioned above, ABC cycle counting is used to distinguish items into categories A, B or C, based on the ABC inventory control methodology and the Pareto theory. A object is more commonly counted than B and C objects by this approach.

    Real world inventory time number

    IKEA is a perfect example of an organization using a complex asset control strategy and a sporadic inventory optimization period. On-site logistics administrators can view stock levels in their store using a proprietary inventory system to measure discrepancies in planned revenue (single to each store) versus stock levels.

    Let us assume for instance that the MALM bed frame of IKEA has sold much more slowly than anticipated. In this case, the logistics manager will check the stock of the bed frame manually and validate it. Which ensures that logistics administrators only have to count cycles if the machine disagrees.

    Bulk transport Bulk

    What is bulk shipping? Bulk shipping is a high volume transport of goods not normally bundled but loaded directly onto a truck. Those items are then sent to the container without safety of packaging, and the object which carries them, normally the hold of the ship.

    As compared to goods delivered in small units, products shipped in bulk, such as bags or pallets, are shipped in larger units.

    Two types of items are typically delivered in bulk: solid bulk and liquid bulk goods. Strong bulk materials are made up of items like grain, mineral and chemical materials, salt and timber. Liquid bulk materials are in liquid form additives or foods. That can vary from milk and fruit juices to oil and gas, and its derivatives.

    Bulk shipping restrictions

    The type of products that can be transported in this way are minimal. Things vulnerable to rupture or disruption can not be used in bulk transport. Tiny, it is certainly not advised to ship individual products in this way because harm is very likely.

    As such, bulk transport is only suitable for a limited choice of items, and it may not be the most effective delivery means unless an organization is engaged in a very particular industry. Safer transportation approaches are more suitable for delicate materials.

    The biggest challenge to a company resources is bulk transport. It does not mean that the need for a product stays constant merely because a product has a good spell. If the item is unexpectedly not as popular as it used to be, it will challenge any organization to change its activities.

    Of addition, there are higher costs to pay for storing bulk goods. Many eCommerce shops do not have the space needed for this tremendous order and may find that the money saved from bulk shipments is quickly spent on storage costs.

    Bulk shipping is a feasible choice only for organizations who have access to warehouses or can afford to raise the storage factor.

    Bulk Transportation Best Practices

    One of the most efficient things to do when shipping bulk is to deal with your chosen shipping company. It is frequent for carriers to offer volume-based discounts, so you can still take the better price.

    By taking into account the weight of your order and the shipping class, you will decide the best course of action for your bulk shipping demands and compare discounts from numerous shipping firms, as well as higher priced goods.

    Bulk transport can only be carried out for goods that are not impaired by quality impairments. For eg, the consistency is known to deteriorate when wine is delivered bulk. The economic benefits of bulk transport must be accounted for by the possible cost of commodity harm.

    Michael C
    Michael C expert

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