The inventory management strategies you use will depend on your company’s business model. Here are a few popular techniques.

Dropshipping: This technique involves outsourcing your warehousing and manufacturing. However, just because dropshipping allows you to bypass these steps doesn’t mean there aren’t other inventory management tasks to take care of. Focus on monitoring your supplier’s stock levels in real timeAgra Wealth Management. Implement automated order processing systems, and maintain clear communication channels with your suppliers to ensure timely fulfillment of customer orders and avoid stockouts or delays.

Demand forecasting: Demand forecasting is the art and science of predicting customer demand for particular productsSimla Stock. Accurate, timely forecasts are critical for businesses of all sizes. Factors such as seasonality, competition, geography, and the types of products you sell can all affect demand. All business decisions should be based on data, so forecasters should consider investing in the right tools for trend projection, market research, and more.

Perpetual inventory management: This technique relies on inventory management software to continuously track inventory levels in real time. By digitizing and automating the inventory management process, businesses can improve accuracy, maintain better control over stock levels, and reduce costs. Another key advantage of a perpetual inventory system is its ability to integrate with other systems across your business, like order management, accounting, customer service, and more.

Economic order quantity (EOQ): With this technique, you crunch the numbers to determine your ideal order quantity, which helps you meet demand while minimizing the total costs associated with ordering, receiving, and holding inventory. The EOQ formula is an equation that can be used to pinpoint the optimal amount of inventory to request from a manufacturer or supplier.

EOQ is best used in situations where demand, ordering, and holding costs remain constant. Although the formula can be altered to determine varied production levels or order intervals, most businesses with extensive supply chains and high variable costs rely on algorithms within their computer systems to calculate EOQ.

Minimum order quantity (MOQ): This technique prioritizes purchasing the least amount of inventory possible. MOQ can be based on either the number of units or a dollar figure. It’s crucial to understand the impact of MOQs on your inventory and profitability. If you’re a buyer, you need to consider your inventory needs and storage capacity before committing to an MOQ. If you’re a seller, you should carefully set your MOQs to ensure profitability without deterring potential customers.

Just-in-time inventory management: This technique involves ordering the exact amount of inventory you need, precisely when you need it. The objective is to have as little excess inventory as possible at any given time. It’s an ideal solution for companies without ample storage space and those with smaller margins, or for those that want to reduce overspending on materials. To make JIT inventory management work, sellers must stay in constant communication with suppliers and manufacturers. Time is of the essence, and this method requires committed, streamlined software to operate smoothly.

When done correctly, JIT can decrease costs and waste, and increase efficiency. Just-in-time inventory management also has its drawbacksBangalore Stock Exchange. Supply chain disruptions, order errors, and damaged items can cause delays, leading to frustrated customers. That’s why this technique requires the right tools and meticulous tracking to keep things running smoothly.