Types of Inventory Management: Stock Efficiency, Storage and Automated Systems

Inventory management helps businesses track and manage inventory levels in real-time. It provides information about supply chain operations, accounting, and purchases. This allows the business to make an informed decision about the level of inventory management, reducing the risk of stockouts and overstocking. Inventory management will also help streamline production, improving company profits and customer satisfaction.

There are different types of inventory management systems for various types of business needs. Here are some types of inventory management systems:

Perpetual Inventory System

This type of inventory system helps track inventory levels and transactions in real-time. It uses technology to provide up-to-date inventory information, which improves accuracy and decision-making. However, it requires advanced technology and can be more expensive.

Periodic Inventory System

Vendor-Managed Inventory (VMI)

Just-In-Time (JIT) Inventory Management

Material Requirements Planning (MRP)

This inventory system uses supply planning to help manufacturing businesses. It helps companies determine the demand for certain products to meet customers’ needs. Based on the orders forecast, this ensures that materials such as wood, glass, aluminum, and plastic are still in stock.

Each inventory system has advantages and challenges. Thus, businesses must decide which system is necessary to meet their operations’ needs and requirements. Selecting an inventory management system is essential to determining efficiency, reducing costs, and providing customer satisfaction.

Different types of inventory control systems help manage and track stock levels. This helps provide businesses with the proper amount of inventory when required, forecast demand, reduce excess inventory, and prevent stockouts.

There are many types of methods for inventory control. This helps to manage stocks effectively. They are:

ABC Analysis

This analysis helps to determine stocks based on their importance, price, and sales volume. There are three categories, which are:

• Class A is for expensive products, high-end items with tight controls and small inventories.
• Class B goods are averagely priced and have mid-priority and medium sales and volume rates.
• Class C products have low value and costs, high sales, and need huge inventory.

FIFO

First in, first out (FIFO) is a method for determining sales suitable for industries that sell perishable items.

LIFO

Last in, first out is a stock method that determines the sales to businesses with rising costs.

Fixed Order Quantity

Fixed Period

Items are ordered at a particular time. This method is easy for businesses with fluctuating demand.

Vendor Managed Inventories

Min-Max

This method determines the minimum and maximum levels for each item. It suits new or small businesses that want a simple cloud based it asset inventory management.

Just-In-Time

Set Par Levels

This method orders items when they have reached a minimum level. It helps businesses ensure that goods are always available.

These inventory control systems and methods are crucial for maintaining optimal stock levels, ensuring customer satisfaction, and enhancing overall business efficiency.

Inventory tracking and monitoring systems ensure the supply chain runs efficiently. These systems help businesses ensure the level of stock, reduce the rate of manual errors, and enhance inventory management. By providing real-time information, companies can make informed decisions, prevent stockouts, and reduce the rate of overstocking. This can save costs, improve customer satisfaction, and enhance operational efficiency.

Barcode Systems

Barcode systems are generally used to track inventory. A barcode label is printed and then attached to products or assets. This barcode is scanned using a scanning device to record the movement or location of the asset. The benefits are that it is cost-effective, easy to use, reduces manual errors, and improves inventory accuracy. The limitation of using a barcode system is that each item needs to be scanned separately, which can take up much time.

RFID

Radio frequency identification (RFID) uses radio waves to identify and track products and assets. RFID tags have information that is stored electronically, are attached to items and are read by an RFID reader without needing a line of sight like barcode scanners. The benefits of using an RFID system are that it can automate processes, provide real-time updates, improve accuracy, reduce stockouts and overstocking, enhance security, and integrate with technologies such as ERP and IoT in inventory management. The limitations of using this system are that it can be expensive, can be affected by other electronic devices, and is more costly than barcode scanners.

Automated Tracking Systems

The automated tracking system uses a few technologies, such as RFID, IoT, and AI, to create a comprehensive inventory management software examples solution. This system helps to track inventory in real time, helps to provide detailed analytics and helps to automate many processes. The benefits of using this system are that it can provide detailed information, reduce the need for manual labor, is scalable for growing businesses and can help companies to make informed decisions. The limitations of this system are that it is complicated to implement and maintain and can be expensive for small businesses.

Timly’s inventory management system is a cloud-based system that helps businesses streamline their operations. Integrating the latest technology provides real-time inventory visibility, reduces stockouts, and enhances customer experience.

Different types of inventory storage systems are essential for warehouse and retail operations to run smoothly and efficiently. The systems are distinct in design and functionality as they would cater to various business needs. Let us look at a few storage solutions.

Drive-in and Drive-Through Racks

Drive-in and drive-through racks are created to optimize space and ensure inventory runs smoothly. Drive-through racks allow forklifts to navigate through system ends, supporting FIFO inventory management software. Drive-in racks move through the front and back after loading and unloading, supporting LIFO inventory management. These racks are used for items located in cold storage.

Push Back System

Selective Racking

Pallet Flow Systems

Mobile Shelving

Wire Partitions

Automated Storage and Retrieval Systems (ASRS)

First in First Out Method (FIFO)

List In, First Out Method (LIFO)

ABC Analysis

The different types of inventory planning systems are:

Perpetual Inventory System

Just in Time (JIT) Inventory System

Periodic Inventory System

This system counts and values inventory at specific times, such as quarterly or monthly. It is used by smaller businesses with a low transaction rate.

FIFO and LIFO

This inventory is used to manage the flow of goods. FIFO is used for perishables while LIFE is used to manage inventory obsolescence.

Economic Order Quantity (EOQ) Model

Demand Forecasting

Reorder Point (ROP) Calculation

Reorder Point = (Average daily demand × Lead time) + Safety stock