Know Everything About Faire Marketplace Inventory Management

Here are several types of Inventory management techniques you should know about:

Just-in-time(JIT) Inventory Management

Just-in-time inventory management is a model where you purchase inventory only when someone wants to buy a product. It’s an inventory management technique that is done to reduce storage and insurance costs and overstocking challenges.

The JIT method is suitable for a business with a predictable market so that you can stock up on goods based on demand. But sometimes, you might encounter challenges because of demand spikes and supplier failures.

Perpetual Inventory Management

Perpetual inventory management deals with updating your inventory whenever you make sales or restock goods. This method can be done through physical counts or with an inventory management software integration. The latter is more effective because your stock is updated automatically in real time. But you’d need to connect your POS to your online store to automate your inventory management.

ABC Analysis

ABC analysis involves segmenting your inventory into three categories to enable you to manage your stock effectively and increase sales. The categories include:

– High-value products that are low in quantity
– Moderate-value products that are moderate in quantity and
– Low-value products that are high in quantity

ABC analysis will enable you to prioritize high-value products and give moderate attention to moderate and low-value products. It can also assist you in developing inventory management strategies that will help predict future demands.

First-in, First-out Inventory Management

First-in, first-out(FIFO) inventory management is a method where the oldest products in your stock are sold before new products are sold.

FIFO is a strategy that suits e-commerce businesses that are selling perishable products like food items. Hence, the goods that have stayed the longest in the warehouse shelves have to be shipped off before the new entries.

Apart from perishable goods, products tend to lose value or deteriorate when they’re stored for too long, so this technique can work for any e-commerce business.

Last-in, First-out(LIFO) Inventory Management

Unlike FIFO, the last-in, first-out inventory method prioritizes the sale of newer stock. This method is less common in e-commerce but might be used when prices fluctuate because it helps to manage profit margins. It can also be used when the new inventory has a limited life span or shelf-life.

Dropshipping

Dropshipping involves sending a product to a consumer directly from your manufacturer or supplier without storing the goods. In dropshipping, you have no inventory and need to store goods in a warehouse. So whenever an order is placed, you notify your supplier, who ships the product to your customer.

However, you don’t have full control of your customer’s buying experience, and higher costs are incurred due to the manufacturer handling the logistics. On the bright side, dropshipping favors new e-commerce businesses that don’t have the funds to own and store goods in a warehouse.

Bulk Shipment Inventory

Bulk Shipment, as the name implies, focuses on purchasing goods in large quantities to reduce transportation costs and take advantage of discount bundles.

Bulk shipments are used by e-commerce businesses that sell goods that have a long shelf-life so they can be ordered in large quantities. However, it requires more capital upfront, and you stand the risk of overstocking goods.

Consignment Inventory Management

In consignment inventory management, your supplier retains ownership of your inventory until it is purchased. This means that you don’t have to pay for the stock until you’ve sold it. Consignment Inventory favors retailers and startups that don’t have the capital to purchase goods in bulk.

Economic Order Quantity

Economic order quantity is a technique for determining the number of goods or inventory to purchase to reduce storing and setup costs. At the same time, maintaining a balance between consumer demands and stock levels.

This formula helps e-commerce businesses to order the right amount of stock and minimize inventory costs.

Cross Docking

Cross docking is when an inbound(or supplier) vehicle offloads goods into an outbound vehicle, which ships them to stores where the goods will be sold. There is little or no storage(warehousing) in between, thereby eliminating storage costs. Cross docking is best for everyday consumer products that are required in large quantities, such as groceries.

Safety Stock Inventory

This involves keeping extra stock on hand to reduce the risk of stockouts due to unexpected demand or supply chain disruptions. Safety stock inventory helps to improve order fulfillment and reduce delivery times, thereby creating a better shopping experience.

Minimum Order Quantity(or Minimum Viable Stock)

Minimum order quantity shows the lowest number of stock or inventory to minimize costs. For example, an electronic gadget that costs more to produce would have a lesser minimum order quantity than everyday products like bathing soap or cereals.