Each company should have inventory management, inventory tracking, and inventory solutions to determine and to maintain its inventory investment at its optimum level. Read on and know how these solutions are used in an organization. Inventory management is used in most organizations to carry out one important objective †to determine and to maintain the company’s inventory investment at its optimum level. Most companies have now decided to install at least one system for both inventory planning and control. The models for inventory management, inventory tracking, and inventory management range from very simple to highly sophisticated and complex inventory models. Using the simplest method of inventory management, the purchaser reviews the stock periodically to see the inventory items that are already short in supplies and orders these items when he thinks the minimum level has already been reached or when the inventory for a particular item has already been exhausted. In this method, no inventory levels are recorded and obviously, such method is more likely to acquire excessive purchasing and carrying expenses on one hand and stock-out costs on the other. Likewise, excessive purchase would lead to more than enough investment in slow moving and obsolete goods, inventory, and shortage causing production and sales to be permanently lost. To improve the very simple method of inventory management, a re-order line should be drawn in the storage area or in the bin so that when the stocks reach this re-order line, the order will be automatically placed. The re-order line in the storage area would be high enough so that the normal usage of the items will be covered until the new stocks arrive. Another inventory management, inventory tracking, and inventory control approach is through the use of perpetual inventory system. This approach is one of the most common methods used by companies and organizations. Another method that can be used to provide inventory management, inventory tracking, and inventory management solutions is the ABC classification. With this method, the inventory items are sorted into three groups based on the annual cost of the items used as well as on the value of the usage. However, it may be pointed out that the ABC analysis method is not the actual control system itself. It only shows ways on how to decide on the items that are most in need of the strict inventory control system. So what are the techniques to be used to provide inventory management, inventory tracking, and inventory management solutions? oSafety Stock or Minimum Inventory oReorder level oEconomic Purchase Order Quantity 1. Safety Stock or Minimum Inventory †There are different methods to determine the safety stock or minimum inventory level. A ready method is to provide safety stock constantly for the usage requirement for at least a month or two, no matter what the item is. Another method commonly used is based on the principle of having large safety stocks when the quantity usage is relatively high, the lead time is relatively long, and the ordering schedule is more frequent. 2. Reorder Level †This method has something to do with lead time. This is the time interval between the placement of the order and receipt of the delivery. If the quantity and lead time of the demand are known with certainty, it is possible to determine the reorder point. 3. Economic Purchase Order Quantities †To control the inventory, a certain decision model was developed. This is also to determine the quantity of materials to be purchased at the optimum level on each purchase order. The above mentioned techniques have been proven to provide inventory management, inventory tracking, and inventory management solutions. Of course the best method depends on what type of company or organization you have. Nevertheless, if you want to save on the costs while maintaining the quality of production and inventory, acquiring inventory management, inventory tracking, and inventory management solutions is the best option for you.
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