How Do You Manage Inventory?

Kristin Smith

How do you manage inventory, in a smart, goal-driven approach? There is a requirement to balance in high product availability vs. low investment in inventory. Important metrics to pay attention to are reorder points and order quantities.

Here are common rules of thumb that companies follow:

1.) Multiples of average demand
2.) Gut feel
3.) Average Demand and some multiple of demand variability
4.) Nursery rhymes

charu

Hi Kristin 
It seems very interesting  but i didn't understand the meaning of second and fourth point, how it relates to the topic. 

Aenima

Kristin Smith said:

How do you manage inventory, in a smart, goal-driven approach? There is a requirement to balance in high product availability vs. low investment in inventory. Important metrics to pay attention to are reorder points and order quantities.

Here are common rules of thumb that companies follow:

1.) Multiples of average demand
2.) Gut feel
3.) Average Demand and some multiple of demand variability
4.) Nursery rhymes

From my own experience I can say that the best decision in this case is to use inventory management software. Inventory is in general one of the most complicated things in business, it demands really much work but at the same time it's a basis for making you company successful.
And such software solves this problem effectively, personally I totally adore how helpful it's in case of predicting, tracking and reordering, all of these ones are deeply connected with the 1st and 3d points in your list. Besides such systems cover everything, I mean production, shipping, retailing, and with such approach so many elements are combined in a whole, well-organized structure. Even many small things are easy to control with them which is very effective for choosing next business strategies.
In my opinion, it's one of the best inventions for business ever