What is the Best way to Reduction cost strategies in inventory management for your Business ?

From capital spent on purchasing to overhead for warehouse storage and shipping costs to deliver goods to customers, there are a lot of opportunities to reduce costs when it comes to inventory management. Dependable cost reduction strategies in inventory management include:

Quality control: Not only do you want to offer customers the best product, but you also want their quality to be consistent. Quality control practices help you monitor batches of inventory, make better sales order decisions, meet regulatory requirements and more, which in turn can lessen business costs.

Shipping location optimization: You can use third-party distribution as a means to fill orders, such as distribution centers, in order to hold inventory closer to the customer can reduce costs in order to earn the lowest cost and fastest delivery.

Regular inventory counts: Maintaining regularity when it comes to counting your inventory through a streamlined process attempts to identify and prevent issues before they occur. You can automate this process within an inventory management system.

Economic order quantity: EOQ is a formula for ordering inventory based on the ideal order quantity. EOQ is most useful when demand, ordering and holding costs are consistent, but can be modified to compensate for different production levels. 

Using an EOQ formula can help you determine the optimal inventory level to target in order to maintain enough stock to satisfy orders, but not too much that you are incurring high holding costs.

Reorder points: These establish a stock level at which it is necessary to reorder more inventory to prevent a stockout. Ensuring enough stock is on hand is necessary to building customer satisfaction and avoiding lost sales revenue.

Elimination of underperforming suppliers: Suppliers who take a long time to fill orders, don’t deliver on time or fill orders inaccurately cost you money by requiring you to hold more safety stock. Using data to analyze supplier performance allows you to identify the best and most reliable.

Technology: While only 22 percent of small and medium-sized businesses use inventory management software, more than half have saved time – which saves money – through automation. An inventory system streamlines tracking, provides real-time data, automates inventory counting and more.

Picking optimization: When you know where in your warehouse your inventory is, your software is able to provide the most efficient picking flow. This saves you time, money and effort.