Common Inventory mistakes distributors make   

 

Inventory analysis is a practice of getting rid of stockouts and overstocking circumstances. Distributors have to analyze the inventory as the market fluctuations differ from time to time. It is made possible efficiently by having knowledge about the inventory and tracking the customers’ demand.   

Managing inventory is imperative to the distributors, and different complications occur while improving the inventory stages. Inventory control is a procedure that manages and regulates the storage, supply, and distribution of stocks. Thus Stock optimization is the prevalent inventory control technique that enhances supply chain efficiency.   

  

Three Mistakes that lead to Inventory Undesirability     

Bad approach on Inventory Undesirability:  

Everything is not predictable in the wholesale business. There may be a chance of retaining unwanted stock in inventory due to an unexpected drop in customer demand. Furthermore, the company can not sell this stock, and you have to remove them from the inventory, which leads to greater financial loss. If the stock does not have inventory turnover within twelve months, it must be thrown out from the warehouse to avoid the unwanted storage cost.   

No deal on Excess Stock:

Excess stock in inventory is the issue, because of the bad demand predicting management and improper tracking of product life cycle changes. Simultaneously, examining the inventory stock strength, it’s important to note down the item level inventory turnover ratio. Moreover, inventory obsolescence may arise if the distributors don’t deal with excess stock on time.   

No inventory seasonality analysis:  

First of all, wholesalers must be aware of how the seasonal variations affect the customer behavior for the product. Therefore, for distributors, handling safety stock is the top technique to manage the supply chain demand instability.   

Inventory Analysis methods:

You can analyze stock levels with several inventory methods. Inventory methods normally either reflect the total inventory turnover or define the total day’s goods kept in inventory with the average cost of goods sold.  

Redistribution:  

Inventory redistribution is the technique where the stock automatically moves from one location to another warehouse location, generating higher demand for the stock.   

ABC Analysis:  

It is the method that classifies the stocks based on the value of the stock. It classifies into A, B, C, whereas A holds high valuable stock and least valuable stock in C. Keeping A stock nearer to the shipping area reduces the labor cost and consumes more time in your warehouse.   

FIFO and LIFO:  

FIFO is the technique where the a business prefers old items more for sales than the newest item. LIFO is the method where you sell the fewest items first, and more preferences are given for it. Using LIFO, the taxable income becomes lesser, whereas, in FIFO, it increases from time to time.    

The average cost is another method used to manage the inventory.   

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