Top Three Methods to Accurately Manage Your Inventory
When it comes to business applications development in the Philippines or anywhere in the world, the Inventory is one of the assets of your company and it is considered as one of the major part of your business operations. For example, raw materials used to make and assemble products are inventories for manufacturers. The products resellers acquire and resell to customers are inventories for them. Hence, you really need inventory management in the form of a business app to do business.
This means, this has to be managed well. Managing your inventory is tedious with all of the ledgers and stock lists to maintain for every transaction and if you do not have the right inventory method or technique, it could cost your company thousands or if not, millions.
For instance, take the case of Overstocking. Overstocking is a serious problem as this would mean that you are risking the liquidity of your cash. If the stocks you purchased will not be sold or released in due time, this would mean that your cash would have been sitting there and you cannot use it for other investments or other expenses in your business operation. As a result, you could also fall into the trap of understocking to minimize the cash outflow but will eventually end up not having the items when the opportunity to sell it arises.
However, your company can avoid these pitfalls by implementing some common yet effective inventory methods and by understanding the different types of inventory management which are as follows:
FIFO (First-In, First-Out)
Businesses sell items they first received. Businesses with perishable goods or products that need to be sold immediately are common practitioners of the FIFO method. If the price of the products goes up, you can adjust the selling price of the goods. This can be a great help for you because you will be selling the old products you have at a very good price.
FIFO methods need a good warehousing practice to track the oldest products.
LIFO (Last-In, First-Out)
This method means that the last item or products that arrived will be the first ones to be released. LIFO system is good for companies whose products are not perishable and will not be obsolete in the near future. Businesses release higher priced items and keep lower priced items. This is good to increase your business gross profit and lower your tax liability.
FEFO (First-Expiry, First-Out procedure)
Products with the earliest expiry date are sold first regardless of when they were received in the FEFO inventory management method. This method is more demanding than FIFO. Vaccines, medicines, and food-related businesses are common practitioners of the FEFO method.
You can now choose which method is suited for you. You can try to use each method to get a first-hand knowledge on how they can help you. As a tip, a good computerized desktop or cloud-based inventory business app or business applications system can help you maximize your time and maximize your inventory using an app. Take note that really good inventory systems should have the following:
- Balances management and report.
- Capability to run on either of the above inventory management methods.
- Automatic management of individual inventory ledgers.
- Group inventory items to specific categories
- Get real time reports with regards to balances and the total inventory value.
- Set reorder points for each item.
- Ability to provide fast moving items and trending items reports.
Have you tried one or two of these methods in your inventory? How do these method/s help you? Have you tried using a computerized inventory system? Maybe this information from our business app or business applications team in the Philippines can help you out a great deal!