As a result, many growing businesses graduate to an inventory management app, software, or system with capabilities beyond manual databases and formulas.With these systems, the procedures of inventory management extend beyond basic reordering and stock monitoring to encompass everything from end-to-end production and business management to lead time and demand forecasting to metrics, reports, and even accounting.
Inventory management is a systematic approach to obtaining, storing, and profiting from non-capital assets (raw materials and finished goods).
The right stock, at the right levels, in the right place, at the right time, and at the right cost.
Here’s an overview of some of the most common inventory formulas…
Days inventory outstanding (DIO), also known as days sales of inventory (DSI), refers to the number of days it takes for inventory to turn into sales.
Let’s add to that a label for everything and the means to track it all.
And, how about some alerts when there’s too much of one item and a shortage of another?This mix pretty much sums up what inventory management software can do for your business.Whether you’re running a brick and mortar store, an e Commerce site, a supermarket, or a logistics company, an inventory management system is a must-have.The reorder point formula answers the age-old question: When is the right time to order more stock?Calculating your reorder point takes three steps: As we touched upon earlier, safety stock acts as an emergency buffer you can break out when it looks like you’re on the verge of selling out.Entrepreneurs, founders, and independent brands now live in a native commerce world where small-to-medium businesses compete against global conglomerates.We’ve put together this definitive guide to inventory management to level the playing field and help you grow your brand with speed, scalability, and smart insights.Naturally, your company’s precise inventory management meaning will vary based on the types of products you sell and the channels you sell them through.But as long as those basic ingredients are present, you’ll have a solid foundation to build upon.As you’ll see below, there are other terms such as “decoupling inventory” and “pipeline inventory” used to describe types of stock-based on its theoretical purpose and use.Nonetheless, physical inventory almost always falls into one of the four categories above.