Safety stock is the number of products a business keeps on hand as a buffer to prevent stockouts. At least, that is the basic definition. But we can better illustrate what it means by using an analogy.
It’s like how your body keeps a little bit of fat on hand to burn off when food becomes scarce. A business, just like a body, shouldn’t accumulate too much fat because that can lead to all sorts of health problems. You need to find a healthy balance between gorging and starving. That is just common sense.
How many times have you heard someone say that inventory management software is essential for your business? We might be guilty of being part of that endless chorus here on the Fishbowl Blog. So, why do we need inventory management, exactly?
It is like some of the arguments you may have heard for using social media.1 “Everyone else is doing it.” “You are missing out if you don’t do it.” “There are lots of opportunities out there.” And so on. Now we are not saying there is anything wrong with social media, or inventory management system, for that matter. We are just asking, are they right for you?
Time is of the essence when it comes to managing your inventory. If you have food products or other goods that have a limited freshness period, expiration dates are a must-have tool to track them by. No matter what goods you sell, it’s important to know their lead times and auto reorder points to make sure they don’t run out. And you can enable employees to track their time on the job and schedule tasks to make sure important things are done properly and in a timely fashion.
Let’s talk more about the five time-based inventory management tools we briefly mentioned above to get a feel for why they are so important to your business.
Are you better off bulk ordering or only purchasing what is necessary to meet your current needs, as in a just in time (JIT) setup? There are advantages and drawbacks to each order management strategy.
You’ll often receive a bulk discount on pricing for reaching a high threshold of items in one order from wholesalers or retailers, and you’ll save money on shipping and delivery fees. But you’ll also have higher carrying costs, more money tied up in inventory, and the potential for product spoilage if it sits on the shelf for too long. When you order smaller quantities instead of bulk purchasing, you will avoid unnecessary storage costs and be able to run a leaner warehouse. However, you need to have incredible precision in your inventory data because you risk running out of items if you order too few, and you will likely have higher shipping and delivery costs as you place more orders over time.
I’d like to share two personal experiences from my life that allude to the dangers of going to one extreme or the other, and the need for finding a healthy balance in your ordering strategy, whether you choose to order smaller or bulk quantities.
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The Monitor module is laser focused on tracking inventory levels. When a part’s quantity falls below its reorder point, the Monitor module can display it in a way that makes it clear what you need to do. It helps you stay on top of your inventory and prevent shortages.(more…)
Let’s dive back into the Part module for the second time. You might even call this part 2. Last time, we discussed how to create new parts and now we’re going to cover how to create part reorder levels.(more…)
Ordering products is what you do to keep them in stock. Maintaining equilibrium in your inventory quantities is a big challenge that you can handle with a manual or automatic order management system. Let’s discuss these two options’ strengths and weaknesses in order to decide which one is ideal.(more…)
Inventory management software is good for your business. In fact, it’s in your best interest to have the right tools to keep your inventory in check and your warehouse working like a well-oiled machine. And this software does all of that and much more.Here are four reasons why using inventory management software is in your best interest.(more…)
Inventory performance metrics are essential to your business. They help you measure how well you are doing at managing your inventory. Here are three major ones you need to know to equalize your inventory levels in the long term.(more…)