Every supply chain relies on inventory management to keep its process on track and get product out to consumers when they want it.
Properly taking control of inventory management means that your warehouse always has the right amount of stock at the right time. Effective warehouse management will keep stock up and costs down but can come with quite a few confusing acronyms that some brand managers can’t easily stomach.
Let’s take a look at everything from the ABCs to the RFIDs of inventory management. We’ll explore what each acronym means in terms of logistics management and how GFS Logistics can help you work these processes in your supply chain’s favor.
If the acronym “ABC” seems elementary, that’s because it really is in our industry! ABC analysis is an inventory management technique every brand should have in its arsenal.
With ABC analysis, you’d categorize items based on their value, from highest value (A) to lowest (C).
Once you’ve valued your items, you can use this data to create a more efficient inventory management system. Grouping items into these three categories lets you focus on managing specific items efficiently. This could mean adding stricter storage requirements for A-tier products and working with your team to properly store and distribute C-tier inventory when it’s in demand.
When you categorize the value of your inventory, you save your team time and money when it comes time to pick and pack for that next shipment.
JIT: Just-In-Time Inventory Management
Successful inventory management is all about saving money and reducing inventory waste. JIT inventory management is a strategy that focuses on just those goals.
JIT strategies involve a business only ordering and accepting goods as they are needed. This leads to shorter warehousing, decreased storage costs, and improved warehouse management.
Over time, excess inventory gets expensive, and having JIT as a long-term ace up your sleeve can help you save money in the long run.
Aside from reducing warehousing costs. JIT inventory management reduces waste, improves efficiency, smooths out productivity, and increases your chances of pleasing your customers.
However, JIT inventory management can be challenging to implement. It requires high-level coordination between suppliers and buyers to ensure that goods are delivered on time.
Poor communication and planning can cause a delay in delivery that creates a traffic jam throughout your entire supply chain. Fortunately, an experienced logistics team can help coordinate shipping routes and find optimal choices that bring your items “home” on time.
EOQ: Economic Order Quantity
Ready to get crunchy? Economic order quantity (EOQ) is a mathematical formula our industry uses to determine the optimal order quantity for a product.
Like JIT, EOQ focuses on carrying inventory to arrive on time. The difference between the two is that EOQ is centered on hitting the most cost-effective order quantity for a warehouse’s inventory.
When your brand works toward EOQ within its inventory management, it reduces the costs of ordering and carrying consistent inventory. When your logistics team has put the work into determining the most optimal quantity to order against your budget and consumer demand, you’ll rarely overorder and have wasted inventory on your balance sheet.
VMI: Vendor-Managed Inventory
If any inventory management strategy requires the utmost communication between parties, it’s VMI. VMI means the supplier is responsible for managing the inventory levels of you, their customer.
With VMI, your supplier uses data and analytics to determine when to replenish your inventory and in what quantity.
VMI may seem like you aren’t in control, but the reality is that it puts you in even more control with regard to your total supply chain.
VMI can help reduce the number of purchase orders and invoices your team has to process, it can improve inventory accuracy and makes planning your shipments easy with streamlined access to exact product amounts in your warehouse.
RFID Technology: Radio Frequency Identification
RFID technology tracks inventory movement throughout your supply chain. Through physical tags attached to inventory, RFID tech helps improve warehouse location accuracy, reduces stockouts, and improves the overall efficiency and swiftness of your supply chain.
RFID technology is perfect for brands dealing with perishable goods and can help you make the best decisions when ordering new inventory.
Take Control of Inventory Management With GFS Logistics
If you plan on adding any of these acronyms to your supply chain process, we have one more for you:
At GFS Logistics, we help businesses overcome inventory management challenges through swift, accurate implementation of various management strategies.
Whether your brand is large or a startup, our logistics team can keep your supply chain running effectively.
Contact us today to learn more about our supply chain services.