Terminology and Techniques for Inventory Management

The techniques a company uses depend on its requirements and its stock. Formulas and analysis are used by some companies to plan stock. Procedures are used by others. All techniques aim to improve accuracy. This guide to the¬†Inventory management system in Malaysia techniques will help you decide which one is best for your business. Here’s a summary of each one:

  1. ABC Analysis: Inventory management system in Malaysia identifies stocks with the highest and lowest popularity.
  2. Batch Tracking: It groups similar items together to determine when they expire and to track any defective products.
  3. Bulk Shipments: Bulk shipping involves unpacking materials and loading them directly onto ships or trucks.
  4. Consignment: You don’t pay your supplier until the item is sold. Formerly, the supplier held ownership of the item until it was sold.
  5. Cross-Docking: With this method, items are unloaded directly from a supplier truck to a delivery truck, eliminating the need for warehousing.
  6. Demand Forecasting: Predicting customer demand is the goal of this form of predictive analytics.
  7. Dropshipping: When items are dropshipped, the supplier sends them directly to the customer from its warehouse.
  8. Economic Order Quantity (EOQ): The formula helps companies reduce holding costs by calculating how much inventory they should order.
  9. LIFO: Last in, first out refers to the order in which you move the most recent inventory, while FIFO refers to the order in which you move the oldest inventory first. FIFO differs from LIFO in that it considers prices always rise, so the most recently-purchased inventory is the most expensive and therefore sold first.

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  1. Just-In-Time Inventory (JIT): When a product is refilled, the bottom line is kept low with this method.
  2. Lean Manufacturing: The goal of this method is to eliminate waste or any item in a manufacturing system that does not provide value to the customer.
  3. Materials Requirements Planning (MRP): Manufactured goods are scheduled and inventoried using this system.
  4. Minimum Order Quantity: Businesses relying on minimum order quantities place minimum orders to keep costs low with wholesalers.
  5. Reorder Point Formula: This formula helps businesses determine if they should reorder at the minimum amount of stock.
  6. Perpetual Inventory Management: This method records stock sales and usage in real-time. Want to learn more about this strategy? Read “The Definite Guide to Perpetual Inventory.”
  7. Safety Stock: Having safety stock in place ensures that there is always extra stock available in case the company cannot replenish it.
  8. Six Sigma: A data-driven technique for removing inventory waste from businesses.
  9. Lean Six Sigma: A combination of lean management and Six Sigma, this method aims to remove waste and increase efficiency.