![]() And, if the items you’re buying in bulk aren’t best sellers, they could end up as excess or even obsolete stock at a significant cost to the business. Don’t forget that inventory costs money to carry and ties up working capital. While placing bulk orders to get supplier discounts may be tempting, it’s wise to understand the impact this will have on your inventory turnover. You can then produce multi-dimensional inventory stocking policies that show what items to stock and in what quantities.īy optimising inventory levels, you’ll quickly see an improvement in your inventory turnover without risking stockouts of your most important lines. value, with A items being the most valuable to the business, B items less valuable and so on.īut for more sophisticated inventory classification, you need to consider more variables that affect turnover rates, such as an item’s pick frequency, cost or demand. By classifying every inventory item into groups, you can manage items with similar features in the same way to optimise your inventory levels and, therefore, improve your inventory turnover.Ī basic form of inventory categorisation, such as ABC analysis, lets you group products based on one dimension, e.g. Instead, you should prioritise stock items based on the above characteristics. It, therefore, makes no sense to have one generic stocking policy where you manage every item in your portfolio in the same way. But, at the same time, every item will also differ in terms of their: We’ve already discussed how every item in your product portfolio will have a different demand type. Prioritise your stock with inventory classification By optimising inventory levels, you’ll quickly see an improvement in your inventory turnover, without risking stockouts of your most important lines. ![]()
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