There are several strategies that businesses can use to reduce inventory costs. It’s important to note that these strategies are interrelated and should be implemented together for the best results. By implementing these strategies, businesses can reduce inventory costs and improve profitability.
Here are some of the most effective strategies:
Forecast True Demand
Accurately forecasting customer demand is critical to reducing excess inventory. By forecasting true demand instead of sales, businesses can avoid overstocking or understocking inventory
Implement Just-In-Time (JIT) Scheduling
JIT scheduling involves producing or ordering inventory just in time for production or sale. This strategy can help businesses reduce inventory levels and minimize holding costs.
Kitting involves bundling low-demand products with high-demand products to help clear out slow-moving inventory. This strategy can help businesses reduce inventory levels and minimize holding costs.
Optimize Inventory Management
Optimizing inventory management involves using data to make informed decisions about inventory levels, reorder points, and safety stock. By optimizing inventory management, businesses can reduce excess inventory and minimize holding costs.
Reduce Lead Times
Reducing lead times can help businesses minimize the time between placing an order and receiving inventory. This strategy can help businesses reduce inventory levels and minimize holding costs.
Get Rid of Obsolete Inventory
Obsolete inventory can be a significant cost for businesses. By getting rid of obsolete inventory, businesses can free up space and reduce holding costs
Bundle Dead Stock to Sell
Bundling dead stock with other products can help businesses clear out slow-moving inventory and reduce holding costs.