Inventory Holding Cost Barometer

INVENTORY HOLDING COST BAROMETER Inventory management can make or break your business. Here is a look at some common stock control techniques, along with their inventory holding costs and potential profits. HIGH Bulk Shipments You purchase and ship products in bulk. Inventory Holding Cost: Potential Profit: ABC Analysis → 24 %24 24 24 You divide on-hand inventory into categories based on the 80-20 rule, and prioritize and manage groups separately and selectively. Inventory Holding Cost: Cross-docking 996 Incoming transport unloads inventory directly onto outbound transport with little or no storage in between. Potential Profit: %24 24 %24 %24 Inventory Holding Cost: Potential Profit: Backordering -> %24 %24 %24 You order goods in only after an order has been placed for them. Inventory Holding Cost: Just In Time You only purchase inventory a few days before it is needed so items arrive just in time for use. Potential Profit: 2$ Inventory Holding Cost: 24 Potential Profit: Consignment > 24 2$ %24 %24 You place goods in the inventory of your retailers, but retain legal ownership until the products are sold. Inventory Holding Cost: → Drop Shipping LOW You directly transfer customer orders and shipment details to a manufacturer or wholesaler, who then ships the goods directly to Potential Profit: your customers. Inventory Holding Cost: 0 Potential Profit: Inventory Management An Intrinsic Part Of Your Business Every business is different, you need to figure out the best mix of inventory management techniques for your company. From this infographic, it's clear that you have to balance out inventory holding costs with your potential profit. The right tactic will help you reduce cost, eliminate wastage, and put an end to inefficiency in your operations. Regardless of the inventory management technique you choose, you need a solid system in place to track and manage your stock. Your inventory is an intrinsic part of your business that you definitely don't want to mess around with. tradegecko Share this infographic from TradeGecko tradegecko.com %24