An effective inventory system is a must for any business. Getting your inventory management system right is not always an easy task. In a rapidly changing world of online shopping and uncertainty in markets every now and then, making mistakes in inventory management can prove to be costly. One needs to be very cautious about running out of stocks and inventory mismanagement calculations.
This is where bulk inventory management plays a key role in effective inventory management. Bulk inventory management is defined as a three-part system starting with a business ordering goods in bulk based on its sales forecasts. Next these goods are stored in an on-site warehouse or the establishment of a third-party logistics company (3PL). As stocks begin to be sold and get diminished the business yet again reorders in bulk.
Bulk inventory management heavily relies on market forecasts, current manufacturing rate and delivery times.
Bulk inventory management techniques and their relevance to your business:
- Par level or reorder point system: A reorder point system involves setting a parameter of a specified number of units based on which the next order will take place. The threshold depends on precise calculations of sales forecasts and manufacturing rates. Whenever a business reaches the defined par level or threshold, they will reorder bulk quantity.
- Order pattern system: This works well for companies that have a fairly fixed number of sales a year. If you know you are going to make a definite number of sales a year you can make bulk orders keeping in mind the number of sales that are expected. It is ideal for companies that have a lot of historical data and seasonal demands that are predictable.
- Control rhythm system: This technique works well for businesses that are confident of predicting their sales patterns at different times in a year. If a business knows the demand for goods at various times of the year it can order accordingly.
The best way to start a bulk inventory management system is to automate the inventory process with the help of inventory management software. Make sure to enter all the relevant details such as names and the current number of units of all your products. Ensure that the process of adding and removing a product from inventory is happening correctly. Set up an alert in your inventory management system to inform you when it’s time to reorder.
Benefits of bulk inventory management:
- Businesses can save a lot of money by availing bulk purchase discounts offered by manufacturers. These discounts reduce the average cost-per-unit, which helps businesses increase their profits.
- A bulk inventory management system is easier to implement and is straightforward.
Challenges of bulk inventory management:
- Your sales forecasts need to be highly accurate. You cannot misjudge your sales forecasts; if you do you run the risk of facing losses.
- Bulk inventory management entails the need for large warehousing in Goa which can at times be an expensive investment.
One needs to decide the use of bulk inventory management depending on the nature of the business. If you have a strong inventory management system that enables you to forecast sales in an ideal manner it will make sense to go in for a bulk inventory system. It will be cost-effective for you as well as convenient to run the business. There is a rise in bulk inventory storage on demand in Goa and this is due to the new trends in e-commerce. This has in turn led to the demand for short-term warehouse space in Goa, as a good warehousing system is a must for bulk inventory management.