Getting to know some of the basic inventory management techniques you could use

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Each and every business will manage their inventory in slightly different ways – it’s all about making it work for you. But especially when you’re starting out, there are plenty of techniques that you can look to adopt that will help you get a handle on your inventory right from the start. Nobody wants a disorganized mess back of house after all. Let’s look at a few of the most common techniques businesses use when it comes to inventory management. Don’t forget, you don’t have to just pick one, your business will more than likely require you to use a mix of different techniques.


Just-in-time inventory involves ordering products right before you sell them. You also order only what you need, so you have no unnecessary excess. By doing so you essentially eliminate the holding time your inventory sits in the warehouse, which in turn helps you reduce any associated costs.

This inventory management technique can be a little bit risky because if anything holds up your orders you can be left in limbo. The last thing you need is to have promised or sold stock to a customer with a particular delivery date and your supplies are held up at the other end. Additionally, it also relies on you knowing your sales trends and forecasting properly.

Bulk ordering

Bulk ordering is quite a well-known technique, and relies on the notion that when you order in bulk you get an associated cost saving. It can be a particularly useful technique for businesses with fast moving goods, as you get both the saving when bulk buying and you don’t have excessive holding costs either considering you are selling the products quickly too. However, the downside comes when your products are not moving out the door quickly and you are paying to store the stock for longer periods of time. These costs may end up outweighing the savings you made by ordering in bulk in the first place, and your capital is tied up as a result too.


Dropshipping alleviates the costs involved with holding inventory as basically a third-party stores and ships it for you instead. If organized and the third-party proves to be trustworthy this can be highly beneficial. However, because you are still the point of contact for your customers, you need to make sure you know what is going on with orders throughout the entire process otherwise your reputation could be affected.


This technique is exactly what it says in the title, you ship products out that have been in storage the longest. It is a particularly common technique when dealing with perishable items, as you don’t want items sitting around for long. However, it can also be applied to non-perishables simply due to the fact you don’t want products and packaging deteriorating at the back of a shelf and getting missed. With this technique, you need to keep your warehouse or back of house organized – you need to know exactly when products have come in and what is due to go out next. It’s about getting your inventory management cycle in shape.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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