7 Inventory Management Techniques to Master

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Understanding what you have in your warehouse, what you need to order in the coming weeks and what inventory is going into which product batches – it’s all crucial information for any stock-based business. Inventory management is important to keep stock-based businesses running. Here are seven basic techniques to get your inventory under control.

Real-Time Inventory Control

Perpetual inventory control involves tracking inventory in real time as it moves through the supply chain. Inventory records are created as orders are placed and updated as inventory is received and each time the inventory is used or moved within the warehouse. This means that stock levels are always up-to-date and allows you to know the exact location of any item of inventory at any given time. Perpetual inventory also makes it easy to report on inventory costs in real time so you can understand financial performance in the moment.

Reorder Rules

Unless your business constantly orders stock as orders roll in, you are likely to periodically order inventory and reorder on a regular basis or when it looks like stock is getting a little low. Ordering inventory at regular intervals or using an ad-hoc approach are both fairly poor ideas. If you regularly order more inventory than you need, you’re likely to build up large excesses of stock and spend far too much money on warehouse space and stock depreciation. On the other hand, if you don’t reorder in a methodical way you’re likely to run short.

If you’re able to regularly keep track of inventory levels (ideally you’d perpetually update stock counts every time you make a sale), you can set a reorder threshold. For example, if you have fewer than 1,000 boxes of bottle caps in stock you might authorise an inventory control system to automatically reorder.


Speaking realistically, most businesses fail to effectively manage all of their inventory. Although inventory management software makes it relatively easy, business owners and managers are often time poor and can’t spare the time to make it happen. This calls for prioritisation. An ABC analysis is a good way of segmenting products according to the level of inventory management that is required.


Accurately managing inventory can often feel like guesswork, so it’s good to forecast inventory trends where possible. Forecasting demand and supply pressures is difficult to do, although sifting through past years’ performance data may yield some clues. Consider looking at market trends, last year’s sales, this year’s growth, seasonal pressures and the potential impact of world events. Equally, accept that some pressures are near impossible to forecast – few people can say for sure exactly how currency markets are going to look or even how transportation costs are likely to change over the next quarter.

Inventory on the Go

Whether you send sales professionals out into the field or operate a chain of retail stores, it’s important that your sales staff can quickly work out how much inventory is available to be sold. Inventory management software prevents your staff from overselling a product and it also means never missing a sale as your team can identify inventory in other locations that is available to be shipped or collected.


Traceability is important to ensure that your products are safe for use no matter what industry your business operates in, but particularly in the food manufacturing sector, healthcare and manufacturing sectors. Inventory control techniques such as batch and serial number tracking make it possible to keep track of all the inputs and outputs.

Bills of Materials

Understanding how much inventory you’ve used can be difficult. In theory you could work out how many bolts, screws and bars you’ve used by looking at what you’ve produced, but working it all out in an Excel spreadsheet is hard. Inventory management software typically supports bills of materials, which are like a recipe for a manufactured product. This makes it easy to work out exactly how much inventory is required to complete an order, and to keep the stock count up to date as inventory is produced.

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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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