Inventory

Management

Presented by: MIRAZOL EDERA-PILAPIL

Content 1. Understanding Inventory Management

2. Strategies for Efficient Inventory Management

3. The Impact of Effective Inventory Management

 Section 1

Understanding Inventory Management

What is Inventory Management?

01 02 03
Definition and Importance Key Components Challenges Faced
Inventory management involves Inventory management encompasses the
overseeing the flow of goods from ordering, storing, and utilization of raw Businesses encounter various challenges in
manufacturers to warehouses and materials, components, and finished inventory management, including
ultimately to the point of sale. It is crucial products. It plays a vital role in overstocking, stockouts, and the need to
for businesses to optimize this process to maintaining adequate stock levels and balance carrying costs with stock
ensure seamless operations and customer preventing stockouts. availability.
satisfaction.
Benefits of Effective Inventory
Management

Cost Reduction
Effective inventory management helps in minimizing holding costs, reducing the
risk of dead stock, and optimizing warehouse space, leading to cost savings.

Enhanced Efficiency
Streamlined inventory processes lead to improved operational efficiency, faster
order fulfillment, and reduced lead times.

Customer Satisfaction
By ensuring product availability and timely delivery, businesses can enhance
customer satisfaction and loyalty, leading to increased sales and profitability.
 Inventory Management Techniques

01
02 03
Just-In-Time (JIT)
JIT inventory management aims to Vendor-Managed
minimize carrying costs by ordering
inventory only when it is needed, thereby
ABC Analysis Inventory (VMI)
reducing excess stock and storage This technique categorizes inventory based
expenses. VMI involves suppliers monitoring
on value and usage, allowing businesses to
prioritize items and allocate resources and replenishing inventory levels for
effectively. their customers, reducing the burden
on the customer's end.
Inventory Management Techniques

04 05 06
Batch Tracking Bulk Shipments Consignment
This method groups similar items to track
This method considers unpacked materials When practicing consignment inventory
expiration dates and trace defective items.
that suppliers load directly into ships or management, your business won’t pay until
trucks. It involves buying, storing and a given product is sold. That also retains
shipping inventory in bulk. ownership of the inventory until your
company sells it.
Inventory Management Techniques

07 08 09
Cross-docking Demand Forecasting Dropshipping
Using this method, you’ll items directly
This form of predictive analytics helps The supplier ships items directly from its
from a supplier truck to the delivery truck.
predict customer demand. warehouse to the customer.
Warehousing is essentially eliminated.
Inventory Management Techniques

10 11 12
FIFO and LIFO Economic Order Quantity Lean Manufacturing
First In, First Out (FIFO) means you move (EOQ) This method focuses on removing waste or
the oldest stock first, Last In, First Out
any item that does not provide value to the
(LIFO) considers that prices always rise, so This formula shows exactly how much
customer from the manufacturing system.
the most recently purchased inventory is he inventory a company should order to
most expensive and thus sold first. reduce holding and other costs.
Inventory Management Techniques

13 14 15
Materials Requirements Minimum Order Quantity Reorder point Formula
Planning (MRP)
A company that relies on minimum order Business use this formula to find the
This system handles planning, scheduling quantity will order amounts of inventory minimum amount of stock they should
and inventory control manufacturing. from wholesalers in each order to keep have before reordering, then manage their
costs low. inventory accordingly.
Inventory Management Techniques

16 17 18
Perpetual Inventory Safety Stock Six Sigma
Management
An inventory management ethos that This is a data-based method for removing
This technique entails recording stock sales prioritize safety stock will ensure there’s waste from business as it relates to
and usage in real-time. always extra stock set aside in case the inventory
company can’t replenish those items.
Inventory Management Techniques

19 17 18
Lean Six Sigma Safety Stock Six Sigma
This method combines lean management
An inventory management ethos that This is a data-based method for removing
Six Sigma practices to remove waste and
prioritize safety stock will ensure there’s waste from business as it relates to
raise efficiency.
always extra stock set aside in case the inventory
company can’t replenish those items.
Inventory Management Software

Features and Benefits

Inventory management software automates and centralizes inventory-related tasks,
offering benefits such as real-time tracking, demand forecasting, and data
analytics.

Popular Tools
There are various software solutions available, including NetSuite, QuickBooks,
and Zoho Inventory, each offering unique features to meet diverse business needs.

Case Studies
Explore real-world examples of businesses that have successfully implemented
inventory management software to streamline their operations and drive growth.
 Section 2

Strategies for Efficient Inventory Management

Inventory Optimization Techniques

Demand Forecasting Safety Stock Management Lead Time Reduction

Accurate demand forecasting enables businesses to Maintaining safety stock helps mitigate the risk of Strategies to reduce lead times, such as optimizing
anticipate customer needs, optimize stock levels, stockouts due to unexpected demand spikes or supplier relationships and leveraging technology,
and minimize excess inventory. supply chain disruptions. contribute to efficient inventory management.
Inventory Control Methods

Batch Tracking
Implementing batch tracking allows businesses to trace products throughout the
supply chain, enabling effective recall management and quality control.

Cycle Counting
Regular cycle counting helps in maintaining accurate inventory records and
identifying discrepancies, contributing to better inventory control.

Stock Replenishment Strategies

Just-in-time replenishment, economic order quantity (EOQ), and reorder point
planning are essential strategies for maintaining optimal stock levels.
Inventory Management Best Practices

01 02 03
Data-Driven Decision Collaborative Supply Continuous Improvement
Making Chain Management Embracing a culture of continuous
improvement allows businesses to adapt to
Leveraging data analytics and inventory Building strong relationships with
changing market dynamics and enhance
KPIs empowers businesses to make suppliers and partners fosters
inventory management processes.
informed decisions, optimize stock levels, collaboration, leading to improved
and identify trends. inventory visibility and supply chain
resilience.
 Section 3

The Impact of Effective Inventory Management

Financial Implications

Cost Savings Profitability Investor Perspective

Effective inventory management directly impacts Streamlined inventory processes contribute to Efficient inventory management enhances investor
the bottom line by reducing holding costs, improved cash flow, reduced markdowns, and confidence by showcasing sound operational
minimizing stockouts, and optimizing working increased profitability for businesses of all sizes. practices and financial discipline.
capital allocation.
Financial Implications
Customer Experience and Satisfaction

Product Availability
Maintaining optimal stock levels ensures that customers can access the products
they need, leading to enhanced satisfaction and repeat business.

Order Fulfillment
Efficient inventory management results in faster order processing and accurate
deliveries, contributing to a positive customer experience.

Brand Reputation
Consistently meeting customer demands through effective inventory management
enhances brand reputation and fosters customer loyalty.
Supply Chain Resilience

01 02 03
Risk Mitigation Adaptability Sustainable Growth
Effective inventory management strategies, Businesses with efficient inventory Resilient supply chains, supported by
such as safety stock management and management practices can swiftly adapt to effective inventory management, lay the
supply chain diversification, mitigate the changing market conditions and supply foundation for sustainable business growth
impact of disruptions and uncertainties. chain challenges. and expansion.
Future Trends in Inventory Management

Automation and AI
Explore the role of automation, artificial intelligence, and predictive analytics in
shaping the future of inventory management and supply chain optimization.

E-commerce Impact
Analyze the evolving inventory management landscape in the context of e-
commerce growth, omnichannel retail, and changing consumer behaviors.

Sustainability Initiatives
Discover how businesses are integrating sustainability into inventory management
practices, addressing environmental concerns and consumer preferences.
Thank You