NAME REGISTRATION SIGNATURE
NO
BRANDON BBM/1479/23
ODHIAMBO
CAROL SILA BBM/0320/23
SUSAN BBM/1480/21
NYAMBURA
ELVIS BEJA BBM/1680/22
KIDERI
COURSE TITTLE; PURCHASING MANAGEMENT
COURSE CODE;BBM 340
Inventory Management Techniques
Inventory management techniques help businesses optimize stock levels, reduce waste,
and improve efficiency. Some key techniques include:
1. Just-in-Time (JIT) Inventory — Stock is replenished only when needed, reducing
storage costs and waste.
2. ABC Analysis — Classifies inventory into three categories: o A: High-value, low-
quantity items o B: Moderate-value, moderate-quantity items o C: Low-value, high-
quantity items
3. First-In, First-Out (FIFO) — Oldest stock is sold first, preventing obsolescence.
4. Last-In, First-Out (LIFO) — Newest stock is sold first, beneficial for inflationary
environments.
5. Economic Order Quantity (EOQ) — A formula-based approach to determine the
ideal order quantity, balancing order and holding costs.
6. Reorder Point Formula — Establishes when new stock should be ordered to avoid
shortages.
7. Safety Stock — Maintains extra inventory as a buffer against demand fluctuations.
8. Dropshipping — A method where products are shipped directly from the supplier to
the customer, reducing the need for storage.
9. Batch Tracking — Groups items into batches for better traceability.
Inventory Management Process
1. Demand Forecasting — Estimating future sales to plan inventory levels.
2. Inventory Procurement — Ordering stock from suppliers based on forecasts.
3. Receiving & Inspection — Checking stock for quality and quantity upon arrival.
4. Storage & Organization — Arranging inventory efficiently to facilitate access and
minimize damage.
5. Tracking & Updating — Using manual or automated systems to track stock
movements.
6. Order Fulfillment — Picking, packing, and shipping orders to customers.
7. Stock Auditing — Regular cycle counting and full inventory checks to ensure
accuracy.
8. Replenishment — Reordering stock based on predefined thresholds.
Best Practices for Managing Inventories
Use an Inventory Management System (IMS) — Automate tracking to reduce human
errors.
Adopt Barcode or RFID Tracking — Enhances accuracy and efficiency.
Optimize Warehouse Layout — Reduces picking time and enhances workflow.
Monitor Key Performance Indicators (KPIs) — Track inventory turnover, order
accuracy, and stockout rates.
Implement Supplier Relationship Management — Strengthen partnerships for better
lead times and pricing.
Regular Audits & Cycle Counting — Ensures data accuracy and prevents
discrepancies.
Minimize Dead Stock — Regularly evaluate and discount slow-moving
items. Use Cloud-Based Systems — Enhances accessibility and scalability.
Inventory Management Methods & Strategies
Push vs. Pull Strategies — o Push: Inventory is produced in advance based on
forecasts. o Pull: Inventory is replenished based on demand.
Vendor-Managed Inventory (VMI) — The supplier manages stock levels at the
retailer's location.
Perpetual Inventory System — Continuously updates inventory records with real-
time data.
Periodic Inventory System — Conducts stock checks at scheduled intervals.
Consignment Inventory — Supplier retains ownership of inventory until sold.
Cross-Docking — Reducing storage needs by transferring incoming stock
directly to outgoing shipments.
Inventory Management Systems
These systems help businesses track, organize, and optimize inventory. Types include:
1. Manual Inventory Systems — Spreadsheets or paper-based tracking, suitable for
small businesses.
2. Barcode & REID Systems — Automate data entry and improve accuracy.
3. Cloud-Based Inventory Systems — Accessible from anywhere, integrating with
ecommerce and POS systems.
4. Enterprise Resource Planning (ERP) Systems — Comprehensive software that
integrates inventory with financials, HR, and supply chain management.
5. Al & IoT-Enabled Systems — Predict demand, automate replenishment, and
improve real-time tracking.
i• S
REFERENCE;
[Link],S and Meindl,P.(2019).Supply Chain Management;Strategy,planning
and operation(7th e.d.).Pearson.
[Link],D.(2019).Inventory Control and Management (3rd e.d.).Wiley
[Link],G.(2017).Warehouse Management;A complete guide to improving
efficiency and minimizing costs in the modern warehouse (2nd e.d.).Kogan Page
