Best Inventory Management Methods

Best Inventory Management Methods

Inventory translates to cash, so proper management is crucial to maintaining a cash positive business. Sales management entails proper forecasting, auditing and minimizing spoilage, dead stock and the costs related to the storage, counting and transport of goods. Here are the most effective methods to manage inventory which can be enhanced, made simpler and more accurate with online and mobile tools such as the inSitu Sales platforms.

First in, first out (FIFO)

Sell the oldest stock received from manufacturers first, then work through newer stock. This helps to minimize spoilage of perishables and prevents older models from going obsolete as newer models become available and customers start rejecting older stock, leaving your business stuck with it.


This method calls for prioritizing inventory levels of product by their value and frequency of sales. Category A is composed of high value (70-80%) products and low frequency of sales (10-20%). Category B is made up of products of moderate value (20%) and moderate sales frequency (20%). Category C is the group of products with low cost value (10-20%) and a high frequency of sales (70-80%).

Set triggers for par levels

Use mobile tools to notify stakeholders – suppliers, warehouse managers, sales managers, and purchasers when inventory hits a certain level so that repurchasing can be processed in time before stock completely depletes. This will rein in costs and issues associated with overstocking (obsolescence, spoilage, storage costs) and understocking (loss of sales from lack of inventory, loss of customer confidence).

Positive and frequent communication with suppliers

Proper management of your business’s relationship with manufacturers builds trust which has many benefits. Your business is in a better position to negotiate minimum order requirements, delivery schedules based on forecasts, and bulk shipment processing. Maintaining as much flexibility as possible is key to dealing with unexpected occurrences such as sales spikes and dips, low cash flow, miscalculations in forecasting, and supplier issues such as shipping delays and discontinuations.

Just in time (JIT)

This method requires diligent monitoring of stock and forecasting levels to minimize product costs. When sales orders are frequent and contain consistent quantities, product can be ordered and scheduled to be received shortly before sales orders are due to customers. This minimizes storage and auditing costs.


This method bypasses the storage component of the inventory management process. Incoming fleet  transfers goods directly onto outbound trucks, to be delivered to customers.


To eliminate storage and auditing costs altogether, consider dropshipping or shipping directly from the supplier to the customer. This method has the most positive impact on cash flow and inventory management.

Meticulous auditing and monitoring

Physical counting is a timely, tedious process that most companies only do annually. However, mid year spot checking and cycle counting can catch discrepancies and minimize costs so that companies are able to make adjustments more often and improve upon their inventory management system as needed. The inSitu Sales B2B portal and mobile app connect to Quickbooks inventory data for easy management.


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