Best Inventory Management Techniques You Need To Know

Inventory management techniques help to always have a stock of ready supplies at hand, whether for your retail store or online shop.

Thanks to proper inventory management, you can avoid disruption in the supply chain, higher storage costs, a shortage of working capital, and many other things. All of this will result in happy customers and more sales.

Therefore, to help you meet the demand of your customers, with the required quantity, on the promised time, and to the right destination, we have detailed all the useful techniques in this blog.

Here, you’ll learn:

  • Process of inventory management?
  • Inventory management techniques
  • Benefits of inventory management techniques

Inventory management technique

What is the Process of Inventory Management?

A well-thought-out, well-executed plan nearly always works in your favor. Following a set of actions behind the scenes of your eCommerce will help you in keeping track of sales, ensure a smooth flow of products, and optimize your resources.

Therefore, before you move on to the list of inventory management techniques, take some time to understand the process of management.

The process has many stages, but broadly speaking, we can separate them into five.

Inventory management technique


This is the stage in which you add new items, raw materials, and individual products to your inventory, which will be used to build a final product later.

Depending on how much space you have allocated for storage, you can use drop shipping, cross-docking, or a different approach.


Inventory management technique

If you’re a wholesaler, for instance, you can skip this step. However, this is the stage where the raw materials and parts bought in the first stage are turned into a finished product. Here you manufacture the final product.


You store purchased products, finished products, and raw resources that haven’t been used yet in this stage. You must properly maintain your stocks to ensure that there is a steady  flow of products.

Always keep detailed reports on your inventory, as well as which products sell well and which don’t, to minimize supply shortages.

You can manually count your inventory or use software to do so.


This is the point at which you sell your products to customers and get paid. They have the option of buying straight from you or from your online store.


One of the most critical parts of the process that will help you in maintaining and growing your company. You must keep track of how many units your products sell and how much money you make on each sale.

Keeping track of re-ordered goods will also help you maximize sales while also ensuring that there is always adequate stock to meet demand.1

Inventory Management Techniques That Make Keeping Inventory Extremely Easy

  • ABC Inventory Management Technique

The ABC analysis technique, which is short for ‘Always Better Control Analysis,’ separates products into three groups in order to determine which products have the most and least impact on total inventory costs.

Group A: Products with the highest profit margins.1

Group B: This category contains things that are less expensive but nonetheless valuable.

Group C: These products are essential in terms of overall profit, but they don’t contribute much on their own.

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  • Demand Forecasting

Wouldn’t it be better if you could anticipate the future demands of your customers? This inventory management technique does just that. It uses historical data on sales to forecast the future demands of your customers.

  • Six Sigma

This inventory management method is a data-driven procedure that provides you with the resources you need to increase business efficiency and reduce inventory waste.

  • Bulk Shipments

Bulk shipment is a cost-effective inventory management method that is based on the notion that buying and shipping things in bulk are less expensive.

While it provides advantages such as cheaper shipping prices and greater profits, it also has drawbacks, such as increased capital risk and storage costs.

  • VED Analysis

The abbreviation VED stands for ‘Vital Essential and Desirable.’ This method is quite handy for keeping track of your inventory’s spare parts.

Some inventory parts are more expensive and necessary for production, and if not managed effectively, can cause the manufacturing process to slow down.

  • Just-in-time Inventory Management Technique

When you order too much stock at once, you risk having dead stock, which means that the products never leave the shelves for an extended period of time.

Companies receive a reduced volume of goods to avoid such scenarios and only as much as is required for the time being.

While this may help save money on storage and avoid frozen inventories, it is not without risk. If consumer demand is not anticipated, you may run out of supply. As a result, make certain you have dependable suppliers at hand.

  • Cross-docking

We know storage costs eat up into the profits, especially when there are large orders. But what if you could avoid warehousing your inventory altogether?

Cross-docking is an inventory management technique where supplier trucks arrive and unload directly onto outbound trucks.

So, in essence, there are no warehousing stops, and products are directly shifted from one mode of transportation to another.

However, a large fleet and a proper chain of transport vehicles are required for a smooth process with no hiccups.

What Are Some Benefits of Inventory Management Techniques?

Inventory management will give you control over your supply chain, sales, and distribution. Your company will benefit immensely from implementing the above techniques. Other additional benefits include:

  • Higher Revenue

The data is clear. Businesses have stated that proper inventory management has resulted in significant increases in sales.

  • Improved Accuracy

You should have accurate information on hand to avoid wasting resources and time. When you manage orders properly, you can fulfill orders on time and with less loss.

  • Customer Retention

Customers are more likely to continue with you for a longer period if you consistently and efficiently meet all of their needs. And, when demand increases, inventory management tactics will ensure you never run out of goods.


To Sum Up

The above-mentioned inventory management techniques will surely help you ‌manage your inventory and optimize your sales. However, you may lose significant profit thanks to higher shipping costs.

Parceldeck will help you ‌ship your products cheaply and securely. To learn more about shipping, read our blog How Can You Make Shipping for eCommerce Sites Easier?