“Manufacturers and retailers report that people are buying less, more frequently, and are determined to keep cash on hand,” according to a Wall Street Journal article called “The Just-in-Time Consumer.”
Flexibility is the key to success in the current economy, where frugality and basic necessities are in, and big spending and luxuries are out. That flexibility is also key in the world of inventory management, where the fickle nature of holiday shopping can create rushes on some products while others don’t move and fill up your shelf space. All the while you need to be prepared for last-minute customers looking for deals.
Although it’s challenging, you can meet frugal customers’ needs by using one or more of the following inventory management techniques:
Just in Time. Using the just-in-time technique is risky, but if you do it right you can receive many rewards. As its name suggests, just in time involves ordering products so they arrive right when customers want them. It’s not easy to plan for customer behavior. It takes a lot of time and research into buying habits, seasonal demand, and location-based factors. If you can make the just-in-time technique work, you can save a lot of money on storage costs, though.
ABC Analysis. ABC analysis involves dividing your products into three groups, marked A, B, and C. Group A contains expensive items; group B contains medium-priced products; and group C contains cheap parts and products. You manage each group separately: You can be fairly hands-off with group C, while group A gets special attention. You can use ABC analysis in conjunction with the just-in-time technique to help you get your reorder timing just right.
Min-Max. The min-max technique is completely separate from just in time. It involves setting a minimum and maximum amount of each product to keep in stock. When you get to the minimum, you order more. This is a fairly straightforward way of inventory management that helps you avoid stockouts. Just be careful not to set your maximum level too high.
Be prepared for the rise in customer demand this Christmas season while keeping a lid on inventory costs by using one or more of these inventory management techniques.