Professional Documents
Culture Documents
• The manufacturers and retailers keep only what they need to produce and sell products in inventory, which
reduces storage and insurance costs, as well as the cost of liquidating or discarding unused, unwanted
inventory.
• To balance this style of inventory management, manufacturers and retailers must work together to
monitor the availability of resources on the manufacturer’s end and consumer demand on the retailer’s.
MRP Method
• Manufacturers must have accurate sales records to enable accurate planning of inventory needs and to
communicate those needs with materials suppliers in a timely manner.
• Inability to accurately forecast sales and plan inventory acquisitions results in a manufacturer's inability to
fulfill orders.
Par levels are the minimum amount of product that must be on hand at all times. When the inventory stock dips
below the predetermined levels, we understand it’s time to order more.
It means that the oldest stock (first-in) gets sold first (first-out), not the newest stock. This is particularly important
for perishable products and don’t end up with unsellable spoilage. It’s a good idea to practice FIFO for non-
perishable products as well.
Contingency Planning
Manage Relationships
When need to return a slow selling item to make room for a new product, restock a fast seller very quickly,
troubleshoot manufacturing issues, or temporarily expand the storage space, it’s important to have a good
relationship with suppliers.
That way they’ll be more willing to work with manufacturer to solve problems.
Regular Auditing
Physical Inventory
A physical inventory is the practice is counting all inventory at once. Typically it’s only done once a year.
Spot Checking
Cycle Counting
Rather than a full count at year-end, cycle counting spreads reconciliation throughout the year.