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Inventory Control

3 Approaches for Optimizing Inventory In Inventory Control

Inventory control is the process of managing, distributing, and storage of stocks. It is an integral and crucial part of supply chain management. The primary objective of inventory control is to ensure that products stay at the right time and place.

It also enables you to forecast the demand and supply of the inventory to save time and costs. If you run out of stocks, your competitors can take your market share.

Considering the cost and losses at stake, you should use specific inventory optimization approaches to ensure product supply meets the demand.

Unfortunately, 43% of small businesses in the US don’t track their inventory, and globally, retailers face $1.7$ trillion losses due to poor inventory management.

The following practices can help to optimize your inventory

1.     Analyze Your Demand

Knowing your demand is a significant advantage in a business’s supply chain management. It helps you to achieve an optimal supply rate to meet the ongoing demand. Moreover, you can focus the production on the in-demand products rather than manufacturing products with less demand.

Demand analysis saves costs and gives a high ROI in production. You should use the following elements to predict near-accurate trends

  • Study the historical sales trend (preferably from the past three to five years)
  • Study the supplier trends to see whether the supplier can maintain the supply during high demand. (this too, preferably from the past three to five years)
  • Analyze the seasonal changes in the sales trends. Sometimes sales are only high because of a particular season or event.
  • Analyze the external factors (competitors, news, shipments, and others)

You have to make sure that your production aligns with the forecasted demand. Otherwise, you will overproduce, which will cause you to lose resources and efforts.

2.     Know Your Most Selling Products

Demand analysis can give you the forecast of the future growth of a particular product, but you can also know which product has the highest sales.

It would be best to use the ABC analysis to optimize the inventory and focus on improving the supply chain. This inventory management technique determines the product’s value for the business. It uses three factors to determine a product’s importance:

  1. Demand
  2. Cost
  3. Risk data

Using the above three elements, you can categorize products into groups A, B, and C. The “A” category products have the highest demand throughout the year. Therefore, ensure adequate production materials and stocks to meet the demand.

“B” category products have moderate demand; they can make around 30% to 20% of your total annual sales. Then comes “C” category products, which contribute the lowest to sales and can be seasonal.

ABC analysis is a simple framework you can quickly implement within your business. Knowing the three categories allows you to optimize your inventory in inventory control.

Inventory Control

3.     Use Stock Level Control Policies

Create stock level control policies to ensure you stock the right products in the right quantities. The ideal approach would be to use SKU, UPC, or EAN codes to categorize, store and monitor products. It is an efficient method to utilize your warehouse space.

ABC analysis can help determine which products should be on priority and how much quantity should be present in the warehouse. Moreover, your stock level policy should also include handling excess and measuring inventory KIPs to ensure smooth warehouse operations.


The above practices will ensure that your inventory is optimized to the latest market trends and demand. Moreover, it will help you to save time and money by investing resources in the right products. Get ahead of your competition with the above inventory optimization strategies.

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