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    Best Inventory Management Techniques To Grow Your Business

    Best Inventory Management Techniques To Grow Your Business

    If you own a business, you should understand your inventory regardless of size.

    You must be aware of the following:

    • How much stock quantity do you need to order?
    • How long will your products remain in the warehouse?
    • How much money do you currently have locked up in inventory?
    • How much money is actively losing value rather than boosting business profits?

    A bit complicated, right?

    However, you can easily get answers to all these questions by employing an inventory management system.

    It aids businesses in determining which products to order, when to order, and in what quantities. It involves tracking inventory from producers and warehouses to the point of sale and is a crucial component of the supply chain.

    Using the appropriate inventory management approach can result in supplying the right items in the proper quantity, at the suitable location, and at the correct time.

    Some of the best inventory management techniques are:

    1.   FIFO and LIFO

    Many businesses operate under the premise that the first products they create or buy should also be the first products they sell. This is known as the First In, First Out (FIFO) principle. Businesses that sell perishable items vulnerable to obsolescence often use the FIFO method.

    On the contrary, the cost of goods sold is calculated using current pricing rather than the price you earlier paid for the inventory in the Last In, First Out (LIFO) inventory technique.

    The product’s selling price will be higher if the price has increased after the first purchase. Tax liability reduction is the major reason for companies to use LIFO. So, when permitted, LIFO accounting is typically used for nonperishable goods.

    Read more here.

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