How Inventory Management Techniques Can Increase Your Profit!

Why is inventory management important?

Inventory management helps reduce operating costs

Enterprise daily operating costs include the staff salary, warehouse rent, storage cost, logistics cost, and so on a series of spending. Inventory management techniques can help you minimize losses.

Inventory means that you store a valuable and limited resource in the warehouse, and you can make it cash only by selling this resource.

For the following types of inventory you need to sell in time:

Products with shelf life that are prone to spoilage: food, medicine, cosmetics, etc. If these products are not sold in time, they will deteriorate and need to be discarded in time.

Outdated products: Outdated phone covers, clothing, or shoes that were popular last year, etc. Such slow-moving goods will occupy a certain amount of inventory space for storage.

To minimize storage costs, you can take certain measures and technologies to achieve efficient inventory management and lower inventory levels.

Effective inventory management techniques are listed below:

Inventory-Management-Techniques丨Unleashed-Software丨ChinaDivision
Inventory-Management-Techniques丨Unleashed-Software丨ChinaDivision

First In First Out (FIFO)

First in first out (FIFO) is an inventory management method widely used worldwide. This method means that the first batch of goods entering the warehouse is also the first batch of products sold.

For example, supermarkets or some small shops will place the latest date of yogurt at the end of their shelves.

But what are the limitations of this technology?

Some products are not suitable for this inventory management technique. For example, red wine. Retailers like to store this kind of goods because they do not have strict shelf-life requirements. Although FIFO can better and more accurately value the inventory on the balance sheet, products such as wine are not so accurate.

inventory-management丨Mitrah-Technology丨ChinaDivision
inventory-management丨Mitrah-Technology丨ChinaDivision

ABC inventory management

ABC classification is also a commonly used inventory management technique, which usually divides inventory resources into three categories:

Class A inventory control is the most stringent and requires accurate records,
Class B inventory control is slightly strict and appropriate records,
Class C inventory control is the simplest and least record.

What are the benefits of this inventory management technique?

ABC analysis is a method of identifying inventories that have a significant impact on the overall inventory cost. There are different controls for each type of inventory.

In other words, each inventory does not have the same value. Dividing inventory into categories A, B, and C can help you determine their respective importance to your business.

First, Class A stocks are critical, often high-value and high-margin items that require regular and frequent inspections; B is next; Class C belongs to the lowest value, so you just need a little attention. First, Class A stocks are critical, often high-value and high-margin items that require regular and frequent inspections; B is next; Class C belongs to the lowest value, so you just need a little attention.

So, how to allocate A, B, C inventory?

There is no clear ratio, everything depends on the goals and standards you set.

According to the Pareto principle, 20% of products bring 80% of revenue. The ratio of ABC’s three inventory is rough as follows:

Class A inventory—accounting for 30% and 60% of total revenue
Class B inventory—accounting for 50% and 30% of total revenue
Class C inventory—accounting for 20% and 10% of total revenue

How to Get The Cheapest International Shipping When Sourcing Products From China

Many businesses order need the Cheapest international shipping, China shipping company, shipping from China when ordering products from suppliers in China. In some cases shipping is the most expensive part of their orders so getting a great price is essential to maximizing profit. If you use the tactics listed below then you are one step ahead when it comes to getting the best shipping rates. There are many things buyers should be aware of when ordering products from China to get the best shipping rates.

Cheapest International Shipping
Cheapest International Shipping

Negotiating With Different Shipping Companies

When getting quotes from suppliers they can ship your items from a variety of carriers. The more expensive carriers like DHL, FedEx International, and EMS offer the fastest shipping times (usually 2-4 business days). The more cost effective carriers like post and others are very slow sometimes even 15 days to one month to deliver your products based on your location. It’s essential to make sure you know when you need your product so that you can use the best shipping company for your situation.

Order Quantities and Shipping Price

It is a common saying that when the quantity ordered increases then the price should decrease. This is also true when ordering products from China. There are shipping fixed costs and then a variable cost of the weight of the items. So when you calculate a rate with a shipping company they are plugging this information into their system to give you a price. (This method will depend on your item’s size but works better for small to medium items) If you are ordering a product like coffee mugs then trying to order just one mug will be expensive but when you order 50 mugs the shipping will be cheaper per unit. It’s all about saving you money on shipping from China because you also have to ship the item to your customer once you receive it.

Online Shipping Calculators

If you believe that your supplier is not being truthful about the shipping cost for your shipment then check the price for yourself on a shipping calculator. You will need to know which carrier you want to use and the dimensions of the packages you are shipping but this is a great way to do-it-yourself or just check a supplier’s pricing to make sure you are not getting screwed over. Sometimes suppliers over inflate the price of shipping to make some extra profit from buyers so beware of this scheme.

International freight forwarders
cheapest shipping rates

Buyers who use these tactics listed above are set to make more profit on their purchases from Chinese suppliers. Once you know how the shipping game works then you can begin to use it to your advantage and make your suppliers work in your best interest. The only problem is that this process is sometimes confusing and it is time consuming. At ChinaDivision we manage the shipping process for your business so that you can focus on what you do best. We can streamline your inventory management and deal with suppliers to help your business work smarter not harder. Contact us today for Cheapest international shipping,China shipping company,shipping from China. We are your one stop shop for all things shipping, logistics, and customer satisfaction.