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PRINCIPLES OF INVENTORY MANAGEMENT

An inventory management program is a system utilized by the company to
manage inventory ordering, storage, use, and sale. It includes managing
raw materials, intermediate products, and finished products of various
types, as well as the storage and processing of such goods.
Importante to sa isang company kasi nakakatulong to to make sure na
there is rarely too much or too little stock of on hand, and also nililimitahan
nya din ang risk of stockouts and inaccurate records.
5 Basic inventory management principles
1. Forecasting of demand
The cost of inventory can rank among the top five expenses for a business,
depending on the industry. Inventory management principles offer the
highest potential for savings when it comes to accurate demand
forecasting.
Yung demand forecasting kasi is isa syang proses na ginamit ng mga
company determine to making estimations about future customer demand
over a defined period, using historical data and other information.
ANY TYPES OF BUSINESS MAG BEBENEFIT SA PAG GAMIT NG
DEMAND FORECASTING

EXAMPLE:
Yung isang food manufacturing industry business gusto nila ipredict yung
future sales nila for their new products na dinevelop nila recently. Since
kulang sila ng historical data, nag decide sila ng undertake market research
initiatives para mas mainitindihan nila kung yung irereact ng consumer sa
kanilang bagong produkto and also to identify if there is any significant ssues
that each new product contains.
2. Flow of warehouse materials

Warehouses are outdated and expensive when they are disorganized and
dirty. The principles of lean manufacturing, including 5S ,Sorting, setting
order, systemic cleaning, standardizing, and sustaining the discipline
ensure that no dollars are lost to poor processes

3. Turning of inventory/rotation of stocks

Managing inventory to the level of lot numbers is vital for minimizing costs
in certain business sectors, such as foodstuffs, and chemical warehousing.
Among the key metrics used to evaluate the effectiveness of your inventory
management program is the inventory turn rate.

INVENTORY TURNOVER FORMULA AND CALCULATION

4. Cycle counting

Cycle count is an incremental method of counting inventory to keep a tab

on inventory levels. Cycle counting works by physically counting a small
portion of an inventory throughout the year with an objective to count each
stock unit at least once.

process of physical counting of stocks / inventory to check if the products is

in match with sales and stocks.
EXAMPLE: ABC CYCLE COUNTING METHODS

 ABC cycle counting is a popular cycle counting method where the

stocks in the warehouse are categorized into 'A,' 'B,' and 'C' variants.
This method is also known as Pareto Analysis.

 Common businesses use the ABC Inventory, this counting process

determine the most highest value of stock (A) eto yung pinaka
mabenta, most sold at the highest volume(B), and lowest sold
item(C).
 ABC analysis is a process where you group different items by their
value. This allows you to store and audit only the particular groups
you want.
 Basically, ABC Inventory is a counting procedure for stocks /
inventory depending on it's value, importance to a businesses profit.
Categorizing stocks, A ( highest value to the business ), B ( Items that
are important but has lower sales volume. C ( Least impact of sales
with lowest profit. )
  helps to find operational process needs. This process led the
business's manage capital cost, reducing inventory, improve invetory
turn'over rate. ( pampa-ikot ng stocks )

5. Process Auditing

Early and frequent auditing is one of the cornerstone principles in inventory

management. Process audits are the first step toward identifying error
sources. From receipt to shipping and each inventory transaction in
between, an audit of the process should be conducted at each step.

. 

- Common businesses use the ABC Inventory, this counting process

determine the most highest value of stock (A) eto yung pinaka mabenta,
most sold at the highest volume(B), and lowest sold item(C).

- ABC analysis is a process where you group different items by their value.
This allows you to store and audit only the particular groups you want.

- Basically, ABC Inventory is a counting procedure for stocks / inventory

depending on it's value, importance to a businesses profit. Categorizing
stocks, A ( highest value to the business ), B ( Items that are important but
has lower sales volume. C ( Least impact of sales with lowest profit. )
- helps to find operational process needs. This process led the business's
manage capital cost, reducing inventory, improve invetory turn'over rate.
( pampa-ikot ng stocks )

Process auduting -

- A crucial part of inventory management on which it determine the flow of

the stocks in a warehouse detail by detail ( every transaction ).

- On this process, errors can be found which leads to daily improvement of

storage management on the warehouse by checking every transactions on
the warehouse for a good resolution on storage balancing.

- the process of evaluation or analysis of something to discover its

precision and security of the inventory.