Inventory Control

What are the 3 Inventory Management Techniques?

inventory management techniques

Inventory management means tracking, ordering, maintaining, and utilizing the stock your business needs to operate smoothly. While there are many ways to manage inventory, most successful businesses choose a single inventory management technique to help them manage their inventory. The right strategy depends on your business model, priorities, and more.

Big-name companies and small businesses alike rely on inventory management strategies to keep their businesses productive and profitable. In this article, we’ll touch on 3 major inventory management techniques, and how inventory management software can help make your inventory management easier.

3 must-know inventory management techniques

The three most popular inventory management techniques are the push technique, the pull technique, and the just-in-time technique. These strategies offer businesses different pathways to meeting customer demand. 

Continue reading to learn more about each of these three inventory management strategies:

1. The Push Strategy for Inventory Management

The push strategy is a method of inventory control in which items are “pushed” down from manufacturer to store, warehouse, or business. There, a customer or employee will then purchase or use the item from inventory on hand.

In order to practice the push strategy successfully, a business needs to properly forecast demand for a product. Understanding how much of a product is needed, and during what time of year, is key. Using inventory management software helps businesses understand how inventory has been used over time, offering key insights into how much inventory they may need to order throughout a calendar year. 

For example, a home improvement store may stock dozens and dozens of barbecues and grills in spring and summer, but keep only a handful in stock during the winter months. These stores determine how many grills to buy based on how many they’ve sold in the past, and when. The push strategy is a good choice for businesses that can accurately predict customer demand. 

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2. The Pull Strategy for Inventory Management

The pull strategy is a method of inventory management in which a store, warehouse, or business “pulls” an item only when a customer or employee orders it. Instead of an item moving down a supply chain, it moves up—which can take a lot of time! 

Usually, the pull strategy is practiced for specialty items, very expensive items, or items for which there is low or unpredictable demand. 

For example, many wedding dresses are “pulled” for brides-to-be only once the shoppers have handed over their credit cards. These women select their dresses from sample gowns or from a website, and then the final dress is either produced or procured for them at purchase. It can take months, but it’s industry-standard, so customers are usually okay with it. 

But the pull strategy is not for every business, especially if customers can get the same product immediately from another supplier. 

3. The Just-in-Time Strategy (JIT) for Inventory Management

The just-in-time inventory strategy is similar to the pull strategy: businesses order inventory “just in time” to fulfill a customer’s order or a business need. Of course, successfully implementing a just-in-time inventory management strategy requires reliable suppliers, vendors, and third-party logistics partners. Without them, a business could fail to meet customer demand, which is always a recipe for disaster. 

Just-in-time inventory offers businesses lower inventory carrying costs, less headstock, and improved cash flow. On the other hand, companies who rely on JIT inventory are not always able to meet demand and sometimes have to overpay for a product just to get it to their customers quickly. 

About Sortly

No matter what method of inventory management your business practices, a good inventory app can help you practice better, faster, and less stressful inventory management and control. Sortly is a top-rated inventory management software that works perfectly on phones, tablets, and computers that can help you get organized fast, even if you’re in over your head.

The app offers key inventory management features like QR and barcode scanning, data-rich reporting, an easy-to-customize inventory system, and the ability to easily add details, pictures, and attachments to all your inventoried items. Curious about how much time and money Sortly can save you? Start a free, two-week trial today!