5 Key Practices For Effective Inventory Management


Proper inventory management is vital in every business to achieve desired profit margins. Additionally, it’s a crucial practice to prevent over or understocking of products and other essentials needed in your business operations. This task can be significantly challenging at times. However, there are various inventory controls you can implement.

For instance, in a large industrial setting, the control of personal protective equipment (PPE) like safety gloves and face masks usage. Even though they’re necessary, mismanagement of such essentials can substantially increase your operating expenses.

Keeping track of their use can be tedious and challenging. However, you can invest in inventory control systems, such as the ProLock Vending Machine, that require staff to check out an item every time they pick a new one. Such a control system can help you know your stock movement and determine restocking periods.

Besides a check-out system for some items, implementing robust inventory management techniques in other sections is also vital. Below are some key practices for an effective management system.

  1. Set And Maintain Reasonable Par Levels

Your stock levels can determine whether you can have enough stock at all times or experience temporary stock-outs. This can cause inconvenience for your customers, which can result in your business losing even the most loyal customers.

Setting up par levels can help you eliminate such instances. Par levels guide you to the minimum re-order levels. Thus, if your inventory hits this level, you know it’s time to restock. While setting par levels, it’s best to consider factors lead times and stock turnover.

The lead time is the period from initiating a local purchase order (LPO) to delivery. Therefore, factoring in your internal purchasing process, transport logistics, and vendor location would be best.

Stock turnover, on the other hand, would be determined by such factors as demand and season. While calculating this, it’s essential to know your stock turnover rate and the period from one re-order to the next.

  1. Make Use Of Technology

Inventory management can be a tedious process. Besides, several mistakes can also happen, especially if you’re using a manual system. This can result in lost stocks or incorrect reporting.

Current technology allows you to adopt various types of workflow automation. For instance, you can find inventory management software that’s easy to integrate with your existing technology. Thus, you can minimize errors and improve efficiency in the preparation of orders for delivery and shipment. Even though the initial investment might be huge, the subsequent effects can be worth it.

  1. Use Batch-Tracking

In every warehouse or business, it’s normal to have similar items in stock. However, this stock can have different batch numbers and expiration dates. Therefore, you must have a system that ensures you dispatch or sell the correct items at the right time. Implementing a batch-tracking can help you achieve this.

Tracking inventory enables you to implement the FIFO (First In, First Out) and LIFO (Last In, First Out) inventory principles. Thus, helping ensure you don’t end up with spoilage. Furthermore, it can help track performance and removal in case of product returns or recalls. This can go a long way in reducing your response time to complaints and concerns, which can also help enhance your reputation and relationships among your clients.

  1. Perform Routine Cycle Counts

Most businesses generally make their inventory check an annual event. In such a case, business operations may be halted to allow a whole day to perform this undertaking. Apart from inconveniencing your clients or business partners, this can also create loopholes for theft. However, this need not be the case.

You can minimize operational disruptions by adopting a cycle count. In this process, you conduct your inventory audits according to product type or sections. These small regular checks can be spaced out throughout the year. This can help enhance inventory accuracy as there won’t be pressure on your team to finish the whole process within a short period. Furthermore, you can quickly notice irregularities and deviations in your inventory.

  1. Apply And Practice The 80-20 Principle

Managing inventories involves various items. And so, it’s crucial that you closely analyze and know the performance of each. A performance analysis exercise can help you categorize your stock into high-, medium-, and low-value inventory.

With the 80-20 principle, you can know which items drive your returns with minimal effort. Such insights can guide you about which products should never run low on your inventory. This also enables you to avoid stock-holding costs. The reason is that you can know stocks with high value but less turnover, thereby keeping minimum quantities.


Inventory management is essential to maximizing your returns on investment. Therefore, you need a robust system to help you achieve this. The above are some key practices you should implement for an effective inventory management system.