5 Effective Ways Of Minimizing Inventory Holding Time

By Author: Rakesh Kumar
Total Articles: 33
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Inventory management is one of the most crucial parts of successful business functioning. It has almost transformed into a competitive advantage.

The concept of Inventory management is simple: it is all about knowing what is in the hand, where is it lying, and how many finished products are there in the market. And since there is considerable cost involved in reaching above or below a set product range, careful inventory management can make a huge difference in the profitability of a business. Although the concept is simple, many organizations fail to address opportunities to optimize inventory and reduce its holding time. Perhaps they presume that the process of getting the right balance can be a complex and time consuming task. This article lists 5 effective ways to minimize inventory holding time that includes Stock replenishment, Secondary Tracking, Supply Chain Management and many others.

Reduce stock replenishment lead times- There are two essential questions that must be answered while replenishing stock - when to order and how much to order. It is important to shorten the product ...
... refill cycle time to ensure that the stock is well-placed in the market and retailers are never out of stock.

This lead time can be broken into three levels viz. the review period, the transportation time and the distribution time. The review period includes the process of gathering knowledge beforehand. With an end-to-end visibility you can know that your product is close to finish in the market and retailers can place orders to their distributors well in time. You can also include other Time-to-Market (TTM) elements like transportation and distribution of products. To ensure timely distribution of products, the Transportation and Product Distribution time should also be minimized. Many companies follow the Hub and spoke distribution model, which leads to efficient product transportation and distribution.

Determining Order Frequencies- Inventory Distribution is also an important function to subside inventory cost. With acute visibility on the stock order frequency, you can cut down cost and inventory holding time significantly. The actual sales data lets you determine the inventory that is demanded more frequently and that which is less-in-demand. You can apply more labor & transportation on the product with high market demand and minimize inventory hold-up.

Obsolete Inventory Management- Stock keeping obsolete inventory could be an unnoticed expense. And the problem with this is that companies usually don’t come to know how much, and in which warehouse(s) its obsolete inventory is lying. This is because of the lack of proper sales data. You need a detailed report on which brand and which SKU of the particular product is lying on the shelf.

For instance, a production planner may just be viewing the reports that 30% of the Brand A toothpaste has got obsolete, while unaware that out of it 25% is of a particular SKU, say, 50gm that is not demanded in a market. With visibility as sharp as this, you can plan production and supply accordingly.

Minimize demand and supply variance- The problem of gap in product demand and supply is often hidden from sales managers. While various methods have been used to minimize demand and supply variance, it is only achievable with a real-time secondary and tertiary sales data at it helps in Production planning and strategies in the distribution channels & route plan limitations in consumer knowledge that influence decisions. Hence keep a watch on the secondary and tertiary sales data and make conscious supply decisions.

Centralize your Distribution mechanism- You may also need to centralize product distribution to maintain the MSL (Minimum Stock Level) for your inventory. For this you need up-to-date data of the complete product distribution (brand and SKU wise) for all warehouses. Once you know the level of goods kept at each warehouse, you know what you have to dispatch and in what quantity to which party.

While managed inventory can be a profit stream for your business, excessive inventory holding can take the shape of a cost-center. Eliminate all the regressions that bundle up to increase your inventory holding time and affect your bottom line. Companies have relied on integrated Sales & Inventory Management systems that cater to end-to-end analysis and automation. Right from tracking Primary, Secondary and Tertiary sales, to sales forecasting and inferred production planning, Inventory Management and Sales Tracking Systems are a must have tools to keep pace with the competition.


Rakesh Kumar is a business consultant of Zed Sales™. Zed Sales™ is leading sales management software in India. Zed Sales™ has lots of innovative features which fulfill your needs of online Sales Tracking Software, Online Sales Tracking Software, sales return management software and much more. Request a free evaluation demo today to take a free trial by visiting Zed Sales website.