How to have good stock management

Find out 04 effective methods to organize your inventory and reduce product waste.

Do you have trouble organizing your company's stock? This is a topic that can confuse and harm entrepreneurs who do not know effective storage management methods.

That is why Blog Cetro has put together 04 stock management methods for you to choose the one that best suits your company and, thus, reduce your waste!

FIFO Method

Have you ever picked out a product in the supermarket and noticed that the food at the back of the shelf had an expiration date that was further away than the food at the front?

This is the application of the "First In, First Out" (FIFO) method. The aim is to ensure that the products with the closest expiry date are bought before they expire.

FIFO is one of the most widely used strategies for organizing the stock of perishable goods, as it is effective in reducing losses of expired products. It is therefore ideal for companies in the food, pharmaceutical, and cosmetics industries.

LIFO Method

Unlike FIFO, the “Last-In, First-Out” (LIFO) method should not be used with perishable products. This strategy is applied when the cost of recently purchased goods is higher than the cost of items in stock, so they have to be sold more quickly for the profit to be proportional to the amount paid by the company.

Clothing stores are the main example of businesses that use the LIFO method. As the cost of the garments sold varies according to the season, the model, and the trends, applying this strategy becomes fundamental to moving stock.

What is the Weighted Average Cost?

This tool is essential for companies to calculate the cost of products held in stock, both new products and those that have been stored for a while. To do the calculation, you just need to be a bit organized when you record your purchases and use the formula:

Weighted Average Cost = Total Inventory Cost / Total Inventory Quantity

In addition, for this method to be carried out in the right way, your company must monitor all stages of stock control to ensure that it is following the Weighted Average Cost. Likewise, you must maintain adequate stock levels to meet customer demands.

Do you know the Just-in-Time technique?

Just-in-Time is an inventory management technique in which the entire purchasing and storage process is carried out in a lean manner to have assertive stock control and reduce costs.

This technique allows the continuous improvement of the processes by reducing the accumulation of products in stocks and meeting only the demands requested by customers, who will receive their purchases on time.

However, the disadvantage of this strategy is that it cannot be applied by companies that have a lot of fluctuations and unpredictability in supplier demands and responsibilities.

Choose the best option for your business!

Now that you know the four most used methods of stock management, you can choose the best strategy for your business to reduce unnecessary costs and waste.

Regardless of the size of your business and the method you choose, Cetro has numerous solutions to optimize your production line. To find out more, contact one of our experts!