How To Reduce Inventory Cost With Just-In-Time Inventory Management? - Ecommerce Guru
inventory control system

How To Reduce Inventory Cost With Just-In-Time Inventory Management?

An inventory control system is one of the most important and tangible assets in any retail or industrial company. Smart inventory management methods can not only assist increase revenues, but they can also make the difference between a successful firm and one that is barely surviving.

Many business owners are unaware of the full cost of carrying extra inventory, which may amount to as much as 29% of the inventory’s worth when all expenditures are factored in (interest, storage, damage, obsolescence, etc.). These expenses are deducted from the bottom line profit.

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Implement inventory management methods that are just-in-time

Just-in-time inventory management comes to the rescue, like manufacturing processes, requires having the correct material, at the right time, in the right place, and in the appropriate amount to produce a product. Unlike traditional inventory management, JIT ensures that raw materials are ordered just when they are needed, rather than weeks (or months) ahead of time, decreasing in-process inventory and the expenses associated with it.

Invest in your workers’ education

Inventory management training should be given to every employee who is responsible for ordering anything that comes through your company’s doors, whether it’s floor items, raw supplies, or merely pencils and paper towels.

Make use of technology

 Today’s market offers a diverse range of managing warehouses. By assisting you in streamlining and improving inventory management while also lowering expenses, the appropriate technology may more than pay for itself.

Inventory turns should be measured and aggressive targets should be set

In many sectors, four inventory turns each year has long been the standard. Businesses may accomplish more frequent inventory turns with today’s advanced inventory management software and practices, such as JIT. Find out what types of turns are typical in your business and set a goal to exceed them. Increased inventory rotations, when done correctly, may increase earnings and cash flow without actually raising sales.

Reduce your inventory items

Having thousands of stock-keeping units, or SKUs, on hand used to be thought of as a competitive advantage (think of the old-fashioned hardware store that had almost any bolt, screw, or tool you could possibly imagine in stock). However, however, overstocking is a surefire way to lose money. Instead, figure out which goods are the most popular and keep enough of them in-store to fulfill consumer demand, while keeping the rest of your inventory to a minimum.

Costs at the warehouse should be kept to a minimum.

Every business owner wants to save money while offering a high-quality product and a positive client experience. Having too much inventory will not only cost you extra money but will also make operating your warehouse a nightmare. As a result, it’s a good idea to forecast a rough amount of items based on consumer demand and store them in your warehouse. In this manner, you won’t need a large warehouse, lowering your warehousing costs.

Effectively Manage Supply Chains

You can simply manage supply chains and use those parts to construct goods using Just-in-Time inventory management. Your production expenses will be reduced as well if you have an effective supply chain. Low manufacturing costs have an immediate impact on product costs. You may get a significant market share and earnings this way.

Reduce Wastage That Isn’t Necessary

Excessive inventory may result in a large number of unsold products that are thrown away. This waste is widespread in industries such as clothes, electronics, and fashion accessories, where trends change often. JIT inventory management not only reduces wastage but also lowers purchasing and manufacturing costs.

Reduce Production Errors

Because you will have less inventory, it will be easier for you to see and correct any mistakes in manufacturing. It is much easier to repair such flaws. In this manner, you’ll be able to provide a better client experience, and your brand will undoubtedly become well-known and sought after.


Inventory management customer experience is like balancing on a tightrope. You’ll wind up with empty shelves or insufficient raw resources to fulfill consumer demand if you stock too few of the correct goods. On the other hand, if you stock too many of the incorrect products, you’ll wind up with an excess of undesirable goods or raw resources that take up room. In either case, you’re squandering a valuable income opportunity.

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