An inventory analysis is vital for the smooth running of the entire business operations. It entails understanding the availability of business products in relation to the demand for specific products.
Having a sound inventory control is something all businesses must strive to acquire, as it puts them in a position where they can maximize their products in relation to consumer demands. It is essential for businesses to practice regular inventory analysis so as to gain proper inventory control.
One of the critical roles of inventory analysis in any business setting is that it helps to make decision making easier, most notably in regards to protecting vital assets. Furthermore, the combination of products classification and inventory analysis can help improve an organization’s inventory control.
More importantly, a proper inventory analysis enables businesses to achieve a good Return on Investment (ROI).
So, how does a business carry out its inventory analysis?
Well, this is where top inventory techniques such as FSN Analysis, VED Analysis, and SDE Analysis come into play.
This analysis deals with the availability of an item in the market. It depicts whether a particular material is scarce or readily available. SDE Analysis is highly beneficial in a market environment where certain items are not readily available. In such situations, it offers the right guide in choosing inventory policies in relation to material availability. The inventory is classified in the following way
VED analysis in inventory management deals with the classification of materials based on their importance to other materials.
FSN analysis in inventory management deals with the classification of items based on usage, consumption rate, and quantity.