The Three Types of Inventory

Categorize Your Items To Start Your Order Card Journey

Systemizing Your Inventory Is Hard

For most businesses, creating a system to manage your inventory is a daunting and difficult task. Sometimes it can seem so overwhelming that It’s hard to figure out where to begin. Making this problem even harder, when most people start thinking about how to systemize inventory management, they immediate start thinking about the items that give them the most trouble. Some of your items are bulky and hard to store. Other items are used infrequently and it’s hard to figure out how many you want to have in stock. And everyone has dealt with unreliable suppliers with variable lead times that are impossible to predict.

Fortunately, About 80% Of Most Business’s Supplies Are Easy To Manage

Even though some of your supplies can be tricky to systemize, the overwhelming majority of the items that most businesses order are not difficult to manage. We’ve found that about 80% of a business’s supplies are inexpensive, easy to store, and come from reliable vendors. Taking on the task of systemizing your inventory management becomes a lot easier if you start with those items and gradually integrate your problematic inventory over time.

Categorize Your Inventory And Tackle One Category At A Time

To help you get started, we’ve created a framework that separates inventory into three different categories, allowing you to tackle the items that are easiest to systemize first, and providing helpful tools to manage your trickier items as you integrate more and more of your supplies into your inventory management system. As you begin working on your inventory’s low-hanging fruit, you’ll begin to notice that the once-daunting list of items in your inventory that drive you crazy gets a lot smaller and becomes a lot easier to systemize. Here’s how we think about the three different types of inventory that most businesses use:

Type 1: Always In Stock

Items You Want On Hand At All Times

The first type of inventory consists of items that you always want on-hand and are crucial to your business’s day-to-day operations. This will usually be about 80% of your business’s inventory and should include every item that is inexpensive, easy to store, and easy to purchase. These can be things like small electrical components, screws, printer paper, etc. Using Arda, you can create an order card for these items, have plenty in surplus, and easily ensure that you never run out of these easy-to-stock, and critical items for your business.

In addition to the items that are inexpensive and easy to keep on hand, this category should also include other items that may be expensive or bulky, but are necessary to run to your business. If you make custom vans and use the same electrical inverter in every single build, that should be a Type 1 item. The items in this category will vary from business to business, but in general, the more items you put in Category 1, the easier it will be to manage your inventory.

Type 2: Infrequently, But Reliably Needed

Items That You Don’t Need Often And Are Expensive Or Difficult To Stock

In an ideal world, every business would have every supply they need on hand at all times to increase efficiency. Unfortunately, there are a lot of good reasons not to keep certain items in stock at all times. Supplies in Category 2 are typically needed infrequently, are large and difficult to store, or can just be very expensive.

Again using custom vans as an example, if you allow your customers to choose one refrigerator out of a list of five different options, there’s a good chance that one or two of those options is substantially less popular than the others. The popular variants that get used often should fall in Category 1, but if you’re only ordering one or two of the less-popular options every year, those less-popular variants should fall into Category 2.

Managing Category 2 is trickier than managing Category 1, but Arda offers a few solutions that greatly simplify managing Category 2 items.

Utilize Our Project Management Module

We’ve built a Project Management tool within Arda that is fully integrated with our inventory management product and adds the ability to create projects, like a custom build, assign items to that project, and then add those items to your cart so that you can purchase them once the project’s bill of materials is finalized. Those items are then attributed to the project in your Order Archive, so you can track which items you’ve ordered and what project they belong to.

Create a Trading-Card-Style Order Card Binder

If you’d like to stick to the physical Order Card system, another approach to managing Category 2 items is to create and print Order Cards for all of the items in Category 2, but because you’re not keeping inventory of those items, rather than placing the card in your inventory to trigger an order, create a binder that contains your Category 2 cards. When you need to place an order for a Category 2 item, find that item’s Order Card in the binder, scan the QR code, and add that item to your cart.

Type 3: One-Off Orders

Items You Will Only Ever Order Once

Systemizing your inventory and order management can save up to 20% of a team’s time and prevent the costly fire drills that occur when you run out of something that you need to have in stock. Unfortunately, from time to time, most businesses will need to order items that fall outside of the purview of this system. Running with the custom van example, a customer might insist that their build has this one specific hammock that they found on vacation in Costa Rica. If you have to place an order for a new item that you don’t normally keep in stock from a vendor that you don’t typically use, it likely doesn’t make much sense to create an Order Card for that item at all, so it would fall into Category 3.

Arda helps you keep track of Category 3 items by allowing you to add a record to your Order Archive without needing to create an Order Card. You can still assign that item to a specific project, if you’re using the Project Management module, and take advantage of our real-time integrations with shipping providers to get tracking updates in the Receiving workflow.

Continuous Improvement

Evaluate Your Supplies On An Ongoing Basis To Continue Gaining Efficiency

Once you get your Order Card setup up and running, your business will begin to operate substantially more efficiently, and you’ll notice your list of problematic supplies begin to dwindle. As time goes on, continue to evaluate the items you have in Category 2 and the circumstances that lead to ordering items in Category 3. If you have a lot of items in Category 2 because your vendor only offers expensive flat-rate shipping and you want to order in bulk, think about finding a different vendor. The more items you can push into Category 1, the more time and money your business will save.

Categorize Your Items To Start Your Order Card Journey

Type 1: Always In Stock

Type 2: Infrequently, But Reliably Needed

Type 3: One-Off Orders

Continuous Improvement

This link can't be embedded.

Want to print your doc?
This is not the way.

Try clicking the ⋯ next to your doc name or using a keyboard shortcut (

CtrlP

) instead.