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Four Efficient Inventory Management Strategies for Bold Businesses

No company becomes successful overnight. The efforts needed to turn into a large and stable company start with the most basic of things. To the dismay of many, one of those basic things is inventory – keeping, monitoring and controlling it. For a business selling the ubiquitous widget, problems can arise from overstocking, and sitting on more product than selling it. But for a business that specializes in perishable goods, such as pharmaceuticals, the issue gets much more complex and vital. That’s where effective inventory management strategies come in.

There should always be an emphasis on the management of products. By making sure that the flow of inventory is as smooth as possible, a company will have an easier time with all other facets of the business. The following are four effective inventory management strategies. Each is a means of taming the wild beast of inventory management and ensuring that products will always be in their best condition. Because at the end of the day, improving inventory management means improving business.

Of the four inventory management strategies, the ABC method works well for lean manufacturers.
Improving efficiency is a crucial component of any effective inventory management strategy.

Improving Inventory Management Through ABC Analysis

This effective inventory management strategy focuses on classifying inventory into three categories. Classification depends on how well the products sell and how much they cost to keep in stock. These can be described as follows:

  • Class A Items – Best selling items that take very little space in your warehouse.
  • Class B Items – Mid-ranged items. They sell regularly but are costlier than Class A Items to keep in warehouses.
  • Class C Items – All the other items in inventory that makes up the bulk of inventory costs while contributing very little to sales.

The primary function of ABC Analysis is that it helps to keep working capital costs as low as possible. It makes it easier to identify which items are needed to reorder more frequently and which of them don’t necessarily need to be in stock that often. When done correctly, it can reduce obsolete inventory and optimize the rate of inventory turnover.

One company that can attest that ABC analysis is useful is Chrysler Corporation. This company adopted ABC analysis in 1991 and still using this inventory management strategy.

Using effective inventory management strategies can protect against the ups and downs of a wild market.
The bane of inventory is often market fluctuations – which underscores the need for improving inventory management.

Safety Stock Inventory: For Adapting to Market Changes

Safety Stock Inventory, or SSI, refers to a rather small surplus amount of inventory kept on hand to guard against unforeseen circumstances. This efficient inventory management strategy helps to protect from variability in market demand and lead times. The companies that make use of safety stock inventory benefit from it in a variety of ways. That includes the following:

  • Protection against unforeseen spikes in demand
  • Avoidance of stockouts
  • Compensation for inaccurate market forecasts
  • Emergency buffers for extra-long lead times

In essence, safety stock inventory is used to make sure that a company is safe from any loss of revenue or loss of customers and market share.

Improving inventory management is crucial when your inventory can expire.
The Consignment method is one of the more effective inventory management strategies for the pharma industry.

The Consignment Inventory Management Strategy

This effective inventory management strategy is primarily a business arrangement where a consignor (or wholesaler) agrees to give their goods to a consignee (or retailer) without any payments up front. The consignor still owns all the products provided and the consignee will only pay for them once they sell.

This technique tries to create a mutual partnership between suppliers and retailers as long as they’re both willing to share the risks and rewards.

Making use of this strategy provides many benefits to both vendors and retailers. First, vendors gain exposure to new markets for their products. They will also experience a decrease in their inventory carrying costs.

Retailers will have a slight decrease in ownership costs and an even more notable improvement in their cash flow. The exposure to minimal risks is lessened thanks to the nature of their agreement!

One good example of this inventory management strategy is Heritage Auctions. Since it is an auction business, they are very keen in terms of how the consignor will benefit from the products consigned. This company always looks for ways to acquire interesting items through consignment.

Minimum Order Quantity: The B2B Go-To

The Minimum Order Quantity (MOQ) strategy refers to the lowest set amount of stock that a supplier is willing to sell. Basically, if a business can’t or doesn’t want to buy the MOQ of a product, the supplier will not sell to them. The purpose of minimum order quantities is to allow suppliers to increase their profits while letting go of inventory faster.

The minimum order quantity is set based on the total cost of inventory and any other expenses that have to be paid before getting any profit. MOQ is an effective inventory management strategy that helps wholesales stay profitable and maintain healthy cash flow.

This type of inventory management strategy is mostly applicable in business-to-business types of companies like from the Alibaba Group. is a wholesale marketplace for global traders where they supply products in huge bulk. The use of MOQ makes it more cost effective.

Key Takeaway

The importance of inventory management in a company lies in the notion that it keeps the money flowing.  Ultimately, it doesn’t matter if the strategy is ABC, SSI, Consignment or MOQ. Optimizing the process is key. By choosing an efficient inventory management strategy, a business ensures that it will eventually be successful.

The University of Pittsburgh Medical Center —Bold Strides in Innovative Healthcare Ideas

The University of Pittsburgh Medical Center (UPMC) is not your average nonprofit healthcare system. In fact, it represents the largest non-government employer in the state of Pennsylvania with more than 85,000 employees. Likewise, the University of Pittsburgh Medical Center controls more than 40 percent of the healthcare market in Western Pennsylvania. Nevertheless, its recognition as a healthcare leader extends well beyond its immediate region of services.

Over the last several years, the University of Pittsburgh Medical Center has increasingly disrupted how traditional healthcare services are being provided. New healthcare delivery models and international outreach are some of its innovative healthcare ideas. Others involve advanced technological solutions through collaborative partnerships. Through these pursuits, the University of Pittsburgh Medical Center expects to change all of society for the better.

UPMC is Creating Innovative Healthcare Ideas Through Technology

In healthcare today, access to services, rising costs and quality care are major concerns. For the University of Pittsburgh Medical Center, a critical approach to address these concerns involves technological solutions.

In this regard, the UPMC  has pursued many innovative health ideas. One notable innovation is that of telemedicine services. These services are already in place for emergency, post-operative care, home monitoring, and consultation needs.

However, telemedicine is just one of the many innovative healthcare ideas being utilized. The University of Pittsburgh Medical Center partnered with Microsoft to design an artificial intelligence platform for doctors. Specifically, Empower MD is an AI bot that learns while listening to doctor-patient interactions. In addition, the AI bot saves physicians time by populating the electronic health record with data. This scenario leaves more time for physicians to concentrate on patient needs face-to-face.

The University of Pittsburgh Medical Center ’s Mission—Translating Science into Practice

One of the notable inefficiencies in healthcare today involves delays and gaps between research and clinical care. The University of Pittsburgh Medical Center is committed to eliminating this void. Key innovative healthcare ideas in this area involve partnerships with regional and national institutions. From startups to advanced healthcare entities, the University of Pittsburgh Medical Center is streamlining scientific breakthroughs into clinical care models.

A key example of this is the University of Pittsburgh Medical Center’s recently unveiled $2 billion building project. This endeavor will either expand or construct three separate hospitals that focus on different research-driven areas of care.

One is dedicated to ophthalmologic research and vision care. Another is focused on cardiac and other advanced organ transplants. And the third is committed to cutting-edge cancer research and treatment. From robotics to coordination with University of Pittsburgh researchers, patients will be receiving evidence-based care much more efficiently.

Innovative Healthcare Ideas – Patient-Focused, Internationally Committed

The University of Pittsburgh Medical Center is not just revolutionary in its technological and translational science approaches. It is also innovative in the way it perceives its role and responsibilities in a global society. Currently, 40 percent of its executives are women, and 10 percent consists of individuals of color. Likewise, the University of Pittsburgh Medical Center actively instills diversity and inclusion values in each of its members.

Undeniably, diversity in leadership has served the organization wella fact that can be significantly credited to UPMC’s Chief Diversity, Inclusion and Talent Management Officer James E. Taylor, Ph.D. I personally saw his passion and commitment for diversity and inclusion when Bold Busienss Publisher Ed Kopko and I interviewed him at the Diversity MBA 12th Annual National Conference. He spoke to us not only about inclusion and diversity but also the how digital transformation is playing a major role at UPMC.

Certainly, this focus on diversity and inclusion extends further than the confines of the organization. Presently, the University of Pittsburgh Medical Center is involved in a 10-year partnership with Sicily, Italy. In addition to expanding a UPMC-operated hospital in Palermo, another hospital will be opened soon in Sicily. The University of Pittsburgh Medical Center also operates the Biomedical Research and Biotechnology Center there as well. Through these endeavors, innovative healthcare ideas regarding organ transplant services are being distributed.

University of Pittsburgh Medical Center — A World Class Leader in Healthcare Innovation

In 2017, the University of Pittsburgh Medical Center generated $15.6 billion in revenues. If it were not a nonprofit, it would rank within the top 200 firms in the Fortune 500.

But it’s not the revenue totals that matter most for the University of Pittsburgh Medical Center. It’s how these resources can be best leveraged to achieve its mission and objectives.

Through scientific collaboration, social commitments, and innovative technologies, the University of Pittsburgh Medical Center is making a difference. Through endeavors such as these, the future for healthcare is looking progressively brighter—and bolder!

To learn more about the University of Pittsburgh Medical Center and their focus on Diversity and Inclusion, read our Bold Leader Spotlight on James E. Taylor, Ph.D., Chief Diversity, Inclusion, and Talent Management Officer.

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The University of Pittsburgh Medical Center ’s is Translating Science into Practice