Inventory Management Jobs Key Terms

Learn inventory management jobs key terms to maximize your business potential
By Christine Pollock Learning inventory management jobs key terms not only helps you sound knowledgeable when talking with others in the industry, but it also offers insight into strategies you could implement to increase your profit margin. Use the terms to make inventory decisions that work best in your unique situation.

Knowing inventory management jobs key terms gives you a glimpse into the inner workings of the industry, and helps you communicate better with other businesses and distributors. It also shows others that you know what you are talking about when you use the terms.

Activity-based costing

Also called ABC, this term refers to a manager's job of breaking down overhead costs, distributing costs into specific activities in both vendor and customer management.
Try:  ICMS offers insight for businesses looking to cut costs and improve profit margins. It recommends activity-based costing and demonstrates how this increases profits.

Blanket order

This term refers to an order a manager places for a certain quantity of a specific product for a pre-determined timeframe without a specific delivery date. For example, a business might order a group of supplies it plans to purchase over a one-year time period. This often reduces costs and increases the chances of shipment arriving in a timely manner.
Try:  The phpBB Group offers a forum where business owners discuss topics like blanket orders. It demonstrates the benefits using this method of ordering.

Commodity

This term has several definitions in the inventory management industry. Sometimes it refers to standard products a manager knows are generally available for consumers from a variety of sources. The term also refers to a specific category in inventory. When this happens, managers and suppliers need to know commodity codes for unique groups of items in order to make their analysis and reports.
Try:  Integrated Publishing discusses ways to work with specific commodity inventory as opposed to other types of inventory.

Distribution requirements planning

Distribution requirements planning, also called DRP, is a process where a manger determines requirements for inventory in an environment for several warehouses and plants. The term sometimes refers to the task of determining requirements for space in a warehouse.
Try:  SlideShare offers a short video explaining distribution requirements planning. It also offers a transcript of the presentation for those would rather read the information than watch the video.

Excess inventory

Businesses use different criteria for determining excess inventory. Some managers count it as inventory held beyond a specific time period and others count it as inventory that exceeds order quantities. Part of the manager's job is to identify excess inventory and to decide how to handle it.
Try:  Forbes.com details ways businesses work with excess inventory. It also mentions how the Internet aids distributors in selling excess items.

Inventory turn

This term refers to the amount of product sold and consumed within a year. Most businesses managers determine this by dividing the year's inventory usage by the average level for inventory.
Try:  Attard Communications offers an in-depth look at inventory turn strategies and calculations. It demonstrates ways methods have changed from the past.