Leveling up your inventory life cycle can be crucial, but keeping all the fundamental factors jumping is essential to let the life cycle evolve. However, if the life cycle stock is healthy, inventory management is smooth.
Inventory management revolves around the pivotal concept of the product life cycle.
From the inventory evaluation to its destination, there are multiple stages through which the inventory moves, and all those stages are said to be the inventory life cycle.
Various strategic steps and procurement procedures are incurred to make informed decisions about inventory production.
Understanding the Inventory Life Cycle
Before exploring the inventory life cycle structure in depth. However, the basic knowledge of managing a product life cycle revolves around the four stages of the inventory life cycle.
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The 7 Stages of the Inventory Life Cycle
Procurement
Acquiring necessary goods and materials before starting a business is essential. However, the inventory life cycle always begins with procurements, where identifying the business and looking for goods and materials is one of the most significant needs.
Storage
Once the procurement procedure is done and dusted, the place where inventory is stored enters the ground. Warehouses and storage facilities are the places where inventory is stored. Product preservation must be made correctly to minimize damage and not stock more than required.
Picking and Packing
When items are picked from the storage location and are in the process of being shipped, a very critical stage begins. However, to perfect this stage’s management, many directions are inserted into one method so no mistakes can occur.
Shipping
A primary stage of shipping is selecting an appropriate and trustworthy carrier service. This process not only includes selecting a carrier service provider but also consists of tracking the shipments to ensure quality and timely delivery.
Sales and Revenue Recognition
Sales transactions are marked and recorded once the product is delivered and in the customer’s hands. This is the point where revenue is recognized. Moreover, sales and revenue recognition involve many more steps, including recording the inventory, invoice generation, and processing the payments.
Returns and Refunds
However, there are many reasons for returning products. There are many cases in which the customer wants a refund and wants to return the product. Additionally, in this stage, the product is inception to enquire where the issue is, and later on, the process of refunding starts.
Disposal
In the end, obsolete, damaged, or excess inventory is disposed of. This step involves donation and charity programs.
Division Of 7 Stages Of Inventory Life Cycle
These 7 stages are further distributed in various categories that are stated below.
Procurement:
- Supplier Selection
- Purchase Order Creation
- Receiving and Inspection
Storage:
- Warehousing
- Inventory Tracking
- Cycle Counting
Picking and Packing:
- Order Fulfillment
- Packaging
Shipping:
- Dispatch
- Shipment Tracking
Sales and Revenue Recognition:
- Revenue Recognition
- Point of Sale (POS)
Returns and Refunds:
- Receiving Returns
- Inspecting Returns
Disposal:
- Obsolete Inventory
- Excess Inventory
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Leveraging SCMDOJO’s Insights About Inventory Life Cycle
SCMDOJO has unique insight into inventory management and planning. Moreover, there is a proper way to utilize all sorts of resources, look for strategies that can balance an inventory, and help organize whatever product needs to be showcased as a prime need to the user. Various factors need to be considered when we talk about inventory life cycle.
Inventory Optimization
When accurate and up-to-date information on the product quantity is available to a particular firm, it dramatically helps a company’s growth and reduces obsolescence. Moreover, inventory movement is vital in optimizing a company’s success, as this sector plays a prominent role in transferring, shipping, and adjusting the flow of received products. Good inventory optimization is directly proportional to a smooth inventory life cycle.
Improve Demand Forecasting Accuracy For Inventory Life Cycle:
Forecasting to improve demand is one of the top-notch ways to understand future demand and predict a better and more accurate result. Moreover, multiple ways to forecast demand, including quantitative and qualitative forecasting, are further distributed in a more detailed and demanded structure of the particularly needed forecasting sector. However, every situation requires a different forecast view; not every forecasting procedure can be applied to every provided situation.
Demand forecasting also helps improve the inventory life cycle as it helps manage life cycle stock.
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Optimize Inventory Life Cycle:
We are implementing strategies to balance demand and supply and control inventory obsolescence. However, if life cycle stock increases, it can damage the demand structure and cause a lot of damage to the business. Excess or out-of-stock stock can be very harmful, as per the demand.
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Enhance Supply Chain Visibility In Inventory Life Cycle:
When we discuss supply chain and inventory life cycle together, one crucial aspect is better visibility, which will allow us to learn more about potential business descriptions and bottlenecks.
Moreover, visibility is significant in every business. One central part is implementing lean inventory practices to optimize inventory flow. Additionally, when you can see things out and about, you can understand the importance of inventory management and life cycle stock.
Moreover, inventory management tool can help track inventory levels and analyze data to make informed decisions and find perfect solutions for a given situation.
Deep Understanding Of Inventory Life Cycle:
However, reducing costs, improving customer satisfaction, optimizing inventory levels, and applying strategies to different aspects of inventory management can help the business flourish. Additionally, one must look for the best ways to understand how to manage product life cycle. The inventory life cycle has different turns and twists that can be very stressful for management.
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Importance of Inventory Life Cycle Management
- Cost Optimization: Efficient inventory management helps reduce holding costs, transportation costs, and potential losses due to stockouts or spoilage.
- Customer Satisfaction: Maintaining adequate stock levels ensures timely delivery and prevents customer dissatisfaction due to product shortages.
- Improved Decision-Making: Accurate inventory data enables informed decisions about purchasing, production, and sales strategies.
- Risk Mitigation: Effective inventory management helps mitigate risks associated with supply chain disruptions, demand fluctuations, and product obsolescence.
- Environmental Sustainability: Careful management of inventory disposal practices promotes sustainable practices and reduces environmental impact.
By effectively managing the inventory life cycle, businesses can optimize their supply chain, improve operational efficiency, and enhance overall profitability.
Stages & Key Focus Of Inventory Life Cycle:
| Stage | Key Focus |
| 1. Demand Identification | Accurate demand forecasting to align inventory levels with consumer expectations and trends. |
| 2. Procurement | Efficient supplier selection, cost management, and securing timely deliveries to avoid stockouts. |
| 3. Production/Manufacturing | Efficient production processes and quality assurance. |
| 4. Storage & Warehousing | Inventory management, organization, and space optimization. |
| 5. Distribution/Logistics | Timely and cost-effective product delivery. |
| 6. Sales & Retail | Effective sales execution and market responsiveness. |
| 7. Post-Sales & Returns | Efficient returns processing and customer retention. |
| 8. End-of-Life/Inventory Disposal | Decision-making on clearance, liquidation, or disposal of unsold goods. |
| 9. Review & Optimization | Continuous process improvement through data analysis and feedback. |
About the Author – Fatima Salman
Fatima Salman is a dynamic content writer and social media influencer with a knack for crafting compelling narratives that engage and inspire. Currently contributing her expertise at SCMDOJO, Fatima brings over five years of experience as a content writer and two years in media. Her passion for storytelling and strategic content creation has made her a key player in digital marketing.
Fatima earned her bachelor’s degree in Economics and Finance from the NED University of Engineering and Technology, where she cultivated a solid analytical foundation that complements her creative skills. Her versatile background allows her to seamlessly blend data-driven insights with captivating content to drive impactful results.
Beyond her professional endeavors, Fatima is a recognized social media influencer. She shares her unique perspectives and lifestyle inspirations with a growing online community.
