Which inventory management method would you use for items with low turnover rates?

The ABC analysis method is particularly effective for managing inventory with low turnover rates because it categorizes inventory items based on their importance and value to the organization. In this system, items are divided into three categories: A (high value, low frequency of sales), B (moderate value, moderate sales frequency), and C (low value, high frequency of sales). For items with low turnover rates, they are likely classified as category C, suggesting that they take up space and resources without generating significant revenue.

By identifying these low-turnover items, organizations can make informed decisions about how to manage them more efficiently. For instance, they might opt for less frequent reordering or develop strategies for reducing excess inventory, such as promotions or discounts to encourage sales. This method helps prioritize resources and management efforts toward items that contribute more significantly to financial performance, ensuring effective procurement and inventory strategies.

The other methods do have their uses but may not be as suitable for low-turnover items. Just-in-time can be efficient for fast-moving goods but is less effective for items that don’t sell frequently. FIFO is good for perishable items or goods that might become obsolete, while periodic counting provides an overview but doesn’t specifically target low-turnover situations for strategic management.