If you work with inventory, you may have heard of terms like “pipeline stock” and “decoupling stock.” While they cover similar concepts, these two words have different meanings, and understanding them can help you manage your products effectively.
What Is Pipeline Inventory?
Pipeline inventory or stock refers to transit stock, or items that are in transit between locations. These are items that have not yet been purchased or arrived at the place where they will be sold, such as a warehouse or storefront. Nearly every business will have some type of pipeline stock, as they have to move their products from one place to another.
When items are in the pipeline, they tie up capital. Understanding your pipeline gives you more awareness as to where your assets are. You can calculate pipeline inventory by multiplying your lead time by your demand rate. If you assume a consistent method of reordering, this number tells you how much product is in transit at any given time.
What Is Decoupling Stock?
Decoupling stock is a method of inventory organization that involves separating the phases of production and setting aside stock reserves to keep the process moving.
Let’s say a company produces computers. They’ll need to order a variety of components, like the screen, keyboard, motherboard and graphics cards. If they decouple their inventory, they separate these different components into phases and set minimum stock levels. Then, if the company that makes the keyboards faces a slowdown, they still have enough keyboards on-hand to produce the final product and keep sales moving.
Decoupling allows them to avoid shortages or overproduction. It’s a type of safety stock, like a safety net that businesses can rely on to maintain their production line.
Pipeline vs. Decoupling Stock
While pipeline inventory refers to a type of inventory or the state of a product, decoupling stock is a method used to manage inventory. Nearly every business will have pipeline inventory, but not all will use decoupling. This method might be reserved for businesses with more complex supply chains or products. If you’re looking to decouple stock, sales forecasting is essential.
Both approaches are designed to improve efficiency through more accurate stock levels, better analytics and clear organization. They can create less uncertainty and help you adapt to the rapid changes that can occur in inventory management.
Stay on Top of Stock Levels With Inventory Management Software
One of the best ways to gain an all-inclusive look at where your products are is with inventory management software. It offers easy product tracking, along with tools for managing multiple warehouses, orders and e-commerce inventory. Barcodes, serial and lot number tracking can help you follow a wide variety of inventory processes. Inventory management software can also help you generate reports and analytics, so you can better make predictions based on your chosen approach to inventory management.
At Finale Inventory, we offer all of that with a personal touch. Every business is unique, and we’ll set you up with a domain expert to help craft the perfect solution for yours. Reach out today to get started with a demo or free trial.