14 Inventory Management Trends to Watch Out for | ToolSense (2023)

Supply chain interruptions caused by the Covid-19 pandemic and geopolitics have forced virtually all businesses to revisit their inventory management systems. Across industries, more advanced and effective methods for efficiently maintaining property inventory levels. Here are 14 of the most popular inventory management trends.

14 Inventory Management Trends to Watch Out for | ToolSense (1)

Key Takeaways

  • Inventory management systems are becoming more spread out yet also more connected.
  • Artificial intelligence, data analytics and cloud-based software are essential to modern inventory management.
  • Trends are toward faster, more cost-efficient and more reliable supply chains and distribution networks.

What Is Inventory Management?

Inventory management is the method by which businesses ensure they have a steady stock of goods, whether they be supplies, finished products, or other assets necessary to operations.

Successful business owners and managers usually use a combination of inventory management processes to devise an efficient system that navigates inventory level, location, pricing, logistics and supply chain factors. The inventory management process is very time-consuming, and it involves many users and intermediaries, especially for manufacturers and enterprises.

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Why Are Inventory Models Important?

Inventory models are the systems that businesses use to establish and develop the most efficient way to maintain necessary inventory levels. While there are many methods by which inventor levels can be maintained, no one method is ideal for every situation.

Inventory models can help determine which of the various methods is most suitable, and then how to maximize the chosen method’s efficiency. Some different models that businesses might use for their inventory are:

Just in Time (JIT)Useful for minimizing storage and inventory overhead, but susceptible to supply chain disruptions and price changes.
Day Sales of Inventory (DSI)Useful for managing perishable goods and space in smaller retail outlets.
Materials Requirement Planning (MRP)Useful for reliably sourcing manufacturing materials across complex supply chain processes.
Centralized Inventory Model (CIM)Useful for controlling inventory levels and tracking movement of goods, in order to minimize shrinkage.
Economic Order Quantity (EOQ)Useful for minimizing inventory costs, including order costs, shortage costs and holding costs.
Economic Production Quantity (EPQ)Useful for managing costs and shrinkage in manufacturing and other production.

There are still more inventory models that businesses use in select situations, and technological innovations are increasingly giving rise to hybrid and combination models that take advantage of multiple models.

14 Inventory Management Trends to Watch Out for | ToolSense (2)

Top 14 Trends in Inventory Management

1. Cloud Technology for Hybrid Work

Cloud technology improves inventory management efficiencies. Businesses have fewer information technology issues to monitor, as a third party oversees servers (and sometimes program updates). The cloud can also sync inventory levels, purchases and other data across supply chain, warehouse and store locations.

As cloud computing continues to improve, its usage in inventory management has steadily been increasing. The transition to work-from-home and hybrid work setups has accelerated the technology’s implementation. An inventory management app is one of the easiest ways to sync inventory details across business locations and employees’ homes.

The best inventory management software isn’t just compatible with the cloud, but is mostly or entirely cloud-based.

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2. Internet of Things for Complete Connectivity

One of the most important inventory management trends is the IoT. The internet of things (IoT) takes cloud technology and integrates it throughout locations. Not only do computers communicate with one another, but virtually everything in a business location can join the local network. Scanners, loading bays, equipment, and even goods themselves can be added onto a location’s IoT network.

3. Artificial Intelligence/Machine Learning for Improvement

Artificial intelligence (AI) and machine learning (ML) provide constant improvement as computer programs learn more about a particular business’s inventory system. These programmes can better integrate inventory movement and levels across complex networks, and they can identify weaknesses that create increased costs. For example, AI/ML might show that a particular product’s packaging results in above-average shipping damage rates.

AI and ML get more powerful as businesses integrate IoT technology, for the technology gives AI/ML more data to analyse.

4. Data Analytics for Predictive Picking

Once extensive data is recorded and analysed, that information can be used to improve picking rates in warehouses. Analysis can show products that are commonly purchased together and/or that are usually purchased by customers with certain behaviours.

Commonly combined products can be placed next to one another, so pickers spend less time going between aisles, and sometimes it’s even possible to pick orders before they occur. That not only improves picking efficiencies, but also allows for even faster delivery times.

Data analytics is reliant on IoT, ML, and AI. As these three advance, more businesses will be able to initiate predictive picking.

5. Warehouse Automation for Labor Reduction

The more that can be automated in warehouse management, the less businesses must spend on employee wages. In most cases, it costs less to maintain a robot than it does to pay an employee.

Warehouse automation will become more prevalent for a few reasons. Improvements in AI, ML and robotics make for more automation possibilities, and costs are decreasing as equipment and software are more available. Additionally, rising wage rates create greater potential savings.

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6. AVGs and AMRs for Better Automation

Automation requires equipment, and that equipment includes both automatic guided vehicles (AVGs) and autonomous mobile robots (AMRs). AVGs have been used in warehouses for well over a half-century, and they still have use today. AMRs are able to do even more than their predecessors.

Both AVGs and AMRs are essential for greater automation.

7. Multi-Warehousing for Distribution

Distributed inventory management uses multiple distribution locations throughout a region, a country, or the world. Storing supplies allows for a more geographically streamlined supply chain management, and storing products makes faster delivery possible. It’s also easier to scale, grow and manage emergencies.

Amazon has long used multiple warehouses to provide its fast shipping and reduce transportation costs. As others must keep up with customer delivery time expectations, more businesses are following suit. The Covid-19 pandemic has also made managers keenly aware of how having multiple locations can help when navigating local emergencies (e.g. lockdowns or natural disasters).

Cloud technology is essential for multi-warehousing, so this management option will become increasingly viable as cloud-based inventory management software cost comes down and capabilities expand.

14 Inventory Management Trends to Watch Out for | ToolSense (10)

8. Third-Party Logistics for Affordability

Making the most of some inventory management methods requires specialized software, equipment, and warehouse designs. Not all small- and medium-sized businesses (SMBs) have the resources to afford these.

For SMBs, outsourcing to a third-party logistics (3PL) provider eliminates the need for costly capital investments. A 3PL specialist will have the necessary resources, while charging an ongoing fee that’s more manageable on finite budgets.

9. Smart Inventory Forecasting for Improved Purchasing

As AI and data analytics provide more insights into sourcing and sales, businesses get information that enables better purchasing decisions. Smart inventory forecasting will improve inventory levels, as businesses can forecast how much inventory they’ll need due to changing conditions.

10. Personalization for Better Anticipation

Smart inventory forecasting reaches its pinnacle in the form of personalization. Personalization prompts customers with product suggestions based on their past habits, and it also sometimes includes pre-ordering products based on expected future purchasing habits.

11. Safety Stock for Fluctuations

Safety stock is excess inventory that’s intentionally kept as a hedge. The “safety stock” or “buffer stock” protects against changes in production and/or sales.

Should machinery malfunction or supply chains be interrupted, the safety allows businesses to continue selling products and delivering on existing orders. Should a spike in customer demand deplete standard inventory levels, the safety allows businesses to continue selling as production is ramped up (and to continue taking advantage of the demand spike).

Some businesses have long been keeping safety stock as a best practice. With the supply change interruptions and changing consumer demand that Covid-19 waves have created, more businesses are realizing the benefits of having safety/buffer goods.

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12. Sustainable and Resilient Supply Chains for Greater Dependability

Technological changes in cloud capabilities, AI, and IoT allow for greater communication across inventory management networks. Decentralizing methods such as multi-warehousing reduce dependency on a particular region.

Changes like these will make more sustainable and resilient supply chain processes across industries and for individual businesses.

13. Omnichannel Customer Service for Better Communication

Customers want to know their orders’ status, and they should immediately be apprised of any issues that could cause delays. Omnichannel customer service ensures customers have the most current information that’s available.

Omnichannel customer service goes beyond communicating via whatever means customers prefer. It gives customers access to supply chain, warehouse and distribution data, so they’re truly informed.

Customers have understandably had more questions throughout the pandemic, and this is one solution many logistics services have made. It’s a change that’s here to stay.

14. Investing in Inventory Managers for Improving

All of these current trends in inventory management are bringing tremendous change, and managers have to keep up with the new technologies and methods. Because businesses have a vested interest in their managers’ skill set and knowledge, many businesses are reinvesting in their inventory managers.

Courses, certifications, seminars and on-the-job training are all ways that managers can learn practical steps in inventory management processes that will have positive results.

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ToolSense gives you the information you need to reduce downtime, lower equipment maintenance and replacement costs, minimize labour hours, and improve order fulfilment. Leverage IoT data, QR codes, reports and more for efficient, modern inventory management. Properly managing inventory is critical to any business, and as technology advances, companies have more opportunities to leverage these insights and remain competitive.


What Are the Latest Trends in Inventory Management?

Emerging trends in inventory management largely focus on incorporating new technologies and mitigating supply chain disruption risks. Technologies such as cloud computing, artificial intelligence, machine learning, internet of things, and data analytics are all used to better maintain inventory levels. The most advanced methods go so far as to predict what inventory will be needed based on past demand and consumer habits. Methods such as safety stock and multi-warehousing have long been used in certain situations. More businesses are adopting these, as the Covid-19 pandemic and geopolitical situations have shown that even UK supply chains can be significantly disrupted.

What Are the Four Types of Inventory?

Which inventory management methods work best for a business depends partly on what inventory the business has. The four types of inventory are raw materials, works-in-progress, finished goods, and maintenance, repair and operations (MRO) goods.

What Are the Three Major Inventory Management Techniques?

While there are many different types of inventory management techniques, most rely on one of the three major ones in some way. The three major techniques are just-in-time (JIT), economic order quantity (EOQ) and materials requirements planning (MRP).

What Is the Future of Inventory Management?

The future of inventory management continues to evolve. Advancements are making systems more automated, more efficient, faster, and more connected even as they’re increasingly spread out.


14 Inventory Management Trends to Watch Out for | ToolSense? ›

While there are many different types of inventory management techniques, most rely on one of the three major ones in some way. The three major techniques are just-in-time (JIT), economic order quantity (EOQ) and materials requirements planning (MRP).

What are trends in inventory management? ›

While there are many different types of inventory management techniques, most rely on one of the three major ones in some way. The three major techniques are just-in-time (JIT), economic order quantity (EOQ) and materials requirements planning (MRP).

What are the 4 types of inventory management? ›

The four types of inventory management are just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ) , and days sales of inventory (DSI). Each inventory management style works better for different businesses, and there are pros and cons to each type.

What is the biggest challenge of inventory management? ›

Inventory Management Challenges and How to Deal with Them
  • Overstocking. Most businesses tend to over-stock on items that take up additional space and increase your storage costs. ...
  • Limited Visibility. ...
  • Tracking Obsolete Stocks. ...
  • Counterproductive Processes. ...
  • Issues with Tracking Materials. ...
  • Defects and Waste.
Oct 11, 2022

What are the 3 major inventory management techniques? ›

In this article we'll dive into the three most common inventory management strategies that most manufacturers operate by: the pull strategy, the push strategy, and the just in time (JIT) strategy.

What are the four 4 categories of trends? ›

Entrepreneurs should observe at least four types of trends—economic, social, technological and regulatory—to identify business opportunities and grow their startups. By paying close attention to economic trends, they can identify areas that are ripe for new ideas.

What are four important trends in management today? ›

Four important trends in management today are crisis management, outside directors, the growing use of information technology, and the increasing need for global management skills.

What are the 9 types of inventory? ›

Different Types of Inventory
  • Raw Materials. Raw materials are the initial supplies used by manufacturers to produce components or finished products. ...
  • Work-In-Process. ...
  • Finished Products. ...
  • Transit Inventory. ...
  • Buffer Inventory. ...
  • Anticipation Inventory. ...
  • Decoupling Inventory. ...
  • Cycle Inventory.
Sep 3, 2020

What are the five elements of inventory management? ›

5 Key Elements of Inventory Management
  • Track your activity. As a business owner, you ought to know about any movement in your stock. ...
  • Daily counts. Managing your inventory is a daily inventory management task. ...
  • Manage out-of-stock products. ...
  • Clear description. ...
  • Organized work environment.
Sep 21, 2016

What are the 6 types of inventory? ›

The 6 Main classifications of inventory
  • transit inventory.
  • buffer inventory.
  • anticipation inventory.
  • decoupling inventory.
  • cycle inventory.
  • MRO goods inventory.
Sep 29, 2020

What are the four 04 major challenges in inventory management? ›

Challenges in Inventory Management
  • Inability to locate the inventory stocks. ...
  • Choosing a manual inventory process. ...
  • Outdated products. ...
  • Analyzing the market demand. ...
  • Overstocking problems. ...
  • Inability to manage inventory waste and defects. ...
  • Lack of a centralized inventory hub. ...
  • Expanding product range.
May 6, 2022

What are the two major inventory issues? ›

The two basic issues in managing inventory are determining how much to order and when to place the order.

What are the two main concern of inventory management? ›

Ans: Inventory management has two main concerns. One is the level of customer service, that is, to have the right goods, in sufficient quantities, in the right place, at the right time. The other is the costs of ordering and carrying inventories.

What is the 80 20 rule in inventory management? ›

What Is the 80/20 Inventory Management Rule? The 80/20 rule states that 80% of results come from 20% of efforts, customers or another unit of measurement. When applied to inventory, the rule suggests that companies earn roughly 80% of their profits from 20% of their products.

What are the ABC techniques of inventory control? ›

ABC analysis is an inventory management technique that determines the value of inventory items based on their importance to the business. ABC ranks items on demand, cost and risk data, and inventory mangers group items into classes based on those criteria.

What is the ABC analysis of inventory? ›

ABC analysis is an inventory classification strategy that categorizes the goods into three categories, A, B, and C, based on their revenue. 'A' in ABC analysis signifies the most important goods, 'B' indicates moderately necessary goods, and 'C' indicates the least essential inventory.

What are the 5 trends? ›

  • 5 Trends for 2020. (and 22 for 2022!) ...
  • 5 Trends for 2020. (and 22 for 2022!) ...
  • GREEN PRESSURE. In 2020, consumers move from eco-status to eco-shame. ...
  • BRAND AVATARS. In 2020, human brands take powerful new form. ...
  • METAMORPHIC DESIGN. Consumers demand relevance as a service. ...
  • THE BURNOUT. ...

What are the 5 types of trend? ›

What are the Different Types of Trends?
  • Uptrend.
  • Downtrend.
  • Sideways trend.

What are the 3 major trends? ›

There are three main types of trends: short-, intermediate- and long-term.

What are the 5 best management styles? ›

There are many management styles, but five stand out above the rest: autocratic, democratic, laissez-faire, visionary, and servant leadership.

What are the 21 common types of management? ›

21 Types of Management
  • Strategic Management. ...
  • Sales Management. ...
  • Marketing Management. ...
  • Public Relations. ...
  • Operations Management. ...
  • Supply Chain Management. ...
  • Procurement Management. ...
  • Financial & Accounting Management.
May 11, 2013

What are the 5 main management styles? ›

Let's take a look at the five most common leadership styles and how they can influence an organization's success.
  • Authoritarian leadership (autocratic) ...
  • Participative leadership (democratic) ...
  • Delegative leadership (laissez-faire) ...
  • Transactional leadership (managerial) ...
  • Transformational leadership (visionary)
Nov 1, 2021

What are the 8 functions of inventory? ›

Functions of Inventory
  • Transit stock / pipeline inventory.
  • Cycle stock.
  • Safety stock (buffer inventory)
  • Anticipation inventory.
  • Others. Smoothing inventories.
Jan 28, 2011

What are the 3 important types of inventories? ›

Raw materials, semi-finished goods, and finished goods are the three main categories of inventory that are accounted for in a company's financial accounts.

What are the 3 components of inventory? ›

The three types of inventory include raw materials, work-in-progress, and finished goods.

What is the best way to manage inventory? ›

Inventory management techniques and best practices for small business
  1. Fine-tune your forecasting. ...
  2. Use the FIFO approach (first in, first out). ...
  3. Identify low-turn stock. ...
  4. Audit your stock. ...
  5. Use cloud-based inventory management software. ...
  6. Track your stock levels at all times. ...
  7. Reduce equipment repair times.

What is XYZ analysis in inventory management? ›

What is an XYZ analysis? An XYZ analysis divides items into three categories. X items have the lowest demand variability. Y items have a moderate amount of demand variability, usually because of a known factor. Z items have the highest demand variability and are therefore the hardest to forecast.

What is an inventory checklist? ›

Inventory Checklist is a record of the items stored in a specific area or department of a company. It helps in tracking and controlling the goods in an organized way. This document can be also be used for inspection because all items in the inventory are recorded here.

What is coding in inventory management? ›

Coding means assigning a code to a product.

The objective of coding is to identify goods in a unique way (there can't be two products with the same code). Warehouse management systems (WMSs) play a key role in this process.

How can inventory accuracy be improved? ›

Improving Inventory Accuracy
  1. Pick a quality program and stick with it. ...
  2. Know what you are up against. ...
  3. Keep your processes simple. ...
  4. Examine your entire supply chain. ...
  5. Establish product traceability during the distribution life cycle. ...
  6. Select technology that fits your needs. ...
  7. Implement a continuous cycle-counting program.
Mar 15, 2007

What are the five 5 current challenges of operations management? ›

What Are the Problems in Operations Management?
  • Labor shortages.
  • Logistics delays.
  • Long lead times.
  • Equipment downtime.
  • Inventory management.
  • Space shortages.
  • Safety management.
  • Ineffective communication.
Feb 22, 2023

How do you overcome poor inventory management? ›

There is no way to achieve the perfect inventory level, but minimum stock levels are a great way to approach this balance. Set a minimum stock level for each item that allows you to order new stock before you run out. Base your minimum stock on sales data combined with the time needed to acquire new stock.

What are two of the most popular inventory control models? ›

Three of the most popular inventory control models are Economic Order Quantity (EOQ), Inventory Production Quantity, and ABC Analysis. Each inventory model has a different approach to help you know how much inventory you should have in stock.

What is poor inventory management? ›

This happens when you cannot immediately fulfill an order because of a stock-out of the ordered item. Not keeping track of inventory levels can lead to stock out of popular items during a sudden surge in demand. This can happen due to peak season or other external factors. Having sufficient stock is crucial.

What are three indications of poor inventory management? ›

Here are some of the most obvious symptoms of poor inventory management:
  • High-cost goods.
  • Stockouts.
  • Slow or low inventory turn.
  • Obsolete items in inventory.
  • Excessive working capital requirements.
  • High-cost storage.
  • Spreadsheet (data-entry) errors.
  • Customer shipping errors.
Jul 6, 2021

What is the most important part of inventory management? ›

One of the most critical aspects of inventory management is managing the flow of raw materials from their procurement to finished products. The goal is to minimize overstocks and improve efficiency so that projects can stay on time and within budget.

What is the golden rule for inventory? ›

Summary: Common SCM inventory golden rules are: (a) avoid situations where inventory and demand are out of balance, those slow-moving low margin products add no value to the firm and (b) production campaigns result in unnecessary inventory.

What is the Pareto rule in a warehouse? ›

In a warehouse, Pareto's Law suggests that 80% of orders come from 20% of your total inventory. Therefore, your warehouse layout should reflect storing the top 20% most-used items closest to the outgoing packing/shipping area to maximize your picking efficiency and minimize wasted time searching for inventory.

What is the goal of inventory management? ›

The goal of inventory management is to have the right products in the right place at the right time. This requires inventory visibility — knowing when to order, how much to order and where to store stock.

What is Ved analysis? ›

VED analysis is based on critical values and shortage cost of the item. Based on their criticality, the items could be classified into three categories: vital, essential and desirable.

What does the EOQ stand for? ›

Economic Order Quantity (EOQ) is derived from a formula that consists of annual demand, holding cost, and order cost. This formula aims at striking a balance between the amount you sell and the amount you spend to manage your inventory.

What is Pareto analysis ABC classification? ›

ABC analysis is a categorization technique used in inventory management. The technique is based on the Pareto principle (or 80/20 rule), which states that 80% of the consequences originate from 20% of the causes, meaning that the relationship between inputs and outputs is unequal.

Why is inventory classification important? ›

Classifying inventory allows a business to have the right items at the right time in the right quantity. Understanding the different types of inventory and classifying them allows a business to reduce costs efficiently by not holding too much inventory, while maximizing sales by reducing stockouts.

What does trends mean in management? ›

What are management trends? Management trends are the ways a leader connects to teams, communicates within an organization and encourages positive performance. These trends are constantly evolving as leaders continue to look for new ways to best motivate and connect with their teams.

What are the three types of trends explained in? ›

Typically, there are three different types of trends given below: Uptrend. Downtrend. Sideways trend.

What indicates a positive trend for inventory management? ›

Higher inventory turnover ratios are considered a positive indicator of effective inventory management. However, a higher inventory turnover ratio does not always mean better performance.

What are the types of trends? ›

The three main types of trends are uptrends, downtrends and horizontal trends.

How do you identify trends? ›

In technical analysis, trends are identified by trendlines or price action that highlight when the price is making higher swing highs and higher swing lows for an uptrend, or lower swing lows and lower swing highs for a downtrend.

What are primary or major trends? ›

The Primary Trend

This is the market's major trend that lasts from a year to several years. It indicates the broader direction of the market. In the world of investing, we also call primary trends a bull market or a bear market, depending on the movement. The primary trend can go either way.

What is the most common way of identifying trends? ›

You essentially identify and decipher a trend by connecting a series of highs or lows. This will give you an idea of whether it is an uptrend or sideways trend or a downtrend. Let us look at an uptrend first. If you can connect a series of chart low-points sloping upward, you have an uptrend.

What is the ideal rule in managing inventory? ›

The 80/20 rule, also known as the Pareto Principle, states that 80% of results come from 20% of causes. Therefore, you need to identify and prioritize the 20% of factors that produce the highest outcomes. In inventory, the rule suggests that 20% of your inventory accounts for 80% of your profit.

What is the goal of good inventory management? ›

The goal of inventory management is to have the right products in the right place at the right time. This requires inventory visibility — knowing when to order, how much to order and where to store stock.

What is the trend of inventory turnover? ›

Inventory turnover is the rate that inventory stock is sold, or used, and replaced. The inventory turnover ratio is calculated by dividing the cost of goods by average inventory for the same period. A higher ratio tends to point to strong sales and a lower one to weak sales.

What are the six categories of trends? ›

In this chapter, we discuss six trend driver categories that inform trend research and forecasting: 1) socio-cultural, 2) economic and politic, 3) science and technology, 4) environment, 5) social psychology, 6) unexpected events.

What are 5 characteristics of a trend? ›

  • Trend. ...
  • Duration of time, Acceptability, Cultural Basis, Transitory increase or decrease. ...
  • Duration of time. ...
  • Acceptability. ...
  • Cultural Basis. ...
  • Transitory Increase or decrease. ...
  • Driver, Enabler, Blocker. ...
  • Microtrend, Macrotrend, Megatrend, Gigatrend, Nanotrend.

What are the basics of trends? ›

Trend is the direction that prices are moving in, based on where they have been in the past. Trends are made up of peaks and troughs. It is the direction of those peaks and troughs that constitute a market's trend. Whether those peaks and troughs are moving up, down, or sideways indicates the direction of the trend.

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