5 Tips to Optimize Inventory Management
If you run an eCommerce business, no matter the size, inventory management will be a crucial component of your operation. Inventory management is the process of tracking stock levels and the movement of goods. From delivering raw materials to manufacturers to fulfilling orders for customers.
Inventory management is essential because it allows you to minimize costs, improve cash flow, and increase your profits.
Well-organized inventory keeps your operation running smoothly. When it is not, you risk running into problems like mis-shipments, shortages, out-of-stocks, spoilage, and overstock.
To ensure you have an adequate inventory management system, it is important to develop a solid plan. First, though, it is necessary to fully understand each step in the inventory management process. The following steps represent this process from start to finish:
Goods delivered to your facility
At this stage, raw materials and subcomponents for manufacturers or finished products for customers first enter your warehouse.
Inspect, sort, and store goods
Next, it is important that you review, sort, and store the inventory items in their designated areas.
Monitor inventory levels
Now that everything is stored, you need to track your inventory levels. You may do this in a variety of ways, including physical counts, perpetual inventory software, or cycle counts.
Stock orders placed
Customers place orders to purchase items from your inventory using your website, app, or in-store.
After the orders are placed, you must approve them and pass them on to your supplier. This step may be automated by your POS (point-of-sale) system.
Collect goods from stock
To fulfill the orders, you must find the necessary goods using their SKU (stock-keeping unit) numbers. Next, take them from the stock, and ship them to the manufacturer or customer.
Update inventory levels
After removing items from stock, update your inventory levels so that you know how much stock is remaining. Now, you can share those levels with the necessary stakeholders.
Low stock levels trigger purchasing/reordering
As your inventory gets low, restock it to ensure you do not create shortages.
What are some of the best ways to Optimize Inventory Management?
If you have a solid approach to inventory management, it will set your business up for success. Here are five tips to optimize your inventory management:
Understand product demand
One of the most important elements of managing your inventory is understanding how demand fluctuates. Watching product demands that are often dynamic and shift throughout the year.
If you understand these fluctuations, you will know when it is necessary to order more or less inventory. You can get a good idea of product demand fluctuations by examining historical trends. To do this, try using a program like Google Trends or Google Analytics
Forecast future demand
Once you have an understanding of the fluctuating levels of interest in your product, focus on forecasting future demand. Inventory forecasting will allow you to order your inventory from year to year as global trends shift.
You will also need to consider increasing your stock around holiday periods or special events. These are usually the times when the product demands increase.
Make sure you have safety stock
As a business owner, it is often necessary to expect the unexpected. For this reason, it’s a good idea to maintain a certain amount of safety stock. This will allow you to stay afloat even if unforeseen circumstances arise.
It’s also important not to go too overboard when it comes to your safety stock. You should have enough for when you might need it, but not so much that it clogs up your warehouse.
Set a minimum viable stock
Even with safety stock, your inventory levels must never dip to quantities that will negatively affect your supply chain.
One way to do this is to set minimum stock levels. Understanding the lowest possible inventory you can have in your warehouse to meet demands. To know this, you must consider the demand for that product and the time it takes to replace it.
Keep storage in mind
As nice as it is to have excess inventory and high demand, you must have a place to put everything. Too much inventory could impact your operation.
It’s also essential to have a system in your warehouse that allows you to locate items quickly and easily. After all, fulfilling customer orders quickly is one of the best ways to keep them coming back. For these purposes, you may benefit from using eCommerce inventory management software.
How Wills Transfer can help you Optimize Your Inventory Management
Another great way to optimize your inventory management is to remove yourself from that responsibility altogether. Instead, hand over this process to a third-party service provider with expertise in this particular area.
This will save you a lot of time and money in the long run and will guarantee that your inventory management process runs smoothly, as it will be operated by a company that specializes in this area. If you are interested in services like warehousing and distribution, you can count on Wills Transfer to get the job done well.
We have been providing innovative logistics solutions that contribute to inventory management optimization for over 75 years.
With our knowledge and experience, we can help your business grow its supply chain and succeed. Our team will ensure that your inventory levels are always maintained, and kept within your min and max quantities.
Since we know inventory management, we can help you increase your fulfillment levels while decreasing your costs. At the same time, we will make sure you have a clear and precise idea of your stock levels. So that you can minimize stock-outs and keep your customers happy.
All of our services are also scalable. This means we can adjust our approach to your inventory management according to fluctuating demands. Or we can ramp things up as your business grows.
For more information about our inventory management services or to learn more about the other 3PL services that we offer, call Wills Transfer Limited at 613-704-7549 or contact us here