This is a guest blog post written by inventory management provider eComdash
One of the toughest parts of running an ecommerce business is inventory management. It’s also one of the most important elements. When inventory is not managed effectively, business owners can’t forecast sales accurately, potentially leading to shipment delays and dissatisfied customers.
Forecasting is not the only area affected by inventory mismanagement, cash flow is impacted as well. Carrying too much stock ties up money needed elsewhere, and not having enough inventory leads to overselling. Both scenarios affect your bottom line.
Implementing a robust and effective inventory management process helps accurately track stock levels, forecast future sales, and optimize purchase order processes. It reduces the likelihood of overstocking, under-stocking, and overselling – factors that influence how your business thrives.
To help get your inventory management operation on track, we’ve put a few tips together to streamline the process.
Think of Inventory as Money You Can’t Spend
To understand your cash flow, you must properly manage inventory; it’s likely your largest business asset. You have to think of your inventory as money you aren’t able to spend. Focus on how to best forecast the stock that will sell and make decisions based on accurate data. Invest in a software solution that updates in real-time and integrates with all your systems and sales channels. By tracking sales on all channels, you can analyze the data to see what products are in demand. You also need to track your purchase order process and how long it takes to receive more inventory. A proper forecasting report will take the demand of your stock along with the estimated reordering timeline to give the best estimates.
Use a SKU system
Each item you have for sale should have a SKU assigned to it. There may be situations where you don’t think it’s necessary, but it is. SKUs help you keep track of products internally, but will also be necessary if you use a 3PL (third-party logistics) that handles products for you. Having a SKU system facilitates new channel expansions because the system can track your stock across multiple channels, properly gathering and analyzing data so you understand what product is profitable as your company and product offering grows.
Maximize Product Movement with Bundling
Using product bundling to cross-sell and up-sell is a great way to move stale products off the shelves. Not every product you have is going to be a top-seller, which means that some products could be dust-collectors. Don’t let these products cost you storage fees. Bundle those slower-moving items with your best-selling items. Your customers will feel like they are getting a great deal, while you make room on your shelves for better products.
Set Minimum and Maximum Product Alerts
If you choose to use an inventory management software, make sure they offer alerts for inventory levels. When specific products reach maximum or minimum levels, make sure you set alerts so you or an employee can take action. With alerts, you will always know when it’s time to order new merchandise and when you have too much. Planning ahead and taking quick action can be the difference between a million-dollar year and a multi-million-dollar year.
Audit Inventory Frequently
Performing inventory audits isn’t something that anyone likes to do, so telling you to audit often may be the last thing you want to hear. But, if you audit at close intervals, you can catch any discrepancies before they become a big problem. The audits won’t take as long since you’ve processed fewer transactions between audits. By keeping a closer eye on your stock and knowing that the quantities in your system are accurate, you won’t waste valuable time looking through months of transactions for a simple mistake that has thrown your numbers off.
Final Thoughts about Inventory Management
Inventory management is crucial to the success and growth of your business. As your business grows, it’s important that you always maintain a firm handle on inventory. With accurate data, you can quickly adjust your management strategies to meet your business’s expanding needs. Technology can make it much easier, but in the end, it comes down to organization and strategic decisions based on accurate data. Follow the above tips to take your business to the next level by controlling inventory, cash flow, and sales growth.