Inventory management can make or break your business. Even though many business owners and managers find it complicated and confusing, following the fundamental principles of good inventory management can result in significant bottom-line savings.
There are two fundamental principles of inventory management:
- You must have enough stock to meet market demands
- It must not tie up too much of your capital
Despite its importance, many businesses fail to integrate proper inventory management. As a result, they suffer from serious negative repercussions when it comes to their long-term growth. One thing you need to understand is that poor inventory management often robs a business of its sales, adversely affecting your customers’ experience.
Imagine how you feel when you want to buy something online and the store says that it is no longer in stock. Alternatively, you may have ordered something online, and been notified several days later that the product wasn’t available. It happens all the time. When this happens, however, people have a tendency to lose trust in online shopping, even if that means frequent trips to brick-and-mortar stores and longer waits in checkout lines. Such experiences can also damage your brand reputation in the long-term, costing you more valuable customers.
The challenges for larger retailers are even more acute as they need to manage their inventory properly across all sales channels. Therefore, the question arises:
How can businesses improve their inventory management?
Here are some starting points:
- Automation – There are many types of software and tools to track your inventory. They are easy to integrate into your existing process, and filling orders takes only a few minutes with these tools. They have streamlined the inventory ordering process by eliminating the need for manual updating. The days of spreadsheets and Excel forms are long past. Not only are those relics cumbersome, but also less accurate; automating your stock inventory management results in fewer mistakes and fewer dollars lost.
- Regular Stock Counts – Regular cycle counts help businesses avoid deficiencies sneaking up on them. It is imperative to record stocking data accurately and update product pages accordingly. As customers, we don’t enjoy ordering something only to find out later that the product is out of stock. Such incidents only benefit your competitors as you are likely to lose customers to them. Maintaining a proper log book can help you combat this problem. Remember, you must record everything that comes in and goes out. A manual inventory count should be done at least once or twice a month to mitigate errors.
- Report on Data – It is important to avoid too much inventory, especially if the value of a particular product is likely to decrease rapidly. Having too much inventory is as detrimental as not having enough stock. To omit this issue, businesses need to record and manage old inventory appropriately. Therefore, you should organize your data and publish periodical reports to make be able to quickly assess items that you have in stock. Implementing a barcode system can also help you track your inventory more efficiently. Proper inventory management helps with cash flow, along with making accurate demand forecasts so that businesses can plan their stock accordingly. This alone offers a great advantage to e-Commerce businesses operating in a very competitive landscape.