Every retailer today, whether they own an eCommerce store or a brick and mortar one, know how much of a nightmare inventory management can be. But what exactly is inventory management?
Simply put, inventory management is an activity of keeping track of products and goods you have in stock, normally in a warehouse, and ensuring you can distribute the goods, as well as replenish your stock on time. You have to ensure that you have enough goods to fulfill orders while also keep track of goods, in order to know when to order more and restock so that everything goes seamlessly.
You can run into various issues and inconveniences ranging from problems with suppliers or manufacturers to transportation, but in most cases, the issue is right under your nose. If your inventory management isn’t optimized well, it can lead to numerous other problems along the supply chain. That can result in additional expenses, loss of money and even loss of customers for your business. With that in mind, here are a few ways to optimize your inventory management and increase efficiency.
One of the essential aspects of managing your inventory is understanding the demand. Predicting how your products will sell and how fast can be challenging, but you can always run an estimate of the demand, in order to manage your inventory more seamlessly and optimize it on time.
If you can manage to predict the demand for your products as accurately as possible, you’ll be able to prepare in advance. As an example, there are a few things you can do to try and predict the demand.
- Get informed about the latest market trends.
- Compare the sales from the previous year with your sales today.
- Determine guaranteed sales from subscriptions or contracts.
- Monitor your current growth rate.
- Determine if there’s an upcoming seasonal hype.
- Check your upcoming promotions.
If you have even a rough estimate of the demand for your good, you can stock up your inventory and ensure a seamless distribution to the end-users.
The size and scope of your inventory can make it more difficult to manage manually. The more inventory you process on a daily basis, the more challenging it becomes to manage it. In that case, it may be time to get some help from technology. As an example, a reliable warehouse management system can help you out immensely with various activities, such as order picking, labeling, packaging, transportation and so on.
In addition, you can leverage technology to automate most of the manual and mundane tasks of inventory control that take up a lot of time and resources, such as data entry, invoicing, data collection, inventory audits and so on. A crucial aspect of inventory management is to be fast and effective when conducting everyday tasks and you simply cannot accomplish that without help from technology in some cases. That’s why it’s better to find a solution that works best for you as soon as possible than risk making a mistake that can cost you both money and customers.
Inventory can become old and obsolete quickly. Try setting up a Lean Kanban to reduce inventory by focusing on customer demand instead of production planning. Just make what’s needed, then the risk of obsolete inventory will be reduced.
Meaningful relationships are essential in the business world and not just with your customers. As a matter of fact, good relationships are also essential in the inventory management process. Therefore, you have to have a good relationship with everyone involved in your supply chain, such as manufacturers, suppliers, employees, drivers, etc. That way, you can rely on them to get the job done efficiently and on time.
For instance, you may have to adjust and adapt to certain situations, such as to return an item to make room for another, restock inventory faster than you normally do, take care of a manufacturing issue and so on. You simply cannot do any of that fast enough without good relations with people involved in your supply chain. If you can rely on people to help you out, you can automatically manage your inventory more efficiently.
Outsource inventory management
A lot of businesses simply cannot handle the logistics on their own. Whether it’s too expensive for them or they lack the means, proper inventory management is out of some businesses’ reach. Outsourcing the entire process may be a more affordable and more reliable solution in such cases.
In other words, a third-party logistics provider takes care of your inventory management ranging from warehousing to order fulfillment processes. That way, you can entirely remove inventory management from your business and focus on other important business tasks. What’s more, you can consider partnering up with other stores and providers to adopt a drop shipping method for your business. That way, you can even expand your business internationally without the added costs of developing your own logistics strategy.
Managing the inventory for your business can oftentimes prove to be quite challenging. The success of your business depends on how efficiently you can stock up and distribute goods to customers. That’s why it’s very important to optimize your inventory management well so that you can improve the overall efficiency of your business.
Keith Coppersmith is a business and marketing expert who has experienced both the rise and fall of many businesses. As a regular contributor at BizzmarkBlog, he enjoys writing and providing insight of the marketing industry based on both practice and theory.