Top tips to excel at inventory management in all commerce settings
As your business grows, you will interact with customers differently through direct sales, non-traditional marketing or your website. While a great customer experience is essential for securing long-term revenue, you probably haven’t considered how important it is to balance this relationship with consistently keeping your expenses on track.
One solution to addressing this long-term is to consider inventory management software so your business can keep track of inventory and stock quantities going into and coming out of your warehouses.
Next, we’ll discuss inventory management techniques and challenges, what software to look for when it comes to making the whole process easier, and some tips for keeping track of your inventory.
What is inventory management?
Inventory management allows companies to determine when to order which type of stock and how much. It helps identify and predict trends and ensures there is always enough stock to satisfy customer orders and early warning when there is a shortage.
There are two main areas of inventory management systems: inventory control and warehouse management so that your goods can be effectively transformed into revenue and not tied up in cash.
Current challenges of inventory management
To avoid stockouts, you need to make sure not to spend too much time figuring out how much stock you have.
You may have difficulties tracking shipments, monitoring product levels, scanning barcodes, and other crucial tasks because of these three most common challenges:
1. Inventory policies and processes for volume sales
Which products are most profitable? Does the volume of your top sellers match that of your top sellers, or are you moving a high volume of expensive items? Nowadays, most businesses use the 80/20 rule, which states that 80% of profit results come from 20% of efforts from their customers.
You will need good inventory management systems to handle periods where you will have volume sales. To ensure your products are close to your customers, you can implement tactics such as inventory distribution, which involves keeping inventory in multiple fulfilment centres. In addition to reducing shipping costs, this expedites delivery time.
2. Managing small orders and excess inventory
Often businesses stock up with goods to be prepared for volume sales. But what happens when the sale volume and demand are low? How can you best optimise your losses?
One strategy to deal with small sales is to reduce the number of items you sell, allowing your business to focus on items with high demand (or high margins) and streamline production.
The other strategy is to get to know your business so that you can select the right inventory methods and forecasting techniques. Calculate the total cost of your stock, including warehousing costs and perishables, and balance that against the demand and the cost of stockouts to create the right balance.
3. The impact of inflation on sales
As inflation rises rapidly, you’ll likely find yourself with identical items you bought at different prices in your inventory. Whenever you sell one of those items, you must deduct it from inventory and record it as the cost of goods sold.
When inflation is high, one way to minimise distortion of your ratio is to keep track of each item’s cost as it enters and leaves your inventory. This may not be a problem if you are selling high-priced, low-volume items like appliances and vehicles. This, however, is probably impractical if you deal with low-priced, high-volume inventory.
Instead, you can use average costing, where you can spread the total inventory cost over all the items in the inventory so that the cost assigned to each item is the same – the average cost.
Our top 3 cost-saving tips for commerce inventory management
Real-time stock communication and synchronisation
Manual inventory management is time-consuming and prone to errors. By implementing a robust purpose-built inventory management solution, your store staff can focus on the customer experience and communicate efficiently, ensuring shelves look great and reducing lines.
Business intelligence tools for analysis and reporting on order status
With rising costs, getting the right product range in the right store at the right time is crucial. Invest in a management system that helps you track, plan, forecast, and react quickly. With ease, accuracy, and insight, manage the complex variables of what, where, and how fast products are sold.
Visibility into available/on-hand inventory
Plan, forecast, and order products faster with an inventory management application that lets you add new products, create detailed descriptions, upload pictures, and change prices within the platform to update across all systems while allowing you to reconcile your counts and write-offs in real-time.
Need more help finding the right tool? Our inventory management solution from WonderLane, a Trust Payments Company is a cloud-enabled, mobile-friendly tool that gives your business a real-time central view of stock – learn more here.
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