The world of eCommerce is expanding at a rapid rate with more and more opportunities opening up for online retailers. It really is an exciting time, providing larger audiences with greater geographical diversity equating to better selling opportunities and higher profits. However, all this promise can be undone very quickly without the appropriate inventory management techniques being employed in the background. Here are 4 ways online merchants can keep their inventory management under control.
Setting your priorities
When it comes to business and managing inventory, it is vital to ascertain where your attention and priorities should lie to maximise your returns. There is no point spending a large amount on inventory that is known to be a slow seller as this chews up resources that would be far better directed to more profitable ventures.
There are various methods you can employ to help you analyse where you should focus your time and resources. Check out how ABC analysis, FSN analysis, and SDE analysis contribute to better inventory management.
Setting your parameters
The next very important aspect of inventory management for an online retailer is to set your minimum stock levels. If you are small or lacking in disposable resources, you cannot afford to keep customers waiting or miss out on sales because you have not planned for demand effectively.
Once you have your set minimum levels, reordering becomes a methodical activity where it is easy to see what needs to be reordered and when so that you have perpetual stock on hand while optimising your resources. This also sets you up for delegation as ordering parameters become transparent and so staff can take over this business activity in your absence, ensuring everything keeps ticking over.
Ensuring warehouse best practices
A vital part of inventory management for any business is ensuring the warehouse operates smoothly, with inventory stocked, rotated and sold in a logical manner and a way that promotes inventory optimisation.
Here’s a list of some warehouse best practices for better inventory control.
Setting your inventory auditing style
As with any business activity, inventory management must be checked for quality and precision at regular intervals. There are several ways you can audit your inventory depending on your business and individual needs. One such way is the classic annual stocktake that everyone dreads, but alas must be done.
If this is not possible or desirable, then an alternative is cycle counting. This is where the whole inventory is split up into smaller tasks that can be conducted perpetually so that by the end of the year, the entire warehouse has been audited but it has been completed in a manageable way. The cycle count of one area of inventory can also be representative of other areas and thus give you early notification of any potential inventory discrepancies. Of course, counting stock against records is as much dependent on good record-keeping as accurate counting. For this, it is vital to use the right systems that can support efficient and accurate inventory management.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.