Proactive inventory management is a vital part of running a successful eCommerce business. While managing inventory can be challenging, using a proactive rather than a reactive approach to inventory management may help to prevent problems such as inventory shortages, concerns about storage space and delayed fulfillment of orders.
When inventory isn’t effectively managed, clients may end up dissatisfied over out-of-stock items and the reputation of your company may be damaged. The best practice in inventory management is to be as proactive as possible.
Collect Inventory Control Data
Inventory control is the process of managing inventory levels in the warehouse and other locations. An effective inventory control system monitors the movement and storage of items and can help with forecasting and reordering. Effectively controlling inventory requires knowing what’s in stock and where it’s located while keeping items in inventory organized and in good condition.
Effective inventory management depends on knowing when to reorder products and how much to order to ensure that the right amount of inventory is on hand at the right location. To improve inventory control practices, start with collecting data on practices that involve your inventory from initial orders to shipping and receiving to restocking.
Identifying Inventory Control Problems
A good place to start working to identify inventory control problems is by reviewing past trends, particularly times when there was a problem with the amount of inventory on hand. Have you been scrambling to fill orders because of insufficient inventory? Or is unwanted inventory taking up valuable warehouse space?
Inventory that’s held too long has an increased risk of damage and keeping too much inventory ties up capital that could better be used elsewhere. All aspects of your stock must be tracked and managed, which includes tracking the quality of stock you receive from suppliers. How often is merchandise returned because it’s defective or broken?
Using Technology for Automatic Stock Control
Small businesses may use a spreadsheet as a manual inventory control technique but using manual processes to control inventory can be labor intensive and increases the risk of human error. Continuous advances in technology make stock management much simpler than it used to be, and automated systems can keep track of stock levels and can easily provide an accurate picture of inventory at multiple locations.
Review your current processes and identify tasks that can be automated. Stock management using automated systems and processes starts by assigning a unique identifier for each item known as an SKU (stock keeping unit). These unique identifiers make it easy to determine where the item is located and whether demand is higher for certain items or certain colors. Fast-moving and in-demand items are easily identified and time isn’t wasted trying to locate specific items.
Software to Improve Inventory Control
Inventory control software makes it easier to be proactive about tracking inventory as well as keeping track of packing and shipping information. Inventory costs can be kept under better control by using real-time updates on stock movements so that stock levels can be monitored automatically and alerts can be provided when stock is low and needs to be replenished.
Real-time tracking provides up-to-date information that can guide your business decisions. Leveraging the information provided by real-time metrics provides performance information that can help you stay ahead of your competitors.
Categorize Your Inventory
Look for ways to categorize your inventory based on demand. Are some items seasonal or in demand only at certain times? Your inventory can be categorized by groups such as profit margin and cost of storing it.
Collect data from all areas of operation, which includes shipping and receiving along with inventory being held on hand. Review the methods you’re currently using to categorize inventory and how effectively it’s working to meet demand. A good way to be proactive is to gain a clear understanding of the entire supply chain such as shipping times and results you can expect from receiving and shipping items. Consider errors that have been made and what changes could be made to reduce the possibility of making a similar mistake.
Optimizing Inventory Control
Having a proactive inventory management system in place means utilizing available technology and continually working to improve inventory control practices. Manual processes and outdated software can slow the growth of your business and lead to costly errors.
There are many factors involved in identifying and maintaining optimal stock levels. Understocking and overstocking both need to be avoided. Setting minimal stock levels can help prevent running out of items. Track items regularly to identify what’s highest and lowest in demand.
Proactive inventory management includes ensuring that inventory records are accurate. Plan on performing regular audits to identify inaccuracies, theft or damaged items. An inventory audit provides detailed information on the value of your inventory and can help to optimize inventory control and contribute to a more proactive way of managing inventory.