8 Easy Ways To Improve Your Inventory Management

Inventory management is the backbone of any successful e-commerce business run through Shopify. There are 13 types of inventory* you could have. It is so important to know how to manage them to ensure the smooth running of your shop.

Inventory management can be confusing. Management involves the entire process of ordering, receiving, and selling, while inventory control only deals with existing stock.

We’ve previously advised on how to create and use barcodes with our app, EasyScan. However, our inventory management software has so much more to offer! Our 8 easy ways to improve your stock management will streamline this process, making the most of its features.

Why Does Inventory Management Matter?

Keeping track of your products from purchase to sale is fundamental for smooth operations. Knowing what you have and where helps you to identify how much to order, and when. If you want to have excellent customer service and increase your profits, this is one way to ensure success.

Not only this, but it makes financial sense too. To avoid running out, overselling, or losing money on discarded products, it's important to maintain an appropriate amount of stock. This is especially the case if you sell things that could expire, like food, drinks, or skincare products.

Moreover, customers often order again if they can get what they want. Meeting demand is an important part of e-commerce and encourages shoppers to be loyal to a particular shop or brand. There are other great ways of doing this, like using our app EasyGift to create Shopify store promotions. However, it’s no good doing this if you don’t manage your inventory to meet demand!

What Are The Difficulties With Stock Management?

Any e-commerce shop owner has faced difficulties with their stock inventory management. One of the most common is changes in demand, especially if you sell seasonal products. After all, not many people buy beach clothes in December, or Christmas decorations in July! When demand changes, your stock needs to change too, making it difficult to manage what you order and send.

Another difficulty might be having a disorganized warehouse. You can organize your warehouse with bin locations, however, you need to manage what is in those locations too.

Poor organization can have knock-on effects. You might have trouble counting your stock, or checking what you have sold. This can be time-consuming at best, and costly at worst.

Finally, if you are not tracking your stock well, you might end up with phantom inventory. This, in simple terms, is when what is on your shopfront has inconsistencies with what is in your warehouse. Aside from being costly, this can lead to customers being unable to receive products they’ve purchased. It can then have a negative domino effect on your profits.

8 Ways To Manage Your Inventory

So, you know why inventory management is important, and what the difficulties with it are. But what can you do about it? Don’t worry — we’ve got some great tips to get you started.

1. Know your Market and Learn to Forecast

At a very basic level, inventory management is all about being able to forecast. To effectively manage your inventory, you need to observe market trends, know your annual sales, and understand your expenses and growth. This will provide you with additional resources.

Of course, you can’t plan for everything. Sometimes, unexpected events happen or things go wrong in ways no one could have predicted. Knowing the fundamentals of what you sell and how the market changes with seasons can help you manage your inventory better.

Research, know products and markets, keep that in mind when ordering or organizing inventory.

2. Organize your Warehouse

Any other tips for improving your inventory management aren’t much help if your warehouse is disorganized!

We’ve already written about why an organized warehouse is important for making order fulfillment efficient. EasyScan makes warehouse management easy by creating barcodes or SKUs to label stock and its location.

This means your warehouse will be easy to navigate. Additionally, ensure your space is clutter-free. This means navigating the stock locations in person will be a lot less difficult.

Good inventory management is essential for an organized warehouse, but the reverse is true too. You can’t have a well-managed inventory without your warehouse being in the best shape it can be!

Audit your stock regularly to make sure there are no inconsistencies.

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3. Use the ABC System

Finding a good method to track your stock is crucial for a well-organized warehouse. There are many ways to achieve this. However, many people widely know and find the 'ABC System' relatively straightforward because it provides 3 categories to organize stock under.

Category A is the stuff you sell frequently and fast. Category B is the next biggest seller. The final category, C, consists of the least sold items, but they are still important for your overall stock. This simplified version helps you understand your products and their importance for your revenue.

There is lots more advice available on how to introduce the ABC system*.

4. Know your Par Levels

Once you know what stock you have, you need to come up with par levels for your inventory. This means the lowest amount of product that you must have in your warehouse all the time.

Setting these numbers is important as it helps you work out when to order more stock from suppliers. This is all part of managing inventory efficiently and not running out of items, or having too much stock.

With EasyScan, use barcodes, to always know the quantity of each item in your inventory. The app allows you to monitor stock levels quickly, remotely, and across any amount of warehouse locations.

5. Automate Order Fulfillment

Another way to ensure effective inventory management is to automate as much as you can. Human error costs U.S. businesses an estimated total of more than $3.1 trillion a year*. Taking out a substantial amount of that error can help you avoid adding your dollars to this total. Automated order fulfillment leaves less room for problems.

EasyScan gives you a simple, automated way to track and send orders using automatically assigned barcodes and a label printing function. You can use a barcode scanner to pick and pack orders efficiently. This translates directly into updates to your inventory. That way, there is less chance that inventory levels will contain errors.

6. Audit Inventory Regularly

Additionally, make a point of auditing your inventory items regularly. Whilst automation and organization eliminate most human error, there can still occasionally be inconsistencies. It is key to check that the representation on your digital inventory accurately matches the physical inventory count.

You can physically count your stock, which many companies choose to do at the end of each tax year. Smaller checks throughout the year are important too. You can pick a single product or a few products to check if the numbers match up. This is crucial for items sold quickly, as that's when most mistakes can happen.

Luckily, with EasyScan, you can do a stock control and make its process very easy. Simply scan the barcodes of your stock and generate a detailed report of the scanned items. This compares to what is on the digital inventory.

7. Build Great Relationships with Suppliers

Relationships with suppliers are very important for inventory management. However, this is something not often prioritized. Having a good relationship with your supplier is important for receiving products on time, especially when you need something urgently. It can also affect prices and where you fall in the list of priorities for your suppliers.

There are plenty of ways to build a great relationship with your suppliers*. Simple advice includes effective communication, understanding suppliers, and maintaining loyalty to valued partners.

8. Expect the Unexpected

We emphasized forecasting, but we should also acknowledge the importance of being ready for surprises. For all our predictions and projections, sometimes things just go wrong.

Even with inventory control systems, mistakes can happen due to miscalculations, discontinued products, marketing events, or the normal fluctuations of business. The unexpected can also be positive. A week of especially high sales can affect your management, for instance.

It is always good to have contingencies in place for when the unexpected happens. Knowing how you will react and what steps you will take to get things back on track are critical business skills. You can’t prepare for everything, but you can sure try!

Sources

https://www.netsuite.com/portal/resource/articles/inventory-management/inventory.shtml

https://www.netsuite.com/portal/resource/articles/inventory-management/abc-inventory-analysis.shtml

https://hbr.org/2016/09/bad-data-costs-the-u-s-3-trillion-per-year

https://www.myob.com/au/blog/6-ways-maintain-great-supplier-relationship/

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