Good inventory management should be a top priority for e-commerce business owners. Having a well-defined inventory management process is essential for optimizing how you control inventory and improving business operations overall. With a few changes to your current practices, you can start implementing inventory management techniques that benefit both your business and customers.
From having goods stocked on your site to ensuring that orders are fulfilled quickly, there are a lot of inventory management steps to consider. To help you get started, we’ve put together some quick and easy tips to save you time and generally make your inventory management better. Read from start to finish for all the best ways to manage inventory, or use the links below to jump ahead.
How can better inventory management transform your business operations?
Inventory management is an essential aspect of operating an e-commerce business—more so than your typical retail business. Its impact is widespread—from sales and customer satisfaction to the efficiency of your internal processes.
To give you an idea of just how pertinent improving your inventory management strategy is, here are just a few examples of how it can make running your business easier:
- Know how much inventory you have at all times, across all your different sales platforms, so you can ensure you have sufficient stock levels
- Understand how your stock moves, including which products are selling and which aren’t, so you can refine your offerings and reduce deadstock
- Figure out which inventory management technique works best for you—just in time (JIT), first-in, first-out (FIFO), or last-in, first-out (LIFO)
- Improve all aspects of supply chain management
- Reduce warehousing costs
- Gain insight into sales data that can help with forecasting and making smarter decisions
- Sell more effectively on multiple channels, including some of the top marketplaces
- Save time on managing inventory, so you can focus on other aspects of your business
- Improve your bottom line
Let’s dive deeper into how you can optimize your inventory management practices.
6 tips for improving inventory management
Effective inventory management starts with having best practices in place. Making some slight changes to your inventory management process is easy and worth the investment of resources. Here are just a few ways you can improve your practices:
Tip #1: Use insights to inform decisions like reordering and pricing
Like ABC analysis, sales data reports are invaluable for decision-making. These insights can provide information regarding which of your products are popular, simply aren’t selling, or are moving slowly.
When you see the most sales based on customer demand and seasonality, you get in-depth inventory analysis. This data can then be used to base decisions on facts instead of assumptions and estimates.
Better inventory control can help you:
- Keep track of inventory counts across all sales channels
- Time reorders
- Optimize order quantity
- Reduce carrying costs
- Improve cash flow
- Increase profitability
Tip #2: Automate as much as possible
Inventory management can be time-consuming, especially if you’re dealing with high sales volumes. One way to cut down the demand that inventory management places on your time and personnel is to automate as many aspects of the process as possible. This could include:
- Automating inventory level updates across platforms
- Uploading new products into the system
- Completing purchase orders
- Automating confirmation emails and invoices
Having your team go through inventory with barcode scanners might be effective. However, automation will save you a lot of time and money, and it will improve accuracy.
Tip #3: Use order tracking
However your inventory management system is set up—whether it’s a spreadsheet or software—careful order tracking is essential. By organizing all that data into easily accessible and useful lists, you can easily filter orders that:
- Have been paid
- Haven’t been paid
- Are overdue
- Haven’t been fulfilled yet
With a more organized system for order tracking, you’ll have a clear view of order statuses and a better handle of order fulfillment overall. And, with order tracking, you’ll be able to provide your customers with updates.
Tip #4: Focus on consistency and process
One of the best things you can do to make inventory management run more smoothly is to follow consistent processes across the board. This is especially true if you have multiple team members involved in inventory control. Whether it’s how you go about managing physical inventory, updating inventory tracking, restocking, or adding new inventory to your sites, consistency is key. Otherwise, you may run into issues like inaccurate data, having too little or excess inventory, or displeased customers.
Establish an inventory management process that everyone can easily follow to keep everything running smoothly.
Tip #5: Streamline internal communication
Oftentimes, mistakes are made due to poor communication. By implementing systems that can help streamline communication in your business, you can ensure everyone is on the same page. It will also help you significantly cut down on errors.
Keep your whole team in the loop with real-time status updates and periodic action emails. Depending on how your business operates, you may want to send these action emails weekly or daily. This ensures your team is receiving the information they need, when they expect it.
Tip #6: Update your inventory management system
When it comes to inventory control, manual data entry and a disjointed process may be a downfall. However, with inventory management software that’s built for small businesses like yours, you can easily overcome these challenges.
A good inventory management solution should allow you to:
- Automate virtually all aspects of inventory management
- Easily track inventory, manage orders, and improve fulfillment across all of your online stores
- Help you identify the right level of safety stock so you can account for lead time and avoid stockouts
- List and manage products across all of your e-commerce platforms like Amazon and Shopify
- Automatically update the amount of inventory available
- Keep inventory information organized and up to date for all your SKUs
- Add and manage more sales channels so you can expand your reach and sell more
- Generate powerful reports that provide key insights into sales
When you use an effective inventory management software, you improve these processes and your efficiency. This opens up more time for you to focus on growing your business.
Implement these changes and strengthen your business’s inventory management
The best way to manage inventory varies from business to business, but these tips can only improve your current processes. Refining your inventory management strategies might seem like a large undertaking, but with the right tools, it can be fairly simple.
This article originally appeared on the QuickBooks Resource Center and was syndicated by MediaFeed.org.
It’s hard to believe that I just passed 10 years as an entrepreneur. As we’ve grown at Content Marketing Institute, I’ve leaned on many critical resources, and I keep them pinned to my office wall—such as Mark Fletcher’s 15 Startup Commandments, Dharmesh Shah’s Startup Triplets and Fast Company’s 10 Common Mistakes Startups Make.
Although it’s hard to clearly identify what success factors have been the most critical during our journey on “the road less traveled,” here are the ones that I believe have made the most impact on me, our company, our amazing employees and — most of all — our valued customers.
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Content marketing works. We have tremendous flexibility in our business model simply because we deliver valuable and compelling industry information to our customers and prospects. Our daily updates, our weekly e-newsletters, our quarterly magazine and our annual research all help to position us as the go-to resource for content marketing information. Without all this, I cannot imagine how difficult it would be to grow our business, not to mention the sheer cost of sales.
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Although our people are some of the leading experts in the entire industry, we hire first based on attitude and flexibility. People with great attitudes who are fun to work with can learn and do just about anything.
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We tell all our employees the following: “Do what you have to do to be successful. Don’t wait for permission. Ask for forgiveness later.” Whether this is a solid policy or not, it allows our employees to take risks and become leaders.
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I cannot express how critical this is. If you partner with anyone, plan that someday the divorce will happen.
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In my experience, most partnerships simply don’t work and can hamper the creativity of the organization. Just be careful.
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One of our advantages is that we are willing to try anything if we believe in what it can provide for our customers, or if we believe that we can gain a competitive advantage. We reach decisions quickly and change these decisions slowly if and when they are changed (hat tip to Napoleon Hill).
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I saw this statement in a tattoo on former Kansas basketball player Thomas Robinson’s arm, and I couldn’t agree more. There were moments when I didn’t believe the business was going to make it. Looking back, it was those moments that have defined our organization.
“I’m no longer afraid of failure, but keenly aware of what new opportunities arise because of it.”
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This almost cost us the entire business. Although my first startup, Junta42, was working and profitable, we weren’t growing the business at a rate that was acceptable. But Junta42 was my baby, and although I knew it needed to evolve, it took everything I had to pivot the business in a new direction. Discarding the product we began the business with was the best business decision—and the hardest one—I ever made.
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Never do any of this yourself. Hire professionals.
Related: Know how sales taxes are affecting your bottom line? Check out our sales tax calculator.
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If the numbers are right, but your gut feels differently, go with your gut — every time. This little piece of advice has served me well.
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The majority of my friends thought I was crazy for leaving a high-paying executive job to start a business. Again, go with your gut.
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How can you be the leading expert in your industry without a book? Honestly, I’m not sure. Write the book for your industry, and it will become the greatest business card you’ll ever have. It will also lead to amazing speaking opportunities that you would never get without the book in hand.
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When you are a micro-sized business, you can afford to try a little bit of everything. That’s perfectly okay. But once you get to a point where the business model is fleshing itself out, then you need laser focus.
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It is your responsibility to know the influencers in your industry who can help make or break your business. Once you identify those people, you need to be sharing their content on a consistent basis, whether that’s through Facebook, Twitter or building lists to post on your blog. The more unsolicited gifts of content you can give, the more others will return the favor, helping to build your business into the future.
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If you wake up in the morning and you aren’t excited about going to work, something is wrong with your business. The last eight years have been an amazing experience that can only happen to someone who has launched a business. I find myself in the unique place of not wanting for anything in life.
For more help on finding startup success, check out our step-by-step guide to starting a business.
This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.
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