Get to Know 15 Effective ways in Tracking Inventory and Challenges, Tracking Methods Inventory Tracking
Keeping track of what you have, where it is,
and how much you have is necessary to run and grow a successful eCommerce
business.
Fortunately, there are several best practices
and tips to help make the task easier. In this post, we will discuss some of
the most important ways to keep track of your inventory.
By following these best practices, you can
ensure that inventory issues don’t stop your eCommerce business from growing.
15
Ways to keep track of your inventory:
Managing your inventory is one of the most critical
tasks for an eCommerce business. Here are 15 best practices to keep your
inventory on track.
1. Start
with your own data
While it can be challenging and
cost-prohibitive for smaller organizations to leverage and utilize large
amounts of data, your business will benefit significantly if you take special
care to collect and understand a key data set – your own.
You’ll want to collect as much information as
you can about your own customers’ preferences and behavior in order to gain
insights and fully understand what they want and how they will respond to your
business’s products, offers, and more.
Your own customers and their behaviors are the
keys to scaling your business. Learn all you can from them.
Some examples of using your own data include
the number of products sold, the time of year they are sold, regional product
trends, how long it takes to source products, and how long it takes you to ship
products. These stats can be collated in something as simple as a spreadsheet
for you to analyze.
2.Maximize
inventory turnover
eCommerce businesses live and die by their
inventory turnover rate. A high inventory turnover rate means that your
eCommerce business is selling through its inventory quickly and
efficiently.
On the other hand, a low inventory turnover rate
can tie up working capital, increase storage costs, and lead to obsolescence.
To maximize your inventory turnover:
1.
Keep a close eye on your sales data. Knowing which
products are selling quickly and which ones are languishing on the shelves will
help you make strategic decisions about inventory levels.
2.
Offer promotions and discounts. Encouraging
customers to buy more products at once with promotions and discounts can help
you clear out slow-moving items.
3.
Use just-in-time
inventory management. Just-in-time inventory
management is all about aligning your stock levels with customer demand. This
can help you avoid the costs of carrying excess inventory.
4.
Review your product mix regularly. As your eCommerce
business grows, you should review your product mix on a regular basis to make
sure that you’re offering the right combination of products to your customers.
Following these best practices can help ensure
that your eCommerce business has a healthy inventory turnover rate.
3.Learn
(and Use) Your ABCs
Not all inventory is created equal.
In order for your eCommerce business to
maximize its inventory turnover, you need to know which products to prioritize.
The ABC inventory management strategy groups
your inventory into three categories based on how valuable they are to your
company.
If this seems familiar, it’s because it is a
variation of the old 80/20 rule, which states you get 80% of your results from
20% of your efforts.
Group your inventory into the following
categories and consider which of your products bring in the most significant
revenue.
·
Category A: High-value inventory (70%) and small in number (10%)
·
Category B: Moderate value inventory (20%) and moderate in
number (20%)
·
Category C: Low-value inventory (10%) and large in number (70%)
As you categorize your inventory, make sure
that you are aligning value with your company’s overall goals, such as
profitability, increasing market share, or brand awareness.
4.Forecast
Demand
Demand volatility has been at an all-time high
over the last few years, and inventory optimization is difficult to get
right.
That said, automated demand forecasting is
available for businesses of any size thanks to intelligent inventory management
systems with the help of artificial intelligence (AI), which can provide more
accurate data than ever before.
This is especially beneficial for businesses
that are looking to manage their inventory more effectively and avoid
stock-outs or overstock situations. Implementing an AI-based demand forecasting
solution can help companies to improve their overall accuracy by up to 80%,
meaning that they can make better decisions regarding what inventory to order,
how much to order, and when to order it.
In addition to improving accuracy, AI-based demand forecasting solutions can also provide businesses with real-time insights into customer demand patterns. You can utilize this information to make more informed decisions about pricing, promotions, and product mix. By understanding what customers want and when they want it, your business can be better equipped to meet customer demand.
5.Automate
Everything You Can
Automating your inventory and supply chain as
much as possible can free up your team while increasing productivity and
accuracy.
In essence, it means utilizing technology in
order centrally manage a complex web of working parts without any need for
manual labor.
The benefits of automating your workflow are many and varied but can be boiled down to a few key points:
Increased Productivity: By automating repetitive tasks, you free up your employees to focus on more critical tasks that require human intervention.
Decreased Costs: Automating your workflow can help you to reduce operational costs by eliminating the need for manual labor.
Increased Accuracy: Automating your workflow can help to improve accuracy and consistency by ensuring that tasks are carried out correctly each and every time – including purchasing and order processes
Improved Customer Satisfaction: By automating your workflow, you can improve customer satisfaction levels by ensuring that tasks are completed in a timely and efficient manner.
Customized Experience: You can customize the storefront experience for your B2C and B2B customers.
Increased Efficiency: Automating your workflow can help to make your business more efficient by streamlining processes across multiple sales channels and warehouses.
Improved Compliance: Automating your workflow can help to ensure compliance with internal and external regulations.
Enhanced Security: Automating your workflow can help to improve security by ensuring that only authorized personnel have access to sensitive data and systems.
Automatically track your revenue goals to keep your eCommerce business growing.
Improved Scalability: Automating your workflow can help you to scale your business up or down as required. For example, you can apply bulk actions for typical, unique, and high-order volumes.
Easier System Administration: Automating your workflow can help to make your inventory and supply chain easier to manage and monitor.
6.Track by Batch and Expiry Date
eCommerce businesses need to keep track of
their inventory in order to maintain efficient operations.
One way to do this is by tracking inventory by
batch and expiry date. Your business can use this information to plan for
future needs and avoid situations where products expire before they can be
sold.
Additionally, tracking inventory by batch and
expiry date can help your eCommerce business to identify trends and reduce
waste. For example, if a particular batch of products is selling well, you can
order more of that product in the future.
Conversely, if a particular batch of products
is consistently expiring before it can be sold, your business can adjust its
ordering process to avoid waste.
Either way, the ability to track your
inventory by batch and expiry date is an essential part of running your
eCommerce business.
7.Follow
FIFO or LIFO
First in, first out (FIFO) means the first
items in your inventory are also the first ones to be sent to customers. In
other words., your oldest items go first.
Last in, first out (LIFO) is the exact
opposite. That means the newest items are shipped first.
If your inventory is perishable items, then
FIFO is your best strategy. Otherwise, you’ll end up with spoiled inventory you
can’t sell.
If your inventory is non-perishable, LIFO is
generally the default. This is because you won’t need to rearrange or rotate
your inventory in the warehouse.
Finally, you will most likely need a mixed
approach if you sell both perishable and non-perishable goods or both
non-seasonal and seasonal products.
8.Keep
Your Pipeline Flowing
To ensure you never have a product shortage,
it’s essential to keep your pipeline inventory flowing. Your pipeline refers to
physical items like raw materials or finished goods that are being moved through
your company’s supply chain.
Pipeline management involves understanding
what physical goods or services are currently in transit and where they are in
the process. This can help businesses avoid issues such as stock-outs or
production bottlenecks. It can also help with forecasting, providing visibility
into what orders are likely to be delivered and when.
9.Decouple
Inventory for Additional Safety
Decoupling inventory, also known as decoupling
stock or safety stock — refers to products, components, or inventory that are
set aside in case of a production stoppage or a supply chain issue.
Decoupled inventory provides your eCommerce
business with a safety net to continue fulfilling customer orders in case of a
production delay or stoppage.
It is crucial to keep both your pipeline
inventory and your decoupled inventory in mind to find a balance between cost
and risk which will set your business up for effective inventory management as
well as sustained growth.
10.Kit
and Bundle to Increase AOV
Inventory kitting, sometimes referred to as
product bundling, groups multiple products together for sale as a single unit,
often offering a discount.
For example, if your eCommerce business sells
cosmetics, you might create a product bundle that includes all red lipsticks
from a variety of different manufacturers. Or, you might create a “sensitive
skin” makeup bundle that consists of a grouping of hypoallergenic products.
When a customer purchases a kitted or bundled
item, your inventory system should link each individual product to that sale
automatically.
Bundling can benefit eCommerce businesses by:
1.
Increasing average order values (AOV)
2.
Keeping holding and shipping costs down
3.
Offering customers convenience and flexibility
4.
Tracking and maintaining stock levels more effectively
5.
Preventing deadstock by selling old or unwanted inventory
11.Know
What Type Of Inventory Management Fits Your Business
As an eCommerce business owner, you have to
ask: how do I know what type of inventory management fits my business,
continuous review systems or periodic review?
The primary difference between the two types
of inventory management is the frequency with which you review and restock your
inventory.
In a continuous review system, you
review your inventory levels on a regular basis and restock them as needed.
This allows you to keep a closer eye on your inventory levels, but it can also
be more expensive and time-consuming.
In a periodic review system, you
review your inventory levels less frequently, typically on a monthly or yearly
basis. This can save you time and money, but it can also lead to stock-outs if
your inventory levels drop unexpectedly.
So, which type of inventory management is
right for you? The answer may depend on the size and complexity of your
eCommerce business.
If you have a large or complex business, then
a continuous review system may be the better option. A periodic review system
may be sufficient if you have a small or simple business. Ultimately, the
decision comes down to what works best for your eCommerce business.
12.Implement
Cycle Counting & Make Your Cycles Count
In order to successfully manage your
inventory, you will need to implement cycle counting.
Before you start, you’ll want to consider the
following:
Counting frequency: How many counts can your staff manage
each year? How does cycle counting impact your manufacturing, receiving, and
delivery?
Counting strategy: Consider whether you will categorize
inventory by location, product category, SKU, or value.
Counting chief: It is crucial to have a trusted stakeholder
or employee to take point on your cycle counting system for both consistency
and accountability.
13.Implement
Quality Control
Quality control is another important aspect of
inventory management. Your eCommerce business should prioritize quality control
to ensure that your customers are satisfied with their purchases and that your
company is running efficiently so it continues to grow.
There are a few ways to prioritize your
eCommerce business inventory quality control.
1. You can create a
quality control plan that outlines the steps you will take to ensure the
quality of your products. This plan should be designed to meet the specific
needs of your business and should be reviewed on a regular basis.
2. You can create a
dedicated quality control team that is responsible for inspecting products and
identifying any defects. This team should be trained in quality control
procedures and should be empowered to do their jobs effectively.
3. You can implement
quality control measures throughout your entire operation. Make every employee
responsible for quality control.
By taking these steps, you can ensure that your
eCommerce business always puts quality first.
14.Optimize
A failure to execute inventory best practices
for your eCommerce business can result in customer loss, inventory cuts, and,
eventually, employee cutbacks.
Prioritizing inventory control will help you
to reduce inefficiencies in your business and give your business a solid
foundation for growth.
15.Use a Ware House Management System
As your business expands, it can be more and
more challenging to keep track of your inventory levels. This is where a
Warehouse Management System (WMS) such as SkuVault can be highly
beneficial.
A WMS can help you to track your inventory
levels in real time, so you can always be sure that you have enough products on
hand to meet customer demand.
In addition, a WMS can also help you to
optimize your warehouse space, which can save you money on storage costs.
Overall, using a WMS is essential to growing
and running a successful eCommerce business.
What
are the Benefits of Tracking Inventory?
eCommerce businesses have a lot to keep track
of.
In addition to product data and customer
information, you also need to keep tabs on your inventory. While this may seem
like a tedious task, tracking inventory can provide many benefits, including:
1. Optimizing your capital tied up in inventory
2. preventing Stock outs
3.
Meeting customer demand
4.
Knowing which products to retire and when to expand your range
Ultimately, tracking inventory is essential to
running a successful eCommerce business
Challenges Faced during Inventory
Tracking
Any eCommerce business owner knows that one of
the most important aspects of running a successful operation is keeping track
of inventory. After all, how can you know what to sell or reorder if you can’t
see what you have in stock? However, inventory management can be a real
challenge, especially as your business grows. Here are just a few of the
potential difficulties you may face:
By taking the time to implement a solid system
and train your team members on how to use it properly, you can overcome these
challenges and keep your eCommerce business running like a well-oiled machine.
What
are Inventory Tracking Methods?
Inventory tracking helps you know what you
have in stock, what needs to be ordered, and how much you can sell. There are a
few different methods you can use to track your inventory:
How can
we Choose the Right Inventory Tracking Method for my Business?
There are a few factors to consider when
choosing an inventory tracking method, such as the size of your business, the
frequency of orders, and the type of products you sell.
If you have a small eCommerce business
with a few orders per week, you can probably get away with using a spreadsheet
to track your inventory.
On the other hand, if you have a large
eCommerce business with multiple orders per day, you’ll need a more
sophisticated system that can handle the volume.
You should also consider the type of products
you sell. If you sell physical goods, you’ll need to track stock levels and
location. If you sell digital goods, you’ll need to track file downloads and
license keys.
By taking these factors into account, you can
choose an inventory tracking method that’s right for your eCommerce business.
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