Project Details

Inventory Management System

Benefits of using an inventory management system
Using a software for a key business process like inventory management brings with it a huge host of benefits, including: 

Automated inventory management 
Potentially the biggest benefits to an inventory management system is automation. Automation avoids risk of human error, saves you endless hours, and ensures you don’t make mistakes. This is a system that is capable of executing repetitive tasks with little manual help, once a set of rules have been set up. This not only helps you have real time visibility on your inventory levels as your stock count automatically updates when a sale is made. This feature is critical not only to accurate forecasting, but also to delivering a good customer experience by avoiding overselling. Automated inventory management also gives you real time visibility on where your stock is, which is essential particularly if you store stock in multiple locations like a warehouse and a physical store, or with more than one selling channel.  

Inventory forecasting for holiday and peak season readiness 
When order volumes increase substantially because of holidays or events throughout the year like a major marketing push from an influencer, the amount of inventory you have will keep up with demand because of accurate demand forecasting. Historical and seasonal data can also be utilized to understand any sales patterns that require adjustments in stock levels at different times of the year. 

Prevent stock outs and overselling 
Overselling is a major challenge for growing ecommerce businesses. When you don’t have an accurate handle on your inventory, it’s very easy to run out of products without knowing it, leading to stock outs. Not only will your customers be unlikely to return, resulting in wasted marketing budget and customer acquisition costs, but you could also be suspended from certain marketplaces. An inventory management system manages the orders and inventory across all of your sales channels simultaneously so you’ll know when to replenish stock. 

Reduce ecommerce business costs
Advanced inventory management reports tell you what you have in stock so your warehouse staff isn’t wasting their time looking for inventory that isn’t actually at the warehouse. This makes the pick, pack and ship process run smooth, so you fulfill more orders as efficiently as possible. 

Another way you save money is by not ordering too much of a product that has low sales volumes. With accurate data and insights reporting, you’ll be able to have a clear understanding of the products that your customers are buying. 

Better inventory planning and forecasting 
Accurate reporting and information is key to any successful business. A software system that integrates with all of the marketplaces and sales channels you sell on, plus shipping and third-party logistics (3PL) providers, will ensure all information is accurate and provide realtime visibility across your business. This will allow for better business decision making, accurate inventory forecasting and planning and therefore less waste in costs for holding unsold stock, or holding stock in the wrong locations. 

Improving supply chain operations 
Unexpected challenges are normal when it comes to the supply chain. With a system in place for inventory management, retailers and ecommerce businesses can more effectively establish a supply chain diversification strategy. More suppliers means that you reduce the risk of long wait times for products if one supplier can’t deliver on time. You can prepare well ahead of a specific time period, like peak season, to order the right amount of stock from a supplier and mitigate any issues. 

Add new selling channels easily 
Want to try a new sales channel to list your products on, such as a marketplace? An inventory management system makes adding new channels more simple as it centralizes your inventory management into one central place so you can still have a real time view on your inventory, even if it’s being sold in multiple locations. Features like real time inventory sync, and forecasting are even more essential to maintaining inventory control once your stock can be sold in multiple locations at once.  


Inventory management techniques    
When it comes to inventory management, it’s not a case of one-size-fits-all. One of the truly great things about using this system is that you can pick and choose from a variety of inventory management techniques. Select the one that suits your business set up so you can focus on driving growth.

Establish par levels 
Par levels are also known as Periodic Automatic Replenishment levels. These allow you to set an amount of inventory that must be available all the time. When your stock levels reach this number, it’s time to reorder. This allows you to balance the standard demand rate for specific items with the risk of overselling. The par level for individual items will vary, but you can calculate these using a reorder point formula using your average daily sales volume and the lead time and safety stock number for each product in your inventory. 

First in First Out 
The First In First Out (FIFO) technique tracks the sequence by which inventory is booked and then dispatched. This can help decrease obsolete inventory and help you monitor the value of your inventory. Leaving products on the shelf can lead to discrepancies between market values and the value of your stock. The FIFO technique makes it easier to align your prices and reduce the impact of inflation. It’s also one way of managing products with an expiry date and minimizing the storage time of these.  

First Expired First Out 
A variation to FIFO, the First Expired First Out (FEFO) technique involves shipping products closest to their expiry date first. Favored by businesses selling perishable items like cosmetics, pharmaceuticals, food, and drink, this technique ensures that you’ll rarely be left with unsellable, expired products in your inventory. This technique needs to be paired with an inventory management system that can track expiry dates to work best. 

Just in Time
The Just in Time (JIT) technique is sometimes called lean manufacturing. The premise is to increase efficiency and decrease costs by only ordering and receiving stock when required. JIT allows for lower inventory holding costs and also reduces your reliance on warehouse storage. This technique is popular with e-Commerce businesses that create customized products. It’s not for everyone, though, as it does leave only a small margin for error which can create order fulfillment issues. 

ABC Analysis 
The demand for different products is rarely distributed evenly between all your stock. This ABC Analysis technique allows you to account for this by categorizing your products into three categories: A, B, and C. This can be based on their demand, value, or cost-significance. Splitting your stock into different classifications allows you to prioritize the ordering of specific items that you’ve identified as a priority. 

Develop a contingency plan 
If the past few years have taught ecommerce businesses anything — it’s that you need to prepare for the unexpected. An unexpected spike in online sales due to a global pandemic causing the shuttering of physical retail? Supply chain challenges due to a cargo ship blocking one of the most significant shipping routes? Would your business survive if you had a sudden sales surge you couldn’t fulfill, or customer demand for goods you can’t get hold of? Having mitigation strategies like alternative suppliers or the ability to pivot your operations to different sales channels is key to business survival.    

Manage surplus inventory and dead stock 
Dead stock refers to products that are taking up valuable warehouse space and ramping up extra associated costs, despite having been removed from selling to customers. These products are dead stock because they may be outdated or do not have the quality that customers expect. 

Surplus inventory is having too much inventory and this leads to dead stock. Surplus inventory happens when you don’t have the visibility over your sales and inventory levels to be able to accurately forecast your stock levels. An inventory management system with real time visibility allows you to foresee when and where to shift products on different marketplaces or sales channels so that surplus inventory doesn’t build up. This is particularly important for marketplace selling as slow moving stock held with the marketplace may result in increased stock holding costs or penalties. 

KPIs for inventory management 
To improve workflows and inventory planning, you should be sure to report on important business KPIs. Here are the basic and essential KPIs we recommend you track:

First Client :

Mannan Enterprise

Category :

Inventory, Software

Release Date :

2022-02-14

Client Feedback of This Project :

Brooklyn Simmons
CEO Zoomin’s

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