Inventory that isn't carefully tracked and managed can create big problems down the road. Excess inventory occupies warehouse space and can tie up your working capital, while stockouts can contribute to a decrease in sales and an increase in dissatisfied customers. To keep the state of your inventory healthy and profitable, you should incorporate the following best practices into your day-to-day inventory management.
A.B.C. - Always Be Checking
In order to get the most robust picture of your inventory and how it moves, you should keep your data up to date with daily stock checks. Ideally, this should be an automated process executed through your inventory management software. By keeping close tabs on the changes in your inventory levels, you'll be able identify supply issues and solve them before they cause real damage to your bottom line.
Address the root causes of excess stock, ASAP
Overstock is an easy problem to fix via liquidation or donation. However, falling back on those strategies regularly without addressing the root cause of the excess inventory could cause you to lose out on profits in the long run. Take a serious approach to identifying what's causing excess inventory and develop a plan to 1) reduce the creation of new excess and 2) find ways to sell off the overstock more effectively.
Identify & prioritize your inventory's winners
Keeping a level inventory of all your products is a common inventory management strategy. However, it’s important to determine which products are your "winners" and focus on keeping those items in-stock, rather than just trying to maintain the same amount of product across the board. Running out of stock on a product that sells quickly is lost potential revenue.
Collaborate with your sales & operations teams
Inventory data is an important consideration when making logistical, purchasing, and fulfillment decisions. Of course, more data is better. Aligning your inventory management with your sales and operations teams can lead to more effective inventory forecasting – which involves estimating the quantity of a product or service that consumers will purchase based on data. Accurate tracking, measuring, and forecasting of inventory is crucial for seamless order fulfillment, financial decision-making, customer satisfaction, brand perception, and other aspects that drive the success of an ecommerce company.