Independent brands, founders, and entrepreneurs now live-in native commerce where small-to-large businesses compete against global challenges. As part of your growth success, companies need to level up their inventory management to gain smart insights, scalability, and speed of success.
In this post, you will learn about inventory management, how it functions, and its related disciplines to your business’s success.
Definition: What is Inventory Management?
Inventory management is a systematic approach to tracking and controlling your system inventory as it is stored, used, bought, and manufactured. It identifies trends in your system so you can make effective decisions and always stay ahead of your stock cycle.
It also effectively calculates how much stock you require so you don’t stay in deficit. If your stock is too high, it will cost you and too less stock reduce your cash flow – Hence, this practice better organizes your inventory so you can gain maximum revenue.
However, knowing when to order, how much to order, where to store, and how to recalculate can quickly become a complicated process. As a result, many growing companies invest in eCommerce management software with capabilities beyond manual formulas and databases.
Importance of Inventory Management
For any business, the value of inventory cannot be overstated. Both SBE and public companies must analyze inventory as a requirement to gain accurate records. The main benefit of inventory management is to fulfill incoming or open orders and raise profiles. Proper inventory management can also help:
- Improve cash flow
With proper inventory management, you only spend money on products that sell. So, there’s always a cash flow through the business.
- Saves Money
Understanding stock means that you know what to buy and when to buy. This also allows you to use proper stock at each location, so you’re able to fulfill orders at the right time. All of these practices decrease the amount of stock that gets unchecked in the warehouse.
- Better Inventory Ordering
Striking a perfect balance between supply and demand is very important for a business, thus, inventory management system provides aid in the ordering of new stock items.
On-time delivery ensures customers that they can trust your brands. This ultimately gives you the upper hand to build loyalty.
- Reduce Labor costs
Improved inventory planning allows small businesses to reduce labor costs. This includes the time spent counting products manually and transporting items.
- Business Intelligence
There are plenty of order management solutions that come with great analytics to allow you to quickly make important decisions. Like you can create an effective marketing strategy with the products that are fast-selling and upscale similar products. The possibilities are endless.
How to effectively do Inventory Management
The goal of inventory management is to understand stock level and location. For this, there are plenty of techniques, manual work, and software you can use.
Most eCommerce platforms like WooCommerce and Shopify have their own inventory tracking system. You just have to enter the data and the tool calculates everything. Additionally, you can opt for dedicated eCommerce Management solutions and gain efficient insights into your business accounting, inventory control, risk analysis, and other eCommerce automation.