Best Inventory Management Practices in 2021

With the digital revolution, the popularity of online stores is on the rise. As per a recent report, more than 2 million people shop online every day. Therefore, the need for brands to go online and make their presence be felt is mandatory. 

But before you hit the online button, evaluate these essential aspects of the online selling process.

  • Have you planned your products in different categories as per customer demand?
  • Have you planned your inventory management to meet online demand?
  • Do you always have adequate stock to fulfill customer needs?

Well! If the answer to the above questions is ‘No,’ then you need to streamline your inventory management process to be successful in the online domain.

Here are the top few points that can refine your inventory planning:

Get a Good Inventory Management Software

The online space is a 24*7 open marketplace; the customer can place an order at any time of the day, thus managing inventory manually would not be a logical option, the best way to handle this is to get good inventory management software that comes with a host of benefits:

  • The software will help you reduce the overall operational costs and boost the cash flow within the business;
  • Automated software will help inventory managers to keep track of the inventory in real-time;
  • There are some software’ that read your demand and supply history and help in generating demand forecast reports. For instance, if the last two years, December showed high demand, it would reflect that and give you an indication;
  • The software will never let you go out of stock. it will send alarms and notifications for stock replenishment;
  • It helps in reducing the shipping and warehouse management costs;
  • Offers centralized tracking of materials across multiple warehouses, situated in different locations; and
  • An MRP system can help in planning, scheduling, and controlling the overall production process of a manufacturing unit. 

Refine Your Forecasting process

Base your forecasts on facts and reports. Study your previous history and watch out for customer behavior and trends. Your sales projections will decide your inventory, so make sure they are accurate and data-driven. To understand the demand pattern, study the following aspects:

  • When did your sales figure for a product rise the highest?
  • What was the duration of the rise?
  • Was it during a holiday season?
  • Were you offering any discounts or offers at that period?

The answer to these questions will help you reach an almost accurate figure, based on which you can decide your stock levels.

Use the First-In, First-Out Approach

The goods that are manufactured first should be the first ones to be sold. This chronological order is critical, especially for perishable goods that have a tiny shelf-life. However, maintain the same process for all products to avoid damage or loss of quality. The most appropriate way of doing this is by adding new items from the back in the warehouse so that the older ones are always seen at the front.  

Adopt the Drop-Shipping Method

Since you are selling online, your customers can order from anywhere. You are not restricted to a few walk-in customers; here, the entire country is your marketing periphery. Therefore, to supply outstation customers, you can use the drop-shipping method. In this process, you can sell your products without managing the inventory yourself. In this case, you could sell inventory to a third party, who will sell on your products, once they receive the customer’s order. In this way, you will save on shipping costs and will be able to satisfy customer demand without having to handle more inventory. 

The Bottom Line:

Your inventory is your biggest asset, so it is essential to manage it rightly. Adopting the right techniques will minimize the overall managing cost of a company and will improve the overall balance sheet of your company.

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