Whether you’re into manufacturing or a wholesale business, managing your ecommerce inventory is a big deal.
Considering that keeping tabs on hundreds or even thousands of your stock items is a huge need, it is without a doubt that your inventory records must be built around an excellent inventory management function.
By having an inventory management system in place, you get to successfully track, order, maintain and even utilize your business’ stocks ensuring that it operates 100% smoothly.
There are countless existing techniques that you can rely on to give you the control and visibility that you need to support your business’ efficient operations.
At Clearinity, we always want to make sure that we give you the knowledge that you need to keep your business profitable, productive, and successful.
Overview On Inventory Management Techniques
Inventory Management Techniques help you track your stock from its manufacturing process, all the way through its fulfillment.
These methods can help your business operate efficiently, providing you with higher levels of control and visibility over your inventory.
Take into consideration that your business lives and dies by your inventory, thus requiring your inventory control to be completely robust.
The main goals of applying inventory management techniques in your business are to:
- Minimize the cost of holding your inventory
- Keep your stock levels consistent
- Get your products into the hands of your customers faster
As the heart of your ecommerce business, using leading inventory management techniques prevents your business from losing track of your inventory and where it is located. Thus, making your business processes more efficient which results in keeping your customers happier.
Although these inventory management methods may take time to master, these approaches are crucial to ensure you maintain an efficient, effective and innovative business.
Selecting the best inventory management techniques for your business is not an easy task. But by setting up the right foundation, you can help your business grow faster.
10 Inventory Management Techniques
The ecommerce landscape is completely a highly competitive space. You’re always expected to sell across multiple channels, and even constantly innovate to manage your business better.
Here at Clearinity, we want to help you overcome your inventory challenges so you can finally quit worrying about whether if:
- Your warehouse has stacked up according to the expected demand
- You have been experiencing losses due to overstock
- You have lost profit due to items going out of stock.
With that being said, our team has come up with a few inventory management techniques to help assist your business’ accuracy and efficiency.
- Cycle Counting To Help Improve Accuracy
This is a very important technique you can use to effectively plan and control your inventory.
By using cycle counting, you get to replace the error-prone periodic physical inventory count. Aside from that, it also provides a robust structure to help you identify and eliminate errors when counting your inventory. Thus, sustainably improving the accuracy of inventory levels in your inventory management software.
As a common method used by a lot of businesses in their inventory management practices, this technique ensures that customers get what they want while still keeping inventory holding at its lowest cost as possible.
- ABC Analysis
The ABC Analysis technique aims to help your business identify which among your inventory earns you the most profit through classifying your products and goods in different tiers.
When using this method, you classify your inventory in three different categories which are based on their value.
- Category A: Products with higher cost and smaller in number
- Category B: Products with moderate cost and moderate in number
- Category C: Products of small cost and larger in number
Using this method helps you manage each of your categories separately, and ensures you focus on the products that give you the most return for your investment.
- Push And Pull Strategy
The push strategy refers to the method of inventory control where you push down your items from the manufacturer to the store, warehouse, or your business.
To practice this method successfully, your business must forecast demand for a product accurately.
The pull strategy, on the other hand, is an inventory management technique where a store, warehouse, or business pulls a product only when a certain employee or customer orders it.
Most of the time, this method is used for specialty items that either have a low or unpredictable demand.
- Just-In-Time Strategy
Quite similar to a pull strategy, the just-in-time inventory strategy orders inventory at the exact time when a customer or business wants their orders to be fulfilled. This strategy involves only holding as little stock as possible, to prevent both the costs and risks of keeping a massive amount of stock on hand.
Although this technique can be risky since it is mostly based on customer behavior, taking the time to research your customer’s buying habits and seasonal demand can help you successfully implement this management strategy.
Bear in mind that when using this technique, it is critical to have reliable suppliers, vendors, and third-party logistics to ensure your ecommerce business meets your customer’s needs.
- Dropshipping And Cross-Docking
Dropshipping is an inventory management technique where your business essentially outsources all aspects to manage your stocks. With this method, your business does not keep the product that you sell. If you’ve successfully made a sale, you will have to buy the product your customer purchased from a third-party store.
Quite similar to dropshipping, cross-docking on the other hand is a technique where your products are transported from one vehicle directly to another with no warehousing. This method requires a robust fleet and a network of transport vehicles.
Using either of these techniques eliminates the need for your business to hold your inventory directly.
Using this technique on your business requires you to purchase wholesale, entrusting your stocks to your retailer while still retaining ownership until your products are sold to a customer where your retailer buys the stocks that have been consumed.
Suppose you consider using this technique whether as a retailer or a wholesaler, it’s best to set terms and conditions on:
- Freight return
- Insurance policies
- Customer data
- Percentage of retailer’s sales commission
- Stock Auditing
Stock auditing helps your ecommerce business maintain accurate stock levels. Regularly auditing your stock is crucial for your business’ success as it gives you an actual date on your stock count.
Aside from automating your inventory management, stock auditing can be done in different forms:
- Physical inventory
- Cycle counting:
- Spot checking
Doing this technique is also key to ensure you secure an accurate level of data, make your KPI, and reach your sales targets by the end of every year.
- First-In-First-Out (FIFO)
This technique plays a crucial role in inventory management, as it ensures your oldest stock is sold first.
This important principle guarantees protection from your products getting damaged or expired, thus giving your customers the best experience when they purchase from your business.
To apply this method in your ecommerce business, organize your inventory in a manner where you can manage your oldest stock by putting it in front, and your latest inventory at the back.
Bundling is an excellent inventory management technique to move your aging inventory. A simple way of doing this is by adding a surprise gift to your customer’s inventory. Without a doubt, this technique can even give your customers a sense of exclusivity.
You can also try to bundle an item to your customer’s order at a reduced cost, making them feel they earned a deal with their purchase.
By applying this method to your business, you not only move aging inventory but also get to upsell to your customers.
10. Inventory Reporting
Using inventory management tools and techniques can help your business generate reports based on the data it collects. Thus, providing you with accurate insights on your inventory, warehouse, purchasing, and even the behavior of your customers.
By using these insights, you can understand which products are moving, which geographical locations do they sell best, and even help you make more informed purchasing decisions moving forward.
Aside from that, proper reporting also guarantees that you can calculate reorder points and set low-stock thresholds to prevent overselling and aging inventory.
Whichever inventory management technique you choose to apply in your ecommerce business, having such a method in place is highly beneficial for your inventory solutions.
By pairing it with your existing tools and software, you will have a more integrated and robust back-end. Thus, giving your business deeper insights to easily identify any discrepancies, securing more accurate results to your business inventory.
With these techniques, you also get the opportunity to reassess your business and see if you should migrate into a stronger method.
As your business continues to scale, it is the objective of inventory management techniques to make it easier for you to lean into more actionable insights, and find efficient ways to control your inventory.
At Clearinity, we want to help you centralize your inventory to help you sell flexibly while avoiding backorders or even unfulfilled order issues. By using the right inventory management techniques, we aim to help your ecommerce business improve your customer experience and bottom line.