One of the toughest parts of running an ecommerce business is managing inventory – but it’s also one of the most important. When you don’t manage your inventory effectively, you can’t forecast sales accurately and you run the risk of delayed shipments which will result in dissatisfied customers.
Not only is your forecasting affected by inventory mismanagement, but your cash flow is too. If you are carrying too much stock, you are tying up capital that you could be using more effectively. If you have too little inventory, it can lead to stockouts, and there is nothing that will send a customer to your competitors faster than telling them that you don’t have the product they want. Both scenarios will affect your bottom line.
When you implement a solid and effective inventory management system you will always know exactly what your stock levels are, you will be able to optimize your ordering, forecasting future sales will be more accurate, and your customers will receive their purchases quickly – all things that will help your business thrive and grow.
Let’s take a look at exactly what inventory management is and more reasons why it’s so important.
Inventory Management Definition
Essentially, inventory management is the process that a company uses to understand and manage its stock of products. It’s a process that allows overseeing and supervising of inventory, including the monitoring of ordering, storage, and order fulfillment. Inventory management also tracks where a product came from, where it is now, and where it ended up allowing retailers to understand how, where, and why inventory is moving.
Why is Inventory Management So Important?
Effective inventory management is vital for retailers of every size. When you’re managing your stock successfully, it will provide you with useful insights across the entire business. There are numerous benefits you’ll see when you have the right inventory management system in place, here are some of the major ones.
Effective inventory management can:
Increase profitability– The inventory that you maintain is capital. That means that if your products are not moving off the shelves, then your money is tied up. An effective inventory management system can work closely with cash flow management to give you a better view of the big picture. When you have insight into when a product will sell, you’ll know how much and how often to order, as well as having a better understanding of how to market the product to generate revenue.
Assist with accurate forecasting– Along those same lines, an inventory management solution allows you to forecast significantly more accurately. Rather than basing inventory decisions on estimates, a robust inventory management system will provide you with accurate data including the quantity of a product that was sold during the last time period or campaign, who purchased it, how much revenue was earned, and other important details. Understanding these factors will help you forecast and plan more accurately.
Prevent shrinkage– Shrinkage is what it is called when inventory is inexplicably missing, and you have a smaller quantity of products than your system says you should. There are many causes of shrinkage, but the biggest is employee theft. When you have a solid inventory management system, you are able to keep a closer eye on your stock, mitigating the risk of shrinkage.
Prevent stock-outs– There is no quicker way to lose a potential customer than to run out of the product they want. When you have an inventory management system, you will always know when you are running low on particular items, so you can reorder in a timely manner, ensuring that your customers are never disappointed by the “out of stock” indication on the product page.
Handle omnichannel selling– Customers today want to be able to shop where they want, how they want, and they want it fast. Additionally, they want positive experiences with brands when they shop – personalized and consistent experiences across all your stores and sites. Streamlining that omnichannel experience for customers is difficult without the use of a strong inventory management software solution.
Inventory Management and Scalability
As you’re determining what your inventory management system is going to look like, scalability is an important consideration to think about. When you have a small business, with a few team members and a modest inventory of products, it may not seem like a good idea to invest in an expensive, high-tier inventory management system with all the bells and whistles available. However, it is definitely worth your time to seek out a system that is flexible and scalable that will grow along with your sales. It’s also important to make sure that the system you choose can handle any sales spikes or drops that you may encounter without costing significantly more in fees.
Inventory Management Software Solutions
Investing in a solid software solution that is scalable and has the other features you want is going to be worth the expense. Not only will you be able to monitor and track you inventory quantities across all sales channels, an inventory management software solution will help eliminate human error, help with auditing, and let you know when you need to reorder stock. And, many of your inventory tasks can be automated, making it even simpler and more convenient.
A robust inventory management solution should:
Lower costs, improve cash flow and increase your business’ bottom line
Provide real-time tracking of inventory
Help you forecast product demands
Prevent product stock-outs and overstocking
Allow access for inventory analysis on all your devices
Streamline warehouse organization and employee time
Offer quick and easy barcode scanning to speed up processing
Allow for multi-warehouse management, tracking inventory across all warehouse locations
Final Thoughts about Inventory Management
Inventory management is vital to the growth and success of your business. As your business grows, it’s important that you keep in mind the huge part that inventory plays and that your management system is flexible and scalable, so it continues to meet your business’ expanding needs. The right software solution can make all the difference. That solution can be found in a software called SkuNexus.
SkuNexus is so much more than an inventory management system, as it is fully customizable and has the ability to integrate with the many other systems you use within your commerce operations. With SkuNexus, everything you need to run a smooth transaction will be organized in one place. Click here to view our full inventory management features.
Contact us below to schedule a free demo and discuss how we can customize this system to fit your company’s specific needs.
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