- by eSellerHub
Inventory management used to be a dreaded word. It’s common for businesses to bring together their entire inventory during year-end, counting up their entire present physical product and ensuring that it matches the accounting books. Performing this task in big companies requires a lot of help in terms of resources and time.
Nowadays, many have come to understand and acknowledge the role and purpose of having a reliable inventory management system. For businesses that sell online like Amazon, Etsy, Shopify, etc., inventory is like a money placeholder and holding inventory knots up a lot of cash. That’s why having good inventory management software is crucial for a developing company.
Shopify inventory management
Shopify Inventory management keeps track of a company’s stocked goods in terms of the numbers and location. Inventory management’s primary goal is to reduce the cost of holding inventory by supporting business owners to know the right time to replenish products or buy materials for manufacturing them.
Importance of inventory management
Inventory management should ensure that the business has sufficient stocks on hand to encounter customer demand. An improperly handled inventory management can result in business-killing money by stocking high volumes of inventory or losing money on potential sales that can’t be fulfilled. Shopify order fulfillment is essential, and having an inventory management system can reduce the risk of several other mistakes.
Here are seven crucial inventory management techniques that can make operations more straightforward.
Avoid spoilage and deadstock
Products having an expiry date, like makeup or food, chances of going bad are more if it is not sold in time. Having Shopify inventory management helps overcome unnecessary spoilage. Deadstock is all the more dangerous as it can no longer be sold, meaning investments have gone without any returns. It doesn’t need to be expired; it may be even because it is out of season, out of trend, or otherwise has to turn out to be irrelevant. By managing inventory better, the deadstock situation can be prevented.
Save on storage costs
Warehousing often depends on the volume of products that needs storage. Storing too many products at once or owning products that are difficult to sell will increase the storage costs. Dodging this will save on operational costs.
Set par levels
Setting “par levels” for products can alert when product levels fall below the minimum set value. Ordering the minimum quantity to get the stock levels back above par is ideal. The par levels differ from product to product and are depends on selling time and time taken to get back in stock. It will also make the Shopify order fulfillment process much more comfortable. Conditions change over time, and it is best to keep an eye on the par levels a couple of times all through the year. If anything changes, then the par levels can be adjusted up or down accordingly.
Sell the old ones first
The oldest stock needs to be sold first, and the newest stock should follow. It is crucial for products that come with a close expiry date to avoid spoilage. If the same old stock is always stored at the back, they’re more likely to get shabby. Plus, the packaging features and design are continually changing over time. To end up with something obsolete that can’t be sold becomes a waste
A lot of unexpected issues can arise when it comes to inventory management. Such problems can affect an unprepared business. For instance, sudden unexpected spike in sales that leads to overselling stock, a shortfall in cash flow and being unable to pay for the products required, not enough space to store seasonal products, inventory miscalculations, etc.
Sometimes it may be due to errors on the manufacturer’s side, like running out of the product that needs to be fulfilled or the manufacturer discontinues providing the product without forewarning. So, it is essential to analyze from where the problem may arise and prepare a contingency plan well ahead.
Reconciling regularly is vital because, in several cases, software and reports are very much relied upon for information from your warehouse to identify the number of products present in the stock. Nevertheless, it’s essential to ensure that the numbers match. It can be done by Physical inventory, which is checking all your inventory together. It is common for many businesses during their year-end accounting and filing typically done once a year. It can be a tedious and disruptive process as it is challenging to find the issue from an entire year’s data. It is best to invest in Shopify order fulfillment
Software that takes care of all the orders, checks and updates stock level, tracks orders and manages warehouse inventory in a single dashboard automatically every time. The inventory also stays up to date, and real-time data can be acquired with Shopify inventory management software.
A significant part of good inventory management boils down to precise demand prediction. It is hard to predict the ever-changing eCommerce market scenario. There are several variables that ought to be taken into consideration. Some of the points that have to be looked at while projecting your future sales are
- market trends
- previous year’s sales during the same week or month
- Current year’s growth rate
- Sure shot sales from subscriptions and contracts
- Seasonal market changes and the global economy
- Forthcoming promotions and
- Scheduled ad spends
Be sure to consider other vital parameters if there’s any that can support in creating a more accurate forecast.
Having a useful inventory management tool improves cash flow in many ways. It makes the entire operational process cost-efficient and helps in understanding how much to sell and how much to buy on time so that there is not idle stock lingering in your warehouse. Also, it helps you to plan ahead for buying more and setting aside enough cash for the purchases.
eSellerHubs’s Shopify order fulfillment software helps to reduce costs, keep businesses profitable, study sales patterns, forecast future sales, and get the business ready to meet the unexpected with Shopify inventory management software. We can help you to choose the best and reliable inventory management techniques for your business and begin implementing them straight away.