- by eSellerHub
Inventory management is an essential process of handling an inventory of products that are held for sale. It is a portion of the enormous supply chain management process and plays a vital role in the continual movement of goods from the manufacturer to the Magento store and finally to the customer.
Inventory management keeps an elaborate record of the entire goods that arrive and leave an eCommerce company’s warehouse or store. Depending on the volume and business model, there are possible variations in how the inventory is handled.
Inventory Management Techniques
Having an effective inventory management process helps in the timely delivery of an eCommerce store’s products and services. Inventory management is a long-standing and essential process for cutting down costs and aiding businesses to offer services at reduced costs.
We have a couple of Magento inventory management techniques used by eCommerce businesses and some of the uncompromisable features that we insist on offering our clients.
- JIT Just-In-Time Model: It is a broadly used technique where a product is stocked or delivered when the order is placed by a customer or at a reasonable time an order gets placed. Therefore, the volume of the inventory is approximately equal to the number of orders. This technique is useful in handling only the products that have more probability of being ordered or ordered by the customers.
The critical point is that we need not store products in the business warehouse, and so plenty of space is left available in the warehouse. It also helps in bringing down the overall storage cost, special storage requirements, and inventory processing. To use JIT, having complete insight into the customers’ persona and buying behavior to streamline product delivery and ensure that all the orders are fulfilled on time.
- FIFO First In, First Out Model: It is a process of inventory management where orders are fulfilled from the top of the stack first. This technique is majorly used in food industries where products are perishable and cannot be stored for a longer duration than their respective expiration date. In addition to that, it also ensures that products are not stored in the warehouse for a longer duration.
- Setting Stock Par levels: Par Levels are adopted by many businesses to keep the least possible amount of all or multiple products at all times. Businesses that use JIT also use Par Levels for a significant number of products to make sure that minimum stock is available at any time to manage the delays and problems that may occur in the product delivery pipeline. It is like a safety net for eCommerce stores that cater to a vast number of customers at the same time.
Generally, Par Levels for each product category are fixed depending on the duration taken to replenish the product stock levels. For example, the par level is set the highest for the products that require a longer time to be delivered to the business warehouse.
- Dropshipping: Dropshipping is a very familiar eCommerce model that eliminates the requirement of a warehouse or a dedicated inventory for product storage. The products are shipped from the manufacturer to the customer directly in this process. It means that no budget is to be necessarily allocated for inventory storage or similar storage options by the business.
Clarity of communication is the crucial element for a successful dropshipping model. Since a third party handles delivery, we should channel communication appropriately for on-time delivery of products.
- Demand Forecasting: Demand Forecasting is a fundamental business process that is required for precise inventory management. It is a data-intensive process that encompasses developing long-term insights or forecasts based on which we can draw the guidelines for upcoming changes in the inventory.
For this, the previous years’ inventory data is needed for creating effective forecast models. These forecasts can only be accurate to an extent and are subject to variation depending on certain factors like market fluctuation, changes in trends, buyer preferences, and new products. Although there are chances that the patterns from past years could recur, these forecasts can assist businesses to dodge inventory-related problems.
Using Inventory Management Extensions for Magento Stores
If you run an eCommerce Magento store making use of inventory management extensions is a good option. The extensions offer additional features and functions that can help you control your inventory effectively. It lets any stock information to be automatically refreshed in real-time. By enabling the extension on your store, you can quickly get Magento stock updates, and saves you more time than manual stock updations.
Coming To The End
Sometimes, installing the extensions could be difficult, and it is best to seek the guidance of the best Magento Development Company or hire a Magento developer. If not done right, your store performance could nosedive. Now, we wouldn’t want that, do we? Therefore, it is best to choose a proficient eCommerce development company to help you enhance your business.