Effective eCommerce inventory control
Optimising inventory to avoid stock-outs and overstocking, while meeting demand, requires consideration of storage capabilities, current inventory levels, supplier lead times, seasonal trends, and scheduled campaigns.
Online businesses must manage their inventory effectively to survive and thrive because, without stock to sell, they lose revenue and custom while stock shortages are an obvious issue, so too is excess inventory, as it ties up cash and as these problems multiply, the inventory imbalances increase bottom-line losses due to expired or redundant stock.
There are three primary levers in optimising inventory and reducing risk; demand forecasting; inventory management and inventory replenishment.
Using historic data to estimate future demand for your products will never be 100% accurate, but it will help you make better-informed decisions with a view of total sales and revenue for a specific period of time, lowering the risk of stock-outs.
Holding too much inventory ties up capital and too little means missed sales and upset customers, while effectively forecast inventory levels lead to efficiency and profitability, with better cash flow and brand loyalty.
Effective inventory management goes beyond loading new stock intakes and adding up items sold to update inventory totals. It should take into account when specific items sell faster, which items sell according to seasons, is there a specific day when certain items sell, and are there any items which almost always sell together.
The Pareto Effect means that roughly 80% of your profits will come from 20% of your SKUs, which is why you should prioritise managing this section of your inventory.
Make a point of totally understanding these items’ sales cycles and closely monitor them, because they make the most money, so managing their inventory correctly is crucial.
If you elect to hold safety stock in case of an emergency or supply chain failure, you should consider the average and maximum daily usage and lead time.
Replenishment is the process of moving products to picking shelves, or receiving more inventory from suppliers, to ensure there is enough of the right inventory ready to be picked as orders are received.
Track inventory and allocate stock to the locations where there is the most demand so that orders can be shipped quickly and at lower costs. Balancing inventory levels in this way improves cash flow, optimises warehousing capacity and consistently meets customer demand.
The reorder point needs to ensure that excess capital is not tied up in inventory and take any lead times into consideration. It should equal the demand during lead time plus an allowed safety stock.
All stock is received into our eCommerce fulfilment centres in precisely the same way, to ensure all items are verified, received and broken down together; counted correctly; checked for accuracy and scanned into stock.
All your SKUs are synched in our inventory management systems, so that you can easily track, update, and manage products across your distribution network and sales channels, to avoid overstocking or running out of inventory too soon.
We audit your inventory for better inventory management, with comprehensive inventory counts, to ensure your stock on-hand matches what you think you have.
Our PowerView supply chain management platform simplifies vendor management, with transparent KPI reporting that highlights issues, if you have a supplier that’s habitually late, short ships orders or is the source of supply chain delays.
Though the reorder formula is simple, keeping tabs on when to reorder each product can be time-consuming and challenging and lead times can vary widely, which is why Noatum Logistics can expedite resupply from any region, with the widest choice of budget and time-critical services.