We have spoken for many times that inventory management and control are one of the most important components on our posts. It is one of the core elements that help to get a profitable and successful e-commerce business, and it can become your main competitive advantage. Any business holder should consider the question about the ways to improve stock control.
Some entrepreneurs think that stock control is only for larger corporations. And of course, they are mistaken. Actually, inventory management should be adjusted to the business purpose and carried accordingly. And surely, those businesses who do their inventory management better, have a richer experience. Thus, for better understanding, let’s cover the topics of:
- What is inventory optimization?
- Tips to improve inventory and stock control
- Which are stock control software
What is Inventory Optimization?
Inventory optimization is the whole process that balances all the levels of inventory. In other words, it is the part that ensures the right amount of inventory that results in achieving equality in supply and demand. Business holders can do this by managing supply variables and forecasting demand. Meanwhile, you should also adjust the stock rules and inventory parameters. With the inventory optimization businesses will ensure product availability while reducing inventory costs and minimising the risk of excess stock.
Inventory Optimization VS Inventory Management
Total inventory management little bit varies from total inventory optimization. Inventory Management includes ordering, storing, managing and shipping. It is the process of keeping track of stocked goods (weights, dimensions, location, etc.). And the main aim is to low down inventory holding costs. In comparison, inventory optimization pays central attention to the products and their quantities according to the demand. But it is used interchangeably with Inventory Management.
How to Improve Stock Control?
Set minimum stock levels
Customers do not forgive those out of stock or do not have the products they need (especially for advertised ones). So minimum stock orders should always be carefully set. And remember that when you do no meet your customers’ expectations, you can lose sales and customers that are more precious.
Check out your minimum stock levels
The contrary side of being out of stock is overstocking. Here the stopped situation is a problem as well: you keep your cash flow in dead stock. And also, space can be not enough for those products that are not bought. Setting definite stock levels will solve this problem, as well. Do not over-stock your inventory – keep your ongoing balance sustainable and easily manageable. One more advice is to let space for your popular items and trendy and seasonal products. Also bear in mind: inventory can lose value over time. Constant analysis of sales and products should be carried out for moving inventory determination.
Be well-aware of your supply chain details
The second important thing is the perfect understanding of your supply chain. You should plan everything – how it works, the strengths and weaknesses because it helps to plan stock and supply updates. You should also be informed about the inventory data – unexpected raise can also occur (previously low-rated item can become very popular at one point), thus impacting your supply chain.
Be attentive to your stock control units
Another essential point to take into account is your Stock-Keeping Units (SKUs). As already mentioned, there can always be an unexpected rise in demand that will undoubtedly affect your inventory management. So you should update your SKUs and make them as flexible as possible. Some items, for example, while seasonal sales, can become from individuals into grouped items and vice-versa.
Use well-known methods to improve stock control: FIFO or LIFO
Primary Inventory management methods are First-in, first-out (FIFO) and Last-in, last-out (LIFO).
FIFO means the stock that you should sell first the inventory got first (the oldest). You can use this method. for those products that are under the threat of spoilage. When using the FIFO system, you’ll surely need an organised warehouse. Logically, it had better you put your oldest inventory in the front shelves to sell it the first.
The opposite of FIFO is LIFO, which means the stock you recently got (the latest) should be sold the first. The solution is based on the growing cost tendency (higher cost items will be less profitable). LIFO is a bit risky because there is a risk of not managing to sell items that are got early and are back on the shelf.
And the last inventory management method is to optimise your inventory. If you carefully research and select inventory management software, you’ll undoubtedly do everything successfully. The software should necessarily have a good reputation, give you a trial option, provide real-time data from multiple channels and have all the features needed. Below we’ll list some inventory control software.
Top stock control software
