Mastering Inventory Management: Strategies with Canary7 WMS
Mastering Inventory Management: Strategies with Canary7 WMS
Imagine you’ve finally found the product you’ve been looking for at an online store. You place the order and find out the item is out of stock. This disappointing experience will make you less likely to visit that store again.
For any e-commerce business, every sale is crucial, and you don’t want to miss out on potential customers with a disorganised inventory. Think of your inventory as the backbone of your online store; without it, you won’t be able to maintain your business.
To avoid these hiccups, you must devise a foolproof inventory management strategy. Not sure where to begin? Read along to find helpful tips and tricks for mastering inventory management.
What Is Inventory Management?
Once you’ve set up your online store, you need to tackle inventory management. Having the right stock isn’t enough; you must implement specific strategies to meet customer demand.
E-commerce inventory management is crucial because it helps you track stock levels and the movement of products. Think of it as a vital building block upon which you will build and grow your business.
A solid inventory management strategy will help you maintain stock control, improve customer relations, and boost profits. You’ll have a streamlined supply chain with all your inventory in order. Without it, you risk shortages, disorganisation, wastage, and so on.
Inventory management will also give you an edge over other ecommerce businesses. 43% of small businesses in the US don’t track their inventory, which means many stores aren’t taking advantage of inventory management resources.
Once you start with stock management software, you can build a solid foundation for your company’s growth. Modern inventory management tools offer integration with other tools such as POS (point of sale), shipping and online store management. With these functions, you can create an e-commerce store unique to your business needs.
What Are Inventory Management Techniques?- 5 Ways To Get Started:
There is no shortage of inventory management techniques, all with varying levels of success and disadvantages.
We’ve compiled a list of some of the best inventory management techniques to help you stay on track. These tips are quite easy to implement, and if you have an existing warehouse, you can get started in no time. Let’s dive in.
1. The JIT (Just in Time) Technique
In JIT or the Just In Time method, you only order the number of items you need, exactly when you need them, maintaining steady rotation in your inventory. With this method, the volume of your inventory more or less matches the number of orders fulfilled.
The key philosophy for JIT method is being able to meet customers demands but also being able to order more stock for the next set of orders quickly.
This stock control strategy was created to increase efficiency, cut inventory holding costs, and reduce waste by purchasing only products that were sure to sell. However, several factors, including a streamlined supply chain system and fast delivery, are needed to maintain this method.
The JIT method can also fail due to several outside disruptions, such as sudden demand surges, supplier unreliability and natural disasters that can halt supply chains. Such problems can create costly hiccups, compromising product quality and decreasing customer satisfaction.
Despite its potential problems, the JIT method is an excellent way of controlling your stock and making sure it stays in rotation. This method reduces storage costs, enhances operational efficiency, reduces waste, and improves your business finances.
The constant turnover of products also ensures all items are of great quality and are relevant to customer demands. Before you consider the JIT method, circle back to our first tip about looking at stock trends. The key to a successful JIT system is predicting customers’ demands.
Once you have this data, you’ll have a better idea of what products to order and how many are needed.
2. Safety Stock Approach
With supply chains, you never know when there will be a sudden surge in product demand. Similarly, you can never plan for outside disruptions such as natural disasters, labour strikes, and so on.
Facing inventory shortages during these situations can really hurt your business. That’s why many online retailers often keep safety stock in hand to stay prepared in any situation.
If you’re unsure how much safety stock to keep, consider your maximum and average daily output. This will help you understand how much stock to hold and when.
3. FIFO (First-in, First-out) Method
True to its name, FIFO, or first-in, first-out, is a warehouse management strategy in which the first products to enter your warehouse are also the first ones to leave. Think of the “first come, first served” mentality regarding your inventory.
When using FIFO for your business, you should consider the product’s lifecycle for better results.
Apart from that, the strategy itself is straightforward: the products you receive first tend to expire or become obsolete easily, so they must be sold or acquired first. You must keep this cycle going to keep stock value high and prevent it from becoming unsellable.
Canary7’s innovative warehouse management system gives you a bird’ s-eye view of your entire stock and key insights to help you master the FIFO method. With a fully responsive design and detailed information, you’ll know how to make the best decisions for managing your stock.
4. The ABC Analysis
Not all products are the same. You might know that some of your products go out of sale as soon as they hit the shelf while others take some time to go out.
Prioritising the right stock can help you keep up with this demand. The ABC method is a tried and tested way to categorise your products according to their demand. Here’s how it works:
- Class A products are essential items, often with a high value. These take up nearly 10-20% of your complete stock.
- Class B products are important but not crucial. These correspond to roughly 30% of the stock.
- Class C products are of low importance and take up nearly 50% of your inventory.
The ABC strategy will help you optimise your inventory and keep up with sales forecasts. You can ensure better inventory management once you have all your stock divided into categories.
5. The Push vs. Pull Method
The push vs. pull method is an opposing inventory management strategy that examines market demand and makes decisions accordingly. Both approaches aim to meet customer demand by carefully balancing it to avoid excess or stockouts.
Here’s a closer look at how these two work.
Push Method: As the name suggests, in push strategy, retailers try to ‘push’ out as much stock as they have available. This strategy typically occurs when consumer demand is unusually high during a specific season.
Many business owners use marketing campaigns and advertising for a greater push to get as much stock out as possible.
The push method is ideal for avoiding stockouts and meeting customer demands, but there’s a risk of being left with excess products. If you sell perishable items, this can be extremely costly. So consider whether or not this strategy works well with your product.
Pull Method: In contrast, in the pull strategy, product levels are kept at a minimum and restocked based on customer demand. Rather than forecasting demand and having safe stock, businesses only keep quantities they know will sell.
This method helps online retailers avoid overstocking and losing money over wasted items. Small businesses and companies with little inventory storage also use this strategy to make the best use of their stock.
The best way to master the pull method is by using inventory management software. This will allow you to replenish stock quickly without creating supply chain disruptions and dissatisfied customers.
5 Ways To Build Your Inventory Management Plan
Now that you’re familiar with the 5 inventory management strategies, here are some best practices for mastering them.
Creating a stock management plan will help you organise your tasks and ensure the process moves smoothly. Here are some basics to help you get started.
1. Check Stock Trends
Before you start building a strategy, you need the right information. After all, you won’t know what strategy to use if you don’t know your stock levels and how much you sell.
Take a look at your stock trends to see which items have more demand and which are slow-moving. Check historical sales data and consumer trend reports to design a stock control strategy.
When you identify these products, you will also have information on the quantity to keep on hand. While this isn’t a foolproof tip, as numbers fluctuate over the years, you can make an educated guess as to how much product to keep.
Always give yourself space for demand to go up or down, and you’ll have mastered this strategy. You can create a forecast manually, but this can be time-consuming. Investing in a high-quality warehouse management system will give you all the necessary details for efficient stock control.
2. Decide Where To Store Your Inventory
Choosing the right location for your inventory is crucial. With the perfect location, you will have enough space to stock as many or as few of your products as you like.
Larger businesses will prefer having multiple warehouses to store their product, while small companies might choose a different location. Deciding the location is crucial because it affects the inventory management strategy you use.
For businesses struggling to find the right space, consider investing in a 3PL. Third-party logistics companies not only hold your stock but also help fulfil orders. This way, you can focus on other business activities, such as sales, marketing, building customer relationships and more.
3. Invest in an Inventory Management Software
You can take your stock management strategies to the next level by investing in intelligent inventory management software. This highly innovative tool is fundamental for any e-commerce business looking to streamline its supply chain.
With inventory management software, you can access key insights that make forecasting customer demand easy. This tool can also smooth out the order processing and returns system.
For larger businesses, many sophisticated IMSs handle multi-warehouse inventory and shipping. If you’re looking to get started with one, consider Canary7.
Canary7 offers a fully responsive and robust warehouse management system that helps you take your business to the next level.
Our WMS provides accurate and comprehensive inventory data so you can make the right decisions for your stock. Despite these innovative features, we’ve designed our software to be as user-friendly and intuitive as possible, making it the ideal solution for any growing business.
4. Organise Your Inventory
This might seem like a simple tip, but if used effectively, it can help you in the long run. Unorganised products often lead to inventory management mishaps. Mislabellied products and items without proper identification can lead to expensive mishaps.
Consider using barcodes—an economical but highly effective way of organising your stock. All you need to do is scan the code and get all the necessary information for your item. Do this process anytime you move, ship, or receive products.
With barcodes, you can avoid mistyped SKU numbers, human errors and bogus inventory. Additionally, you improve packing slips to reduce shipping errors. Try colour-coding your packing slips according to the product category. This method allows you to visually distinguish between items and makes organisation easier.
5. Set Clear Reorder Points
Setting accurate reorder points is a great way to make sure you never run out of stock and risk losing a customer. If you don’t set up a reorder point, you could cause a major disruption in your workflow.
If this happens multiple times, you risk losing long-time buyers and tarnishing your brand’s reputation. The great news is that you can avoid this problem by simply setting up a reorder point.
Check your historical inventory date and forecast demand for reordering. Once you have your insights, you’ll know how much to order and when.
Then, use the inventory management system to create an automatic reorder point notification so you can stay on top of your stock levels. Additionally, consider your lead times when setting up the point, as this will reduce time constraints.
Upgrade Your Inventory Management System With Canary7
Get started with Canary7 today to simplify inventory management. Our user-friendly WMS software is designed to improve organisation and visibility.
You can automate order processing, fulfilment, shipping, and more with Canary7. Our software is designed to give you a 360-degree view of your inventory with accurate insights to make informed decisions.
With all these tools, you can improve efficiency while cultivating your brand. So don’t wait; get started with Canary7 today!
