Three inventory management best practices
Managing inventory is key to the success of many retailers. How well they buy, sell and manage their stock can have huge ramifications on the success of their eCommerce operations. For many retailers today, managing inventory is quickly becoming a top challenge. As customers are increasingly shopping in a variety of ways, from brick-and-mortar stores to product catalogs, inventory management across all these channels has become more complex. Retailers need to optimize the allocation of their inventory based on a number of factors or else they may miss critical sales.
In that regard, eCommerce software, inventory software and other technology play a critical role in overall inventory management. Deploying the right inventory software can provide merchants with more real-time insight into their stock levels. Inventory software can tell where items are selling quickly, identify potential gaps before they happen, reroute inventory to different channels depending on demand and otherwise empower retailers to make the most of their product spread. In other words, managing inventory can be made much easier with the right inventory management software.
As retail consultancy F. Curtis Barry & Company noted, there is an intense degree of complexity involved with managing inventory across multiple channels. For instance, a retailer may have an online store that is accessed directly by customers, but that same online store may also serve as catching point for print catalog recipients. Conversely, someone looking to complete an order after receiving a catalog may also call a specific call center. There are a lot of different factors that must be considered.
Fortunately, many retailers are well aware of the challenges of cross-channel inventory management and are taking action to make it less of an issue. In fact, one report from RSR Research found that many retailers had adjusted to a single source of inventory that can be accessed through multiple channels. Moving forward, the goal will be refinement – only 10 percent of respondents strongly agreed they had achieved a desired level of integration between their retail stores and fulfillment operations.
Here are a few best practices for inventory management across multiple channels:
1. Separate core and non-core products
The Illinois Institute of Technology defines core products as items that retailers don’t want to run out of, while non-core merchandise accounts for everything else. The best example would be seasonal items – toy stores might have toys they sell year round, but during back-to-school season they may sell schools supplies or around Halloween, they may stock costumes and props.
By differentiating between the two categories, retailers can better prioritize in-demand products and ensure they don’t run out on specific channels.
2. Leverage ‘just in time’ (JIT) inventory management
JIT inventory management requires retailers to be flexible and dynamic and also necessitates the use of robust inventory software that can track demand and orders in real-time. However, once implemented, JIT inventory management allows retailers to maximize the efficiency of their inventory management, ensuring stock is always available on the channels where it’s needed.
3. Improve forecasting
Forecasting can go a long way to lowering costs and ensuring the success of inventory management efforts. When retailers are able to accurately predict which items they need and the correct quantity, they will be better suited to meet the expectations of their customers without having surplus stock. Better forecasting requires deft observation of market research, market demand models, demand patterns, minimum stock levels and historical techniques and can play a huge role in successful inventory management.
With customers shopping from a broader range of retail channels, managing inventory has never been more important. Fortunately, merchants now have access to the inventory software and techniques they need to accomplish their goals.