Optimize Your Inventory Now: 5 Inventory Management Tips for Webshop Owners

The purpose of this blog post is to help make inventory management a manageable and resource-saving task, which can transform inventory management from an unmanageable resource-draining task into a competitive advantage.

Introduction: What is inventory management?

Effective management of your inventory can transform your inventory from a cost driver to a profit driver because efficient and intelligent inventory management is a crucial factor that drives the cost and efficiency of all other supply-chain activities. Mastering inventory management not only saves you from hours of manual and tedious work – it is the foundation of efficient supply chain management, which has a positive impact on your overall business efficiency.

The term “supply chain” refers to the network and nodes of companies, activities, people, and enterprises that are involved in sourcing, producing, and selling finished goods and services to the end-customer or final consumption. A widely accepted definition of supply chain management is as follows:

“The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally” (APICS Dictionary)

The supply chain can be simple or complex. For example, a local strawberry vendor (typically) has a simpler supply chain than a pharmaceutical company, as the latter has many “links” in the supply chain and, the former fewer.

Supply chain management, i.e. the management of the flow of goods (and services), has become an increasingly important yet complex task. Today, supply chains are more complex than ever before, consequently, supply chain management is increasingly complex. The complexity can be explained by a variety of factors, including new customer behavior and expectations, technological developments, new legal requirements, intensified global competition, more opportunities for cost savings through outsourcing, etc.

A Warehouse Management System (WMS) or Inventory Management System (IMS) is a software application, that can ease the pressure and the workload of working with complex supply chains, additionally it can lead to:

-Increased productivity -Decreased tied-up stock -Higher customer satisfaction -Fewer mistakes -Optimized workflows -Cost-advantages -Better supplier relationships -Optimized receiving, picking, packing, and shipping -Streamlined workflows -Ideal production management

Perfecting your inventory management is essential if you want to streamline your company’s workflows and boost your bottom line. The benefits of efficient inventory management include:

• Increased productivity
• Decreased tied-up stock
• Higher customer satisfaction
• Optimized workflows
• Eliminate data-entry mistakes
• Cost-advantages
• Improved warehouse logistics
• Optimized receiving, picking, packing and shipping
• Ideal production management
• Avoid paying for products, you never received
• Get pain free through annual stock-count

Perfecting your inventory management

Perfecting your inventory management is essential if you want to streamline your company’s workflows and boost your bottom line. The relationship between e-commerce and inventory/warehouse management is worth investigating.

It should come as no surprise that e-commerce has come to stay, in fact, the latest predictions indicate that the growth of e-commerce will only continue to increase. Consequently, it is highly relevant that companies seek the rewards of successful inventory management, if they aim at keeping up with market trends and remain competitive in a future ruled by e-commerce. Surprisingly, many web-shops manage their inventory manually!

Manual inventory management often involves sheets, typing errors, and time-wasting. It is a time and resource-draining activity. It is therefore understandable that many webshops deprioritize handling their warehouse, and instead focus on their core business – i.e. attracting more customers, increasing sales, and optimizing their webshop website. However, this can have a negative impact on the very thing they try to achieve – resulting in less rather than more sales.

Have you ever spend resources on luring customers into your webshop? E.g. through fancy social media marketing, web design, and email marketing? It is crucial to remember that all of these (valuable) efforts are 100% lost if they are not coupled with powerful inventory management: What if your customers can’t complete their orders because the stock count is incorrect? Or if they receive the wrong order at the wrong time?

Manual inventory management often involves sheets, typing errors, and time-wasting. It is a time and resource-draining activity. It is therefore understandable that many webshops deprioritize handling their warehouse, and instead focus on their core business – i.e. attracting more customers, increasing sales, and optimizing their webshop website. However, this can have a negative impact on the very thing they try to achieve – resulting in less rather than more sales.

In the following paragraphs, we will present Five tips that make inventory and warehouse management easy and resource-saving.They touch both strategic considerations and concrete actions, but As a consequence, according to your company.

1. Understand the payoffs of smart(er) warehouse/ inventory management 

We get it: running a successful web-shop is not easy. The competition is fierce, and your customers typically have a multitude of alternatives to choose from.

Most webshops overlook that one of the easiest ways to differentiate themselves from the competition is to streamline their internal processes, namely the management of the inventory and all associated workflows.

Implementing the right inventory management system, customized to the needs of your company, can upgrade your customer, employee, and supplier interactions. As a consequence, you will free up resources that can be used on your core business, and simultaneously get an overview of ALL your company processes.

The benefits of efficient inventory management include:

Again, the benefits of efficient warehouse and inventory management is worth repeating:

• Minimal stock-tie-up
• Avoid accounting errors and uncomfortable end-of the year surprises
• Get loyal customers and good reviews, by always having the right products in stock
• Future proof business processes
• Increased efficiency and productivity
• Pick, pack and ship the right products – the first time and every time
• Data-driven purchasing based on historical data
• Work smarter – across the company
• Get pain less through the annual stock-count
• Minimize manual work ressource draining work
• Improve inventory accuracy
• Optimize purchase management
• Improved vendor & supplier relationships
• Improved warehouse logistics

2. Organize your products

The next step is to organize your products and put them into a singular system. This step may appear self-evident, yet our experience tells us that many companies neglect this crucial aspect.

There is no right way to organize your goods, but whatever system you choose – make sure that you categorize your goods in a manner that makes sense for your specific business.

Getting a complete overview of your inventory and movement of goods, typically requires more than just keeping a record of Stock Keeping Units (SKU’s). Categorizing your products into product-groups, cost price, production status, location, inventory- and freight status (e.g. ordered from supplier).

If you want a comprehensive overview of everything inventory-related, we advise you to utilize a digital product ledger.

A digital product ledger gives you instant access to an overview of all product movements, location(s), customer- and supplier invoices, in addition to immediate stock regulations, real-time inventory status of every single product, and SKU tracking numbers across single product lines or all inventory items.

3. Digitize all of your company processes

Your web-shop is digital – digitizing your bookkeeping and inventory management should therefore be a no-brainer.

Digitalization of the previously mentioned workflows enable you to gain a singular overview in crucial performance indicators, such as sales, invoicing, payment, receiving, put-away, shipping, inventory value and daily operations.

Today there are many software vendors that offer all-in-one systems that can digitize and automate your company processes.

A good place to start, could be looking into accounting- and inventory software.

4. Keep track of your inventory status 

This step may also seem self-evident, yet a surprisingly large number of webshops don’t know their exact inventory levels, which means that numerous end-customers experience delays or not being able to complete their online orders.

As a webshop owner, your primary source of profit is your products/goods, keeping track of your inventory is therefore just as important as keeping track of your finances. Your products are a representation of what you have invested your financial resources in. The most important thing to remember is that your webshop always is updated with your factual inventory status. Otherwise you risk the dreaded back-orders or lost customers.

Additionally, the exact information about your inventory status in real-time (not from last year’s stock-count) enables you to complete supplier purchasing based on data, rather than your intuition: Data trumps intuition everytime.

Backorders and stockouts cause several expenses in the form of lost sales, lost productivity and lost capital.

Too much inventory carries the cost of capital tied up in inventory, the cost of storage, insurance, and obsolescence, and much more.

5. Continuous & Constant Reporting

At different times, you need insight into how your webshop is doing, e.g. where and how you can optimize.

This requires access to reports and key numbers in real time.

As a minimum, you should keep track of your inventory flow, i.e. how, when, and in what quantity your products move in and out of your warehouse.

Continuous reporting gives you a snapshot of the state of your business, thereby aiding in optimizing your daily operations.

In the absence of constant and continuous information, you can not perform corrective actions nor optimize.

Rackbeat: WMS and IMS for e-commerce

Rackbeat is a cloud based Inventory Management system, that offers real-time reporting, data-driven purchasing, invoicing, inventory- and production management, and much more. We offer a complete software solution that strengthens our e-commerce customers.

Rackbeat can effortlessly be customized to your company’s unique needs. If you have a webshop, Rackbeat offers:

•     Seamless integrations with your bookkeeping-, accounting- and webshop platforms
•     Optimized purchase management
•     Order fulfillment: Expedition, production, reporting, package slips, warehouse user(s), pick & pack, freight, delivery, invoicing and much more.

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