Whether you are a wholesaler, retailer, manufacturer, or distributor, inventory is a valuable asset in the success of your ecommerce business. Due to the importance of inventory, many business owners feel obligated to stock up their shelves despite lacking a clear-cut strategy for maintaining it appropriately. This move can, and without a doubt will spell trouble for them in the future. Stocking up your inventory to address a possible demand makes sense, but when products begin to collect dust or turn rotten, they unavoidably become wasted money. Here are ways to manage your inventory efficiently and foster business growth.
Know the Different Types of Inventory in Your Business
The three common types of inventory include:
Raw materials: These are materials required for the production of your final product. Based on your line of business, they can occupy a considerably large space.
Work in progress (WIP): This category features goods that are undergoing the manufacturing process. Examples of WIP goods are toys pending painting and ceramic awaiting firing.
Finished goods: These are items ready for sale. You can sell them directly to your customers or send them to distributors.
While all the categories are interdependent, each category has unique storage needs. If you lack sufficient raw materials, the number of your finished goods will go down. If there is a sharp decline in the demand of your finished items, you may find yourself with lots of raw materials.
Make Smart Forecasts
Understanding the demand for your goods is a fundamental prerequisite for coming up with efficient inventory management. How does your demand change over time? You can leverage seasonal variations or other trends to predict how demand will adjust. Quality inventory software like https://www.stitchlabs.com/integrations/quickbooks-online-inventory-management/ will produce reports about past sales. Such reports will help you determine which items are highly demanded at which periods of the year. You can use that insight to come up with an appropriate stock collection.
Track Your Inventory
At this step, you need to know every inventory in your business and its exact location. Tracking your inventory might be stress-free if you are running a small ecommerce business, but it can hastily become intricate as your business grows. You can easily track raw materials but tracking WIPs is hard since they tend to move from place to place a lot. You need to track finished goods right from your store to the client. An ideal inventory system tracks goods each step of the way. You track stock leveraging traditional methods like Barcode scanning or modern ones like the fast and affordable radio-frequency identification (RFID) devices. Ensure the tracking technology you choose suits your inventory management system.
Use the Right Tools
Whatever tracking method you choose, ensure you have the right software to reinforce it. Don’t manage your inventory using Excel spreadsheets. Instead, rely on inventory management software, which was created for the job.
An excellent inventory management system can make your business more efficient and reliable. It will minimize waste, reduce the time each product stays in the warehouse, and assist you in forecasting future demand.