Top inventory management techniques to implement in 2021
Inventory Management is a way of controlling and tracking the inventory orders, their storage, and usage. Inappropriate inventory management leads to the working capital crunch, increase in storage cost, more idle time. Consequently, it causes waste of labor resources, supply disruption, leading to unsatisfied customers, and sales reduction. Therefore, following inventory management techniques is unavoidable to ensure an effective stock supply. Essential inventory management techniques Just in Time (JIT) Just-in-time is an inventory management technique involving only the right quantity available at the time of production. Precisely, it means maintaining accuracy. This is a technique requiring efficient timely suppliers, proper planning, and timely inventory arrival for the orders. JIT is appealing as it slashes costs on shipping, warehousing, insurance, and others. However, it is risky to stay always perfectly predictable. Having access to timely fashion helps to stay competitive and real-time analytics help optimize operations. JIT, the inventory management cloud-based system offers clear visibility from anywhere into your inventory. Backordering Backordering is a process that customers place orders, regardless of the stock. It is a practice commonly used by retailers when there is a surge in demand. Backorders are a way of taking orders, receiving payments for the products that are out-of-stock. Enabling backorders is an indication of increased cash flow and sales. It gives flexibility for the small businesses, while the risk of overstock is less. However, it also includes the customer dissatisfaction risk to wait for a longer time. One of the relatively simple inventory management techniques is backordering. It means using this inventory technique; you should match purchase and sales orders. Further reading: Best practices for managing backordered items. Bulk shipments A bulk shipment is comparatively cheaper to ship or purchase goods. Bulk shipments are the predominant inventory management techniques. It is applicable for high customer demand goods. The bulk shipping downside is you have to invest extra money, right from the inventory to warehousing. It may offset the money saved due to stocking huge volumes. Besides, there is the worry of selling them fast. Bulk shipments lower shipping costs, and ensure profitability. Shipping evergreen or long shelf-life products is a great option as bulk shipments. Dropshipping and cross-docking Inventory management techniques, dropshipping, and cross-docking are business models allowing you to ship and sell products that you do not stock or own. It is where the manufacturers or wholesalers produce goods, warehouse them, and take care of the shipping. Dropshipping is convenient as it transfers the shipment details and the customer orders to a wholesaler or the manufacturer to ship it directly to the customers. The same is with cross-docking, where the incoming railroad cars or semi-trailer trucks directly unload materials onto outbound rail cars, trailers, or trucks. Essentially, no inventory holding cost, low startup cost, less risk, and potential profit. There is a possibility of staging the inbound items until the completion of the outbound shipment. It may require a network and extensive fleet for cross-decking. Consignment Consignment is an arrangement where a vendor agrees to give to a retailer their goods without upfront payment. They receive payment only when the retailer sells the goods. The inventory management techniques favor a win-win situation for the suppliers and retailers, provided they share rewards and risks. It calls for a high degree of confidence. It is good to test new products and to know the product performance. The retailers benefit as their capital is not held, while they can return at no cost the unsold goods. It decreases lag times even to restock the products.
Integrate Workflow Automation into eCommerce Stores
The eCommerce industry is a thriving one with a worth of over $3.4 billion. This market will continue to grow given current opportunities. A smart way to get a firm grip on such a competition is to integrate workflow automation in your web store. eCommerce websites operate all-round the clock. You can process orders every hour and day of the week without any obstruction. If you are just starting, you can’t acquire the number of staff as large companies have. In this sense, automation can keep your business running when the human resource is tight. Peradventure you don’t know how to integrate workflow automation in your eCommerce store, we will share essential steps to achieve them. What is Workflow Automation? Workflow automation refers to ways of streamlining your business processes. The primary premise is to identify any manual or repetitive task, which can be handled by a software application. You then assign these tasks to the software rather than your employees. Steps to integrate workflow automation Implementing workflow automation software could make or mar your business productivity. However, for most businesses, the issue is how to do it effectively. Well, it is pretty more straightforward than you think. Here is how to get your workflow automation done. 1. Identify repetitive tasks The first step toward workflow automation is identifying repetitive tasks. Look at your business’s current operation and find any bottlenecks in your daily activities that reduce your productivity. You need to deal with these issues by introducing the relevant automation process. 2. Set goals After identifying what reduces your productivity in your business, you can think of ways to improve them. It is important to think through the extent to which you want to improve these things and the subsequent effects they will have on your business. For instance, an employee wastes a lot of time picking stock manually; your objective can be to dispatch 30% more orders daily by automating the process. 3. Find a suitable automation tool The workflow automation tool you choose to integrate should be in line with your goal. For instance, you need an automation solution that will focus on managing stock and order fulfillment when picking a stock. Here, you can analyze and compare various automation tools by checking their features and prices. Furthermore, don’t forget to check their testimonials and customer reviews to know how the app is working for similar businesses. 4. Staff training No matter how effective automation software is, it will be underutilized if the user doesn’t understand its capability. Once you get the software that fits your need, you should invest time, finance, and effort into training workers. At times, some business owners learn how to use it without teaching their workers. You need to train everyone in the firm on how to use it to get the best out of the automation tool. 5. Evaluation There is nothing static in the business world. You need to test and assess the impact of the automation tool. Do you need to find out if the change to an automated system allowed you to achieve your goals? If it didn’t, then you have to find a way to rectify the issue. However, if it does achieve your goal, you can also improve the current system. Integrate Atom8 automation into your website Now you know the importance of workflow automation and how to integrate it. If you’re operating on BigCommere, we have Atom8 Automation as the one and only workflow automation for the platform. The app allows for: Auto-categorize orders (based on value, locations, etc) Auto-segment customer (based on demographics, spending, the total number of order, etc) Auto-tag customers on CRM, email marketing, and delivery platforms Auto-generate reports & lists on Google Sheet Auto-publish products Auto-notify of low-stock items, abandoned cart, or high-value orders Auto-detect and halt high-risk orders In this turbulent time, having the right eCommerce automation tool not only helps you save time and resources but also significantly increases your revenue. Therefore, it’s no waste investing in one.
How to reduce inventory holding cost
Any small business owner understands that an increase in demand means something good. It is a sign that you are making progress and customers are noticing you. However, it comes with higher overheads and costs, especially if you have small storage. To increase your growing inventory, you need to a significant amount of cost. Therefore, minimizing your inventory cost is a great way to free up space and reallocate your business capital. It is a daunting task for most small business owners because the cost of managing inventory is very high. You have to pay for the warehouse, account for shrinkage, breakage, and quality control can be expensive. Perhaps, you are contemplating how to cut these costs when you want to add new products; in this write-up, you will learn a simple trick on how to reduce your inventory holding cost. How to Reduce Inventory Holding Cost If your small business is experiencing extreme growth and you don’t want to be cut off guard, you can implement the following techniques to minimize your inventory holding costs. Find the right reorder point When you understand the perfect time to reorder products and the exact volume you need, it is easier for you not to over hold more inventory than expected. To get your reorder points, you can use a forecasting tool to help you look through past sales data. This data can put into consideration the seasonality geography and channels most customers prefer to buy. According to a recent study, having insight into your previous sales pattern helps reduce inventory costs. Avoid overstocking If you spend a large amount of money replenishing your stock, there is every possibility that you are missing out on opportunities for your business to grow. Suppliers often offer discounts for large volume orders, promotional items, or deals on a new item. Is it hard to turn down all of these offers? Well, you can. Initially, it might look like you are saving money when you accept any deal or discount since you will eventually reorder products in the nearest future. Nevertheless, if your product always remains on your shelves, you might subsequently experience a deadstock situation. It means you have to pay for the products in your storage. To minimize your inventory holding cost, you should only order the exact quantity you need while using any remaining capital to diversify your inventory. Reduce supplier lead-time In a situation where your store has high supplier lead-time, you would need additional storage space to accommodate all orders. It means you will have to get more space for these products. However, when your supplier offers a lower lead time, you have the flexibility to make orders. With this, you minimize stock carrying costs while reducing the risk of holding goods that can become obsolete. Use inventory management software Starting your new online business can be challenging, especially when you want to forecast customer demand. You can leverage inventory management software to enable you to analyze and understand how each product performs. Today, there are several cheap inventory management software to use that will help you reduce inventory holding costs. Use Backorder to lower Inventory Holding Cost Another method to save inventory holding cost and space is allowing backorders on your site. This method has both pros and cons. So you should calculate backorder cost carefully to make sure it is below inventory holding cost. Following backorder best practices and finding the right tool to manage backorders will assist you greatly in cost optimization.
