Strategies To Reduce Inventory Issues 

Strategies to reduce inventory issues

Inventory management is a key yet challenging part of every eCommerce business. Companies rely on inventory management to know when to order stock, how much to order, and so on. However, problems with inventory management are threatening their business’s activities and results. Look at which inventory issues you need to monitor and get ways to build a strategy for reduction.


Common inventory issues facing online businesses

Complex supply chain

The supply chain of eCommerce businesses is getting more complicated due to the tough competition in the marketplace. Businesses must do everything they can to ensure their order fulfillment. They have to expand their range of products and work with more suppliers.

The complexity and daily fluctuation are placing a burden on eCommerce inventory management. Dealing with complexity makes online businesses distracted from focusing on serving customers and creating business value.


Sometimes, e-tailers try to reduce their inventory to decrease costs. This leads to a high risk of stockouts. In addition, failure to track inventory is also a reason for stockout events.

When this happens, e-tailers face declining revenue and customer satisfaction, and more back-end costs. 


As opposed to stockouts, when businesses reserve too many items or can’t sell goods, they may face the problem of deadstock. 

Deadstock deprives businesses of the sales which could be generated by selling those stocks while resulting in higher operational and warehouse costs.

Bad operational performance

Many operating procedures are carried out as a reaction to a situation rather than a part of the plan. As a result, bad performances negatively affect efficiency and thus increase operational costs.

Spreadsheets and manual records

Many businesses usually use spreadsheets to manage inventory and manually track the inventory. This is not a matter for small-to-medium-sized businesses. But when it comes to large-scale companies, it is not practical. Big companies will struggle to manage a variety of products in addition to facing the risk of human error.  


Top 6 strategies for inventory issues reduction 

1. Create good relationships with customers and suppliers

Developing strong relationships with suppliers and customers is an effective strategy for inventory issues. Open communication with your suppliers. As good business relationships rely on strong communication. 

Furthermore, always make sure every problem or concern is immediately reached by two sides. To build a good relationship with customers, always be transparent about what you have and avoid over-promising or under quality orders.

2. Forecast

Forecasting helps determine how much inventory should have in the warehouse for a specific period. Hence, you will stock the right quantity rather than leaving it falling below a safety threshold or taking up your stock space. Then, lower your risks of stockouts or deadstock. 

Inventory demand forecast should involve past sales trends and the correlation with future needs. You can use an inventory management system to make your forecast more accurate. 

3. First in, first out

First in, first out, or FIFO is an inventory management method focusing on selling older stock before anything else. It helps keep the natural flow of goods and makes it easier for record-keeping. Essentially, using FIFO means there is a high rotation of stock. Therefore, you may avoid potential deadstock.

Whether you are a fashion, tech, or food company, you should not miss out on this effective method.

4. Allow backorder

A demand forecasting is hardly as exact as it is in reality. It may be higher or lower. Thus, allow backorder to make sure you still get revenue and do not disappoint your customers. Backorder enables you to sell an out-of-stock product and deliver it to the customer later when you get the goods. 

BackOrder is a powerful platform on BigCommerce that helps online merchants manage and fulfill backorders effectively. So, if you are holding a BigCommerce store, give it a try.

BackOrder CTA

5. Automate inventory management

Automation helps you decrease manual tasks and result in better performance. Deploy a software or platform that replaces manual inventory documentation, paperless transactions for invoices and purchase orders. An automation application like Atom8 will help you execute repetitive activities and avoid human error.

6. Have a contingency plan

One of the essential strategies for successful inventory management is preparing for bad situations. Ask yourself what threats your inventory will face, how your inventory will be affected, and what you will do in that circumstance. Have an action plan to deal with these. The more detailed your plan is, the better it is. Ensure that you specify a person to be responsible for execution.


Final thought

Inventory issues are unavoidable for every business. But you can take some actions to reduce them and get your business to grow. Keep in mind that no matter which strategy you are following, it is always necessary to combine humans and technology. Humans come up with ideas, and technology makes the best of performance.


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