Multi-channel Inventory Management: How to avoid over-stocks and out-of-stocks
Thursday, April 5, 2018Lauren Macdonald
Inventory management is key to the success of any retail business, both in-store, and online. After all, inventory is arguably the most important asset a business has.
Without proper inventory management, you’re putting your business at risk of:
- Losing money due to over-stocking
- Angering customers with out-of-stock messages
- Increasing delays and cancellations due to inefficient fulfillment processes
- Other problems resulting from human error
According to our friends at Shopify,
it’s estimated that over-stocks and out-of-stocks cost retailers $1.1 trillion globally in revenue, with up to $222.7 billion of that being caused by data disconnect and systems problems such as not sharing inventory information across multiple channels. Yet, despite the obvious importance of inventory management, it’s amazing to think that up to 43% of retailers still rely on pen, paper, and spreadsheets for tracking inventory.
Without knowing how much inventory you have, where it’s located, and how much inventory you’ll need to fulfill both current and future orders, it’s nearly impossible to run a profitable business. Here are some answers to two commonly asked questions about inventory management:
“How can I cleanup my inventory management process and get back on track?”
To avoid overselling and out-of-stock scenarios, it’s a good idea to invest in a multi-channel inventory management solution. One way of doing this is to integrate the places you sell (in-store or online) with the back-office accounting or ERP system you use to keep track of your finances. By doing so, you can sync inventory levels in near-real time, and ensure that you never sell more of a product than you actually have available.
You can also invest in a multi-channel inventory management software that will set reminders and place automatic re-orders once stock reaches a certain level. Most of these types of software also allow you to scale up during a rush or holiday season and scale down during the off-season. As a result, you’ll be able to reduce costs by not purchasing inventory until it’s needed.
“What if I can’t afford a full inventory management solution?”
Our best suggestion is to start small. Begin by automating inventory for the products you sell the most of into your accounting/ERP so at the very least, your back-office records are accurate at all times.
Once your business becomes more profitable, you can always reconsider investing in a full inventory-management software that will allow you to place automatic orders for inventory, access forecasting capabilities, and other nice-to-have features.
How to get started: