One of the biggest challenges facing online retailers is inventory management. This is especially true as your business begins to gain traction with customers and orders start coming in fast and furious. As a start-up you may have been able to get by with physical inventory counts and manually entering your data into spreadsheets. It was time consuming, and more than a little inefficient, but it worked – at least for a while.
Accurate Inventory Management is Critical to Growing Businesses
As sales pick up, and product lines expand, inventory management becomes even more critical to your business’ success. Manually counting stock items, and checking and rechecking invoices and receipts, leaves too much room for costly errors. It also takes time away from your most important job – growing your business.
Inventory management software offers an alternative to costly and time-consuming manual inventory tasks. Small retail enterprises, both online and in the real world, can benefit from adopting a more advanced approach to inventory management tasks. If you’re still manually tracking your incoming and outgoing inventories, now is the time to explore some of the advantages inventory management software has to offer small retail enterprises.
Improved Accuracy and Efficiency
Many retailers struggle to maintain accurate inventory counts on a regular basis. In fact, recent industry studies have shown that the majority of businesses in the retail sector only have a 63% accuracy rate when it comes to tracking and managing their active stock levels. That’s a shockingly low accuracy rate, and it leads inevitably to costly inefficiencies that impact a business’ bottom line.
But inventory management isn’t just about tracking on-hand stock levels. It’s also important to have an accurate accounting of incoming and outgoing product. Sales receipts and purchase orders need to be efficiently and accurately processed to ensure that optimal stock levels are being maintained. This helps retailers avoid potentially costly overages or shortages.
Leaner Inventory for Improved Cash Flow
One of the most significant benefits of using inventory management software is that it allows retailers to exploit a just-in-time inventory model. By maintaining leaner on-hand stock levels smaller business can free up valuable cash, rather than having it tied up in stagnant inventories. This is an inventory management approach that has become standard operating procedure in the the manufacturing sector to cut costs and improve productivity. With the right inventory management system in place, retailers can adapt the same lean inventory management ideas to their own needs to enjoy similar advances in efficiency.
Reduce the Risk of Overselling
Inaccurate inventory counts can often lead to overselling. This can be particularly problematical for online retailers, especially those selling over multiple platforms. Overselling results in loss of control over your inventory, costly delays in shipping, and disappointed (and non-returning) customers. It can also result in omnichannel sellers being suspended, or in some cases banned, from listing products with online marketplaces such as Amazon and EBay.
Inventory management software makes it easier for retailers to synchronize both their inventory and orders across all of their ecommerce platforms. The software adjusts your inventory count each time a sale is made, and restocking is simplified by automatically adding items to existing purchase orders to maintain a reliable inventory.
Avoid Stock-Outs and Overstocks
Balance is the watchword when it comes to inventory management. You don’t want to sit on too much stock at any one time, tying up your cash. But you also want to avoid running out of product, disappointing customers and losing sales. It’s a tightrope walk.
With inventory management software retailers can more easily track low-stock levels and automate reorder points for specific product lines, all but eliminating stock-outs. By closely monitoring low-stock levels, and only reordering as necessary, it is also easier to avoid overstocks that take up warehouse space at the expense of other, more active, product lines.
Improve Your Supply Chain
Batch tracking features are included with the majority of inventory management systems. These features make it easier for retailers to evaluate their supply chains, tracking performance and comparing and contrasting company performance data points. This is an invaluable tool for business owners who always need to keep a close watch on supply costs and delivery times.
An in depth analysis of supplier performance gives business owners the information they need to renegotiate terms with current suppliers, prioritizing those that are exceeding expectations and, if necessary, cut ties with underperforming companies.
Streamline Product Returns and Recalls
Product recalls can complicate a smooth running warehouse. Product has to be located and manually counted before being packed for return to the supplier. It’s time consuming and individual pieces can easily get missed in the process, leading to losses that can’t be recouped once the return/recall window has closed.
Inventory management software simplifies product returns by providing full product traceability, as well as the ability to track and locate specific delivery batches. This makes it easier to fully comply with product recalls and to meet timely product return schedules. It also ensures that all returning product is accounted for, and money is not left on the warehouse floor in the form of unsellable stock items.
Reduce Inventory Errors and Operating Costs
Accuracy is key to any form of inventory management, whether it’s manual or automated. Without an accurate record of on-hand stock levels, and a reliable understanding of incoming and outgoing inventory, errors will creep into the system. Errors which lead to immediate losses and higher costs down the line as retailers try to run damage control.
Inventory management software is designed to reduce errors and cut operating costs across the board by improving accuracy in all inventory tasks. The improved organization helps to reduce stock over-runs so that retailers can spend their money on new product lines rather than have it tied up in warehousing slow moving stock items.
Software Solutions Scale with Your Business
Over time, as a retail operation grows, inventory management tasks become much more critical and much more complicated. What you used to be able to accomplish with a clipboard and spreadsheet now requires multiple employees and additional time allotted to complete the tasks.
Inventory management software automates most of those tasks, reducing the added workload for you and your staff while delivering an added efficiency that translates to savings across the board. As a retailer you naturally want to grow your business, and to do that you need to manage your resources carefully. If your current system lacks the accuracy and efficiency you need, now may be the time to add inventory management software to your operations tool belt.