Inventory management system is the process which ensures that products and materials required for the business to run smoothly are always available in optimal quantities. This means the system will monitor that neither too much is purchased resulting in over-stocking, nor too little causing a shortage, but just the right amount required with adequate backup. In other words, inventory management is the process of ordering, storing and consuming of the raw materials needed during production. It also includes the process of monitoring and controlling the final product that is ready for shipment and sale.
Inventory is one of the company’s most important assets and is an investment that will not produce any returns till the time the goods are sold finally. For this reason, inventory management is a serious concern for businesses, whether it is an online store or a brick and-mortar setup.
Managing inventory successfully is like hitting a moving target. Supply and demand in any business are not constant, they keep changing. Businesses feel the need to build in flexibility so that no critical sales are missed because of non-availability of demanded products.
Here are a few tips on how to ensure your inventory management system runs smoothly:Handle the Core and Non-core items separately:
Core items are those fast moving and season specific items that a business cannot afford to have a shortage of. For instance, gift items popular during Diwali or other festivals, holiday items just before summer holidays and back to school items at the end of summer holidays. By separating them from regular items, a business can prioritise items better according to expected demand and make sure that they don’t run out of stock during peak demand.Use sales forecasts to use ‘Just in Time’ inventory management:
Just-In-Time (JIT) is an inventory management strategy used to unblock money tied up in stocks and increase efficiency. JIT is achieved by getting products and materials only when they are required, just in time for use. This helps reduce costs of storing inventory. This type of technique can be used only when the company is able to accurately forecast demand and predict fluctuations in sales. What is required to make accurate forecasts is a good inventory management application or software so that information on demand and supply is available in real-time. With a good system, you can ensure that stocks are available across channels whenever they are required.Make sales forecasting more accurate:
As we discussed earlier, accurate forecasting is essential for successful inventory management. If you know what the customer needs, you will be in a much better position to meet customer demands, without stocking large quantities all the time. To achieve better forecasting, your business needs to conduct market research, observe demand models, analyse demand patterns and understand required stock quantities.
If you are in the e-commerce business and are looking for a robust inventory management system, Amazon would be happy to help you with a wide choice of software and tools. To use Amazon software and tools, please register as ‘Seller on Amazon’