By guest author Mikhail Ledvich, Director of Product Marketing at Monsoon Commerce.
So, you’ve been tasked with placing the reorders for inventory. You can always use the last 30 days of sales history to estimate your reorder, or you can take a different approach to inventory management to help you keep better tabs on your products.
At the end of the day, the problem you are trying to solve is inventory financing — how much inventory do I need to service my customers and minimize the quantity sitting on my shelves when it’s time to pay the supplier?
In addition to the capital, there are additional costs associated with overstock inventory, such as insurance, taxes, storage space, damage and obsolescence. By taking a smarter approach to inventory management you’ll be able to save a bundle of cash.
Here are 4 tips for optimizing your inventory management strategy:
You must have a clear picture of your “A,” “B,” and “C” items. The goal is to maximize your effort on the most profitable, fastest-moving items, while minimizing resources for the slow movers. Items in each segment should have their own strategy for stock and reorder. The “A” items are extremely important to the success of your online business. So, your reorder strategy should be based on avoiding these items from being out of stock, even if they have to be reordered on a daily or weekly basis. Your “B” and “C” items are of less importance to your online business and can be handled with less stringent control.
It’s important that you perform ongoing reviews of inventory and product segmentation. To do this, you need to get input from all the departments — including marketing, sales and operations — and synthesize their knowledge and plans as part of inventory forecasting.
Once you’ve gotten the new inventory management system in place, look to optimize the entire supply process — not just your metrics. Work with your supplier(s) to cut down their lead-time, shipping carriers to get more visibility into your shipments, or the warehouse team to receive items into inventory more quickly.
Hopefully this is enough to get you thinking about a smarter way to manage your inventory. But do not fear — you don’t have to do any of this manually. Many of the systems available today can automatically keep track of and perform the above analysis for you.
For more online business tips, check out our Ecommerce Tips and Trends page.
About the Guest Author:
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