Managing a large number of goods for sale is no easy job. The most important thing, however, is that it takes place in a way that does not lead to sales interruptions. The success of inventory management is directly related to successful trading. Magento meets sales representatives and provides the appropriate inventory management tools to satisfy both the seller and their customer.
Why is supply management important?
The basis of an efficient e-commerce company is quick response time to the order. Good inventory management guarantees to avoid circumstances such as issuing a non-existent product or bad sales posting. A properly working system will also provide you with an emergency plan.
So how do you save by proper inventory management? If you store goods that you do not sell, you will not make money. On the other hand, advertising with a sold out product also threatens a longer delivery time and thus a dissatisfied customer. This contributes to the negative perception of your business and thereby lowers the value of UX activities.
Signs of a poorly led inventory
No central system. If you rely only on sales invoices and order confirmations, you may have a problem with the subsequent order in the accounts. The central system allows you to track your inventory while comparing the quantities in your orders. This can be the key to success and certainly a tool that conveys a good sense of comfort. Automating these processes also saves a significant amount of time by allowing information that is normally distributed across documents to be aggregated in one place.
Wrong bills. Have you ever received an order for products that you have not yet in stock? This can lead to a shameful cancellation of the order, but above all to the loss of the good reputation in the eyes of the customer and the competition. In addition, there may be uncertainties regarding the balance of stocks. The proper condition of the warehouse is a priority in e-commerce. If you change the stock manually, you can quickly make a mistake. That’s why you need an automatic system that does it all for you.
Techniques for a good supply management
Plan supplies for specific demand
Predicting the demand for your products may sound trivial, but it is probably the most important element for the future of your company. Even if you think you have good instincts, an automatic system can only improve it. The ability to evaluate sales, based on past data, will be a great help for you when planning the purchase of goods.
First of all, the evaluation of sales in specific periods of the past year will be an invaluable help in predicting demand for the next year. Having a list of specific numbers in one place, it will be easier for you to assess the situation and make the right decision. You can also make a prediction of the conversion rate and the usability rating of the ad.
Specify the minimum required a stock level
The minimum required quantitative state of the product, also known as MSL (Minimum Stock Level), is the condition below which your range should not go down. If the quantity of goods falls below a certain number, it means the time to place an order.
This number varies depending on sales and forecasted demand for a given product. However, if you specify your MSL, it will help you systematize orders. Just remember to update your MSL once in a while, depending on the trading conditions for your industry.
Maintain the right level of supply
As a continuation for the minimal inventory, it is important not only to specify them but also to carry out these orders. With the central system, you can automate the procurement processes according to specific guidelines. There is a possibility to set a notification about going down below a specific level of inventory, as well as setting up an automatic order placement. It is an excellent tool for the industry with a wide range that is difficult to control manually. Especially so for the industry from the B2B sector.
Set the priority products
The priority of the assortment, or grouping of goods by popularity, may be a great help for an e-commerce reseller. This is best done according to the ABC technique.
- Group A goods: bestsellers, the largest profit in your store.
- Group B goods: products that are not so popular but cost a lot, which makes them profitable when sold.
- Group C goods: other products, the largest portion of inventories, selling but not significantly relating to the main sales line.
The most attention should be paid to group A. Group B and C may stay in the background, because it does not bring large profits.
Prepare the emergency plan
Plan according to the proverbial “count on the best, plan for the worst.” Prepare for any eventuality, and you will certainly not be surprised by the unusual situation. For simplicity, you can answer the following questions:
- What if my sales suddenly go up and I run out of supplies?
- What if I run out of space in the warehouse?
- What if I miscalculate my supplies?
- What if my supplier runs out of goods?
- What if the producer stops producing the goods I order?
- What if there is an unexpected product withdrawal from the market?
- What if the cash flow deteriorates?
Planning for the above situations will depend on your business model and specific variables in your business. However, as a resourceful entrepreneur, you must be prepared for every situation.
Centralize inventory management
Relying on a pen and a piece of paper may not be enough in times of technologically advanced trade. If you want to stay a step behind the competition, you need a cloud inventory management system. This will allow you to control your inventory on a regular basis. You will be able to check, predict, control and recalculate your inventory in real time from anywhere in the world. The amount of time saved in view of other duties related to running a business should however be the biggest argument.
Maintain communication with the customer and supplier
Running a warehouse is not just about numbers. It is also about maintaining good relations with both customers and suppliers. If you run out of goods, you need to be sure that the information will immediately appear on the store’s website. Be honest about withdrawn products, inform the customer about everything on time, ensure a good return policy. All this builds a reputation in the eyes of the customer.
If, in turn, you maintain good contact with the supplier, you can be sure that in the event of an unexpected or crisis situation, you will be quickly informed. Then you can react quickly, look for another supplier and inform the client about the situation.
Constantly monitor the system
Even if all the above-mentioned tips are mastered and you think your system works like a Swiss watch, you still need to carry out audits. The demand for products changes along with the changing trends and seasons. Prices change and customers migrate between brands. You must keep up to date with all changes and update the range accordingly. There is never rest in commerce.
In recent years, drop-shipping has gained a reputation for a good B plan for an online store. It means that instead of self-storage and shipping, the producer does it for you. You only deal with collecting orders and transferring their suppliers. You can use your customer base, saving money on warehousing and forwarding. This is certainly an option to consider, even as part of an alternative to the system you are using.
Use the FIFO method
The FIFO method, from First In First Out in English, means that you should sell the product you bought first. It is doubly important in the trade of goods that are easily perishable. For the sake of business, you should not hesitate to sell slowly aging goods. This exposes you to losses associated with storage, while in their place could be a newer product. In the course of storage, products can also be damaged, and goods that are broken from old age or out of date can turn out to be impossible to sell.
You need a system that will display the oldest goods first. Make sure that you are up to date with consumption dates or news and trends that determine customer interest. If you maintain a high FIFO, you will not be exposed to losses due to the storage of goods that will not be immediately sold.
Running an eCommerce business can be more difficult than it seems. So you should reach for every available tool to facilitate this task. If there is a system that will do some work for you, and even improve your sales results, it’s a good idea to use it quickly and in one place. Automation in every area of business definitely facilitates the proper functioning of the organization.