Manufacturing companies, retail and wholesale stores all need to manage inventories. Experts mention businesses have a significant capital locked in inventory, which can affect the company’s financial health. In this blog post, you will learn about inventory management in detail.
What Is Inventory Management?
How you manage the movement of inventory can make or break your business. Businesses know the impact of inventory management on customers. Hence, organisations need to strike a balance between demand and supply.
In addition, business owners need to track their inventory regularly to ensure the company never faces stock shortages or overstock issues.
Features of Inventory Management
Unified Visibility Across All Channels
Businesses with multiple storefronts need to maintain inventory at different sites. For example, if you are a fashion brand with ten outlets in the State, you need to maintain adequate inventory levels at all outlets and a warehouse that supplies stock to the outlet.
The inventory management system should offer unified visibility across all channels to ensure you never face stock out or overstocked issues. Today, most fashion brands allow customers to shop online, and brands must have real-time visibility of inventory levels at all sites.
The order management system should work well with inventory management for delivery optimisation and help customers get real-time visibility of products while ordering.
Automated Store Replenishment
Giving you a clear view of the inventory is not enough. The inventory management system should also have optimised store replenishment systems and supply systems to maintain a healthy inventory. For example, if any particular store is closer to stock exhaustion of a specific product, the system should guide staff to know where the product can be fulfilled from.
The system should make the proper fulfilment recommendations based on pre-set business rules. In simple words, the system should have capabilities to make recommendations that make sense to your business and customers and reduce the negative impact of inventory management.
Reverse Logistics
Retail businesses need to manage delivery and return logistics. The inventory management system should make the purchase and returns as easy as possible to the customer.
When a customer registers to return the product, the system should automatically decide where the product should be returned to. For example, if the product returned is in demand, it should be returned to the store and not the warehouse.
Prioritisation and Reservation of Stock From Different Channels
A multi-brand store must source items from different channels to maintain the inventory. The inventory management system should identify sales trends and read sales data to prioritise stock from various channels. Based on your pre-set business rule, it should reserve stock for every category as part of the replenishment strategy.
Customer Categories
Every business storing customer data segregates customers into different categories: new customers, active customers, unhappy customers, lapsed customers, and referral customers. Therefore, the inventory management system should stock items considering the customer categories.
The system should also categorise items based on their consumption. For example, the A category refers to the items with the highest annual consumption value. In contrast, B refers to the items sold regularly but not as much as item A. Item C does not sell much and has the lowest inventory value.
Experts mention the inventory management system should perform an ABC analysis to determine the unique needs of various customer categories and optimise inventory control.
Balance Customer Service With Business Requirements
Every staff member is equally accountable for fulfilling customer expectations and business needs. The system should improve core processes, lower costs(inventory management, transportation), and reduce inefficiencies in the supply chain. When you can achieve these things, you automatically increase customer satisfaction and business profits.
Thus, you can see inventory management is crucial for your business success, and you should be careful when selecting an inventory management system for your business.
