Inventory management is an important task in business operations, especially e-commerce business with a large volume of orders from many platforms at the same time. When finding an effective way to manage inventory, businesses will be able to balance the amount of goods, plan appropriately, save costs, save time and retain customers. Let's explore with Upbase.vn some effective ways to manage inventory in the article below!
What is inventory?
Inventory is a term that refers to the quantity of goods, raw materials or products that have been produced or purchased but have not been sold or used up at a specific time. This is the portion of an asset that the company is holding in inventory for future sale or use in the course of business.
Currently, inventory is often classified into four main groups:
- Raw materials: These are materials that are used for future production or have been sent for recycling. These raw materials can be purchased while in transit or held in storage for later use.
- Semi-finished products: These are products that have gone through several stages in the production process, except the final stage. They can be warehoused or transferred for further processing into final products or for sale on the market.
- Finished products: These are finished products that have gone through the final processing stage in the production process and are ready to be distributed or sold on the market.
- Raw materials: These are materials necessary to produce the product but are not directly a component of the product. Typically materials such as packaging, fuel, cartons, and other support materials.
Why do businesses need to have effective inventory management?
When operating e-commerce platforms, businesses need to pay attention to the supply chain of goods and the condition of warehouses to ensure uninterrupted business operations and reduce the risk of errors causing damage. Here are some benefits when businesses know how to manage inventory effectively:
- Meet customer needs: Accurate inventory management helps meet customer shopping needs effectively. When inventory is well managed, customers can get the products they want quickly and reliably, enhancing their shopping experience and customer satisfaction.
- Optimize storage costs: Proper inventory management helps avoid excess inventory, minimize unnecessary storage of goods, thereby reducing storage and warehouse management costs.
- Forecasting and supply chain management: Managing inventory through data can provide important information for demand forecasting and supply chain management. This helps businesses better prepare for fluctuations in customer demand and aids in optimizing supply chain processes.
- Coping with risks and losses: Careful inventory management helps minimize the risk of product loss or damage. Knowing the exact amount of inventory can help prevent goods from spoiling or exceeding their expiration dates.
- Optimize revenue and profits: By accurately managing inventory, businesses can optimize revenue through maintaining a stable supply, avoiding shortages and enhancing profits through Minimize unnecessary inventory costs.
- Compete effectively: In the competitive e-commerce market, effective inventory management can be the deciding factor between success and failure. Therefore, good inventory management will help businesses maintain and strengthen their competitive position.
Inventory management is actually not too complicated when you find the right methods and tools. But it plays an extremely important role in business activities. Understanding inventory levels will help businesses know:
- When to reorder: It's important to know when supplies will run out. No one wants to be in a situation where they cannot supply a product to a customer, and should not wait until that product is out of stock before placing a new order.
- Order quantity: Suppose you own an online fashion shop on an e-commerce platform. A clothing model is selling better than expected. Therefore, you need to order additional production or import more of that model promptly. Inventory management also helps you maintain a steady supply of goods, avoiding over-ordering and creating unnecessarily large inventories.
- Should we place orders for other products? Continuing with the fashion store example, if that clothing model sells well, will other models in the same collection also sell well? Accurate inventory tracking also supports purchasing decisions and the success of new products.
- Storage time: This is very important for perishable items. If inventory is not managed properly, it can lead to waste and unsaleable goods. Some products may become outdated or no longer suitable for market trends.
In short, inventory management in e-commerce not only helps meet customer needs effectively but also brings many benefits in terms of costs, supply chain management and revenue optimization for customers. enterprise.
How to effectively manage inventory for e-commerce business
When you feel that inventory management is taking up too much of your employees' working time during the day and there are still many errors, it is time for businesses to review their inventory management processes and methods. Here are some suggestions for effective e-commerce inventory management to help businesses save time, resources and costs to better manage goods and supply chains:
Maintain a safety stock in warehouse
No matter how carefully we analyze and calculate, we cannot accurately predict the quantity of buyers' orders, which items will be in short supply, and which items will be in excess. Therefore, maintaining a safe stockpile is extremely important.
Looking at the current era, when consumer shopping habits are changing rapidly, we can see that supply and demand will continuously change. To prepare for all possibilities that arise, maintaining an inventory will help businesses be better prepared to deal with unexpected situations.
Balance inventory
The second thing to pay attention to is to maintain a reasonable balance when managing inventory in the business. Accumulating too much inventory not only creates great liquidation pressure but can also cause unnecessary waste. On the contrary, too little inventory can lead to shortages of goods, causing businesses to lose business opportunities and market access.
No one wants to have to deal with liquidating inventory due to large quantities, but no one also wants to face out-of-stock situations that leave customers dissatisfied and businesses losing sales opportunities. Both of these situations can cause financial and reputational damage to the business.
To solve this problem, using appropriate and effective inventory management software is essential. It helps businesses track and adjust inventory accurately, thereby optimizing business operations and avoiding unwanted situations.
Use the kitting technique
The process of synthesizing inventory and creating product packages for sale is called kitting. One of the best examples of this technique is the Buy 2 Get 1 Free offer. This method not only helps eliminate excess inventory at attractive prices, but also has the potential to increase the average value of orders and gives customers the feeling of receiving special offers.
Look at past purchases to predict future stock
By doing this, we can create a feedback loop to gain a more detailed view of inventory status and evaluate whether inventory levels need to be increased or decreased. Monitoring inventory on a regular basis helps you better understand which products are in highest demand, while also assessing seasonal trends and being able to adjust restocking frequency as desired.
Smart storage
When organizing a sale, it is important to consider how the items will be physically stored.
How you store products will determine how you manage your inventory. If you store all products at your facility, your inventory controls and processes will be handled internally.
If you store goods offsite in fulfillment centers or supplier warehouses, or use intermediary shipping providers, you need to link your inventory processes and data tools. with their system.
No matter where you store your goods, it's important to ensure that you can easily find and retrieve your products.
Choose the right inventory management software
According to Wasp, 43% of small and medium-sized enterprises (SMEs) still use manual methods to manage inventory, which means 43% of SMEs are prone to making mistakes. Therefore, there is a need for a software tool that helps avoid chaos and human errors.
However, choosing warehouse management software that suits the budget and needs of the business is not easy. Businesses can refer to some of the following criteria:
- How many users will require access?
- Does the software allow for scalability as your company grows?
- Can the software integrate with other systems?
- Can they provide data migration support?
- Does the system allow for custom reporting?
- Are you allowed to check your inventory history?
- Does the software prevent inventory from being stolen, lost or misdelivered?
- Do you need to access your inventory management software on multiple devices?
- What is the quality of their technical support during troubleshooting?Quản lý hàng tồn kho hiệu quả với Upbase SMEs
UpBase SMEs is multi-platform e-commerce sales management software developed by Upbase Technology Joint Stock Company, a unit with many years of experience supporting SMEs to break through revenue and develop e-commerce business activities.
UpBase SMEs software includes many sales management features on Shopee/Lazada/TikTok Shop platforms, including WAREHOUSE MANAGEMENT AND INVENTORY MANAGEMENT FEATURES.
The inventory management information section of UpBase SMEs will include:
- General information about goods
- Type of goods
- Actual inventory/on hold/ready to sell/in transit/inventory warning
- Cost price/Selling price/Minimum selling price
- Warehouse information
Conclusion
In short, applying a smart inventory management system will make your e-commerce business much more convenient. Combining the use of appropriate software with the above methods will ensure that businesses always update inventory status, thereby optimizing profits. This also improves user experience, increasing customer satisfaction and loyalty.
The UpBase team is always ready to accompany SMEs in solving difficulties in inventory management in particular and e-commerce business in general!
