How To Improve Inventory Management?
As a necessary part of fulfillment, inventory management plays an important role in the global business, especially in the global dropshipping business. How to improve inventory management effectively becomes a bane of business owners because it can directly affect the review of customers. This article will take a deeper dive into inventory management which will give you some practicable and available tips to a great degree if you want to operate a global dropshipping business but don’t want to be bothered by the same bane.
What is Inventory Management?
Before discussing how to improve inventory management, let’s talk about what is inventory management. Inventory management means the management of the number of goods in the logistics process. And it can track inventory from purchase to sale of goods. For most companies, the practicable function of inventory management is to keep the balance between stock and sale so that the orders from the customers can be delivered punctually.
1. Basic Types of Inventory
Before tracking inventory management effectively, you need to exactly know what inventory comprises so that your tracking work can be moved forward very well. The basic type of inventory contains the following information.
- Raw Materials
Raw materials mean the related materials you need to prepare when you want to produce some products.
- Finished Products
Finished products mean the qualified products you finished and prepare to sell or deliver to your customer.
- Unfinished Products
Unfinished products mean the products you need to finish and the unqualified products you need to remake or rectify after checking.
- In-transit Products
In-transit products mean the products are being shipped and you can do some preparations for the next work. Such as: providing installing service for customers, reminding customers to receive, informing customers to check, informing customers to test, informing customers to pay, etc.
- Cycle Inventory
Cycle inventory means the products are shipped to customers from suppliers or manufacturers, then immediately sold to customers.
- Anticipation Products
Anticipation products mean the products in inventory more than the products in the surge of sales, whether in product amounts or product types, and that can help companies effectively avoid the lack of inventory in selling.
- Decoupling Products
Decoupling products means the parts, supplies, or products set aside. And they can help companies effectively avoid a slowdown or halt in production.
- MRO Goods
MRO goods stand for “maintenance, repair and operating supplies”, and they can support the production process to a great degree.
- Buffer Inventory
Buffer Inventory means “safety stock”. As a cushion, buffer inventory usually can help companies effectively handle some unexpected issues or the need for more inventories.
What are the Benefits of Inventory Management?
At present, there are many benefits of inventory management, but the core benefit of inventory management can be summed up as the following aspects.
- Saving Costs
Effective inventory management not only can help you keep a balance between your inventory and your sale, but also can help you handle inventory problems to a great degree. Effectively inventory management can help you save more money, time, and energy, and you can spend more money, time, and energy on expanding your business
- Improving Cash Flow
Proper and effective inventory management can help you improve the cash flow in your company, and that will be good for your business running.
- Gaining Customers
The key point to developing loyal customers is ensuring customers can punctually receive the products they need without more waiting, and that can help you gain more repeat customers to a great degree.
How to Manage the Level of Inventories Effectively?
About how to manage the level of inventories effectively, there are many ways. But the key points can be summed up as the following aspects.
By putting your inventory into optimized groups, you can clearly know which products you need to source more in amount and frequency, and which are more important to your business but may cost more and move forward more slowly. Generally speaking, experts specialized in the field usually suggest business owners segregate their inventory into A, B, and C groups. Products in group A usually are higher-ticket products that they need. Products in group C usually are lower-cost products that turn over quickly. Products in group B usually are moderately priced, and the sales amount of the products in group B usually is lower than the products from group C and higher than the products from group A.
2. Tracking Products Information
Once an order is placed by a customer, professional and reliable 3pl services can help dropshipping business owners track product information in the inventory. About the typical example of a 3pl service supplier is Honest FulPhilment. As a professional and reliable 3pl service supplier, Honest Fulphilment receives good reviews from dozens of customers from all over the world.
It is necessary for business owners to audit their inventory because it can help business owners to effectively grasp the running state of the company. The work will be good for their business growth.
An unreliable supplier can make trouble for your inventory. To avoid the troubles from inventory, if you have a supplier who is always delayed in delivery or shorts your order frequently, you’d better discuss the issues with your supplier and analyze the reason caused the problems.
In business, 80% of profits come from 20% of inventory. So, it is necessary to optimize inventory management of this 20% of items. You should clearly know the complete sales lifecycle of these products and closely monitor them.
6. Keeping Consistency
It is necessary for business owners to ensure all staff can receive, inspect and record goods with a strict standard, and that can help you ensure consistency between inventory and sales.
7. Tracking Sales
It is necessary for business owners to track sales of each product so that the inventory and the sales in your company can keep a balance. You’d better clearly know the trend of your inventory and update your inventory totals at a regular period, and that can help you effectively grasp the running state of your company.
To provide qualified and enough goods to your customers, it is necessary for you to restock your inventory. As a professional and reliable dropshipping supplier, HonestFulphilment can help you avoid the problem of restocking to a great degree because the company can help you find professional and reliable suppliers, and you needn’t worry about restocking.
9. Investing In Inventory Management Technology
It is necessary for you to invest more in inventory management technology because it can help you save more time, energy, and capital in inventory management, and you can spend more time, energy, and money on expanding your business
10. Adopting Integrated Technology
It is sensible for you to adopt some integrated technologies in inventory management because it can help you release the burden of your work and effectively improve the efficiency of inventory management. The Honest Fulphilment app can grasp inventory information clearly.
3 Best Inventory Management Systems for 2022
Knowing about how to manage the level of management of inventories effectively, you might consider inventory management is not easy for you. If you want to spend more time expanding your business, it is sensible for you to adopt a professional and reliable inventory management system. This passage will choose some of them to talk about, such as ShipBob, ShipHero, and Katana, and hope they can give you a reference.
As a professional and reliable provider of the inventory management system, ShipBob can help users effectively improve the delivery time, reduce shipping costs, and improve the overall shopping experience of customers. At present, ShipBob adopts a powerful combination of connected technology, strategically-located warehouses, and dependable fulfillment services. With ShipBob, inventory management in your business will be easier.
As a type of cloud-based order fulfillment software, ShipHero adopts integrated modules for order management, inventory management, shipping management, and returns management. With ShipHero, you can clearly know the inventory state in your business, and your inventory management will be easier and more efficient.
As a type of manufacturing ERP software, Katana allows users to make inventory adjustments and automatically calculate operation costs. It can help users effectively handle inventory management such as raw material tracking, production planning, and stock support. With Katana, your inventory can be controlled effectively, and it is good for your business.
Inventory management is a bane of business owners, especially for global dropshipping business owners. So, the passage mainly talked about inventory management from its definition to its benefit, how to manage the level of inventories effectively, and some professional inventories management systems that can be worked with. Hope the above information can give you a reference. About inventory management, if you want to more, welcome to contact us.
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