One of the most critical components in customer experience on the internet is having a low lead time between placing an order and receiving the product.

Thus, efficient inventory management becomes one of the integral components for success in this e-commerce jigsaw puzzle. In recent years, several direct-to-consumer e-commerce brands have flourished in India by banking solely on various inventory management techniques including the use of ERP integrations.

Top 9 Inventory Management Techniques for Business Scaling

Inventory management is important for businesses because it enables effective control and optimization of their stock levels. By keeping track of items, companies can prevent stockouts, reduce excess inventory products in stock, and enhance customer satisfaction by ensuring products are available when needed. 

In current times, when every brand is vying for the narrowing attention span of the customer and where the crowded marketplace makes it difficult for brands to stand out, efficient stock management techniques can enable you to build a solid case for your brand. You can leverage various effective inventory management techniques to build a successful business in 2024 

Let us look deeply into various types of inventory management methods and understand how you can build a competitively ahead business with stock management.

Types of Inventory Management Techniques

A business can adopt several inventory management methods, but accurate inventory is crucial for success Some of the most popular ones are as follows:

1. ABC Analysis

Under this method, the stock manager is expected to identify the most popular and least popular types of stock and manage the inventory control accordingly, taking into account inventory levels. This is useful for businesses that sell a wide variety of products at different price bands. It is particularly useful for businesses in fashion and entertainment, among others. 

 2. Just-in-time (JIT) Method

As the name suggests, you are expected to maintain the lowest level of stock possible under this method and expect the goods to roll in just before they are supposed to be dispatched. Toyota perfected this method as part of its car manufacturing process. While it can result in capital savings, it is a risky proposition to follow the JIT method, as an unexpected demand surge can cause a shortfall in raw materials. To mitigate this risk, it is recommended to maintain a safety stock of inventory, also known as the reorder point.

 3. Dropshipping

Under this method, businesses are expected to outsource all aspects of managing the inventory, including warehousing. This method has some benefits but is suitable for only some businesses that do not rely on efficient stock management as the success factor. It is particularly useful for businesses that want to get into e-commerce but cannot afford or justify the cost of a warehouse of inventory management. 

 4. Bulk Shipments

Businesses following this technique assume that bulk buying is always cheaper. This is good for businesses where the products have consistent demand and will see a sudden increase in demand level. It is useful for businesses that have a majority of the production process done in-house and can handle unexpected demand surges. 

 5. Consignment

Under this method, the consignor (wholesaler) gives possession of the goods to the consignee (retailer). The consignee is expected to pay the consignor only after selling the goods in the market. This method is most popular in the informal sectors of the economy but can be made more efficient with the use of inventory management software.

 6. Cross-docking

Under this method, you are expected to hold the stock for the least amount of time. As soon as the goods are received, they are packed and shipped for real-time delivery, ensuring efficient fulfillment. This system theoretically eliminates the need for any stock. This method is useful for e-commerce businesses that are following the marketplace model. 

 7. Barcode Scanning

This method involves scanning a barcode before you handle an item in the warehouse. The fact is that barcodes are affordable, and human mistakes are costly. Therefore, it is important to have a system that lets you follow a scanning system to receive, ship, or alter an item in a business. It is particularly relevant for companies with more than a handful of items to handle,  as it ensures efficient replenishment of inventory.

8. Backordering

A backorder is when a business is open to accepting orders for the stock that it does not have in the warehouse when the order is placed. Backordering works well for pre-launch or products that have a strong hype driving their growth. It is particularly relevant for products with a history or which have a celebrity driving strong word-of-mouth marketing. This process of ordering products that are not currently in stock is known as backordering.

 9. Demand Forecasting

This method uses predictive analysis to forecast the possible changes in consumer demand in the future. In today’s business environment, it is critical to have a strong demand forecasting strategy on your side to foresee the expected changes in the marketplace. A good technology platform will let you access such data analytics, which can equip you to make such demand forecasts.

Conclusion

These are the most popular inventory management techniques that you can adopt in your business to make your processes more efficient. With the e-commerce industry expected to grow rapidly in the coming years, the inventory management system is expected to become all the more significant for the success of any business.

Schedule a FREE demo with Unicommerce Warehouse Management consultants.

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While the growth is phenomenal, it also threw online retailers in a fix. The rise in orders meant many struggled to handle their inventory efficiently. It took a toll on their order deliveries.

Weak stock-taking abilities can affect e-commerce players adversely. Therefore, organizations need to ensure that they do not jeopardize their orders due to poor directory handling. They should adopt an inventory management system throughout their value chain.

An inventory management system combines multiple processes throughout the supply chain. It requires organizations to adopt a robust inventory management software capable of handling the intricacies and setting up an environment for efficient reporting and inventory level management. This blog discusses the benefits of inventory management software for an e-commerce business.

Why do e-commerce businesses need Inventory Management Software?

Most e-commerce businesses deal in finished goods. Hence, they have to source from multiple vendors. Even before the pandemic struck, multichannel inventory management was one of the top challenges in e-commerce and cost 12% of sales per annum. They need a dedicated inventory management solution to escape the USD 2 trillion costs associated with stock mismanagement. 

In addition, if your e-commerce business revolves around perishables, it is difficult to organize it all manually. Hence, e-commerce inventory management software is a must in such cases. Here are the advantages of inventory management software:

1. Augments real-time inventory management
A robust inventory management software can be a crucial enabler for e-commerce businesses to undertake real-time inventory tracking. It is vital for brands that deal with a multitude of items online.

The software allows them to track product sales, develop patterns, and understand the target customer’s reaction.

In addition, inventory management software can also inform your audience about the availability or unavailability of items they are interested in. In the case of the latter, it can also inform them of the expected time slot at which the same will be back for ordering.

2. Builds a balance between supply and demand

Some brands practice the JIT (Just-in-Time) method, where they need to coordinate supply and production schedules closely. Hence, it is critical to developing an inventory module that is in sync with demand and allows you to manage a sustainable balance. 

For example, you can tweak the inventory management software to inform about dead stock or even reorder necessary items on its own. In addition, it also lets e-commerce brands track outdated items, enables them to remove such items, and instead increases the quantity of those in demand.

Read how Businesses are growing with Unicommerce – How India’s Leading Multi-Brand Car Service Company Attained 9X Sales Growth by optimizing Dropship and Inventory management operations

3. Brings about transparency

Another vital benefit of an inventory management system is its ability for transparency throughout the supply chain. Given that it can generate real-time data, it gives you an extra leeway to manage your inventory and make more informed decisions concerning your warehouse. 

Information is easily accessible and shareable to all the requisite people, ensuring that everyone part of the process gets more time to react. It enables the team to improve overall efficiency and customer satisfaction.

If your people know about stock levels in real-time, it would reduce the chances of human error and improve decision-making. So every time you ask someone the reason behind their decisions, you are assured of greater transparency and improved data access because of a robust inventory system.

4. Reduces the instances of stock-outs

Remember the days when you would continually juggle between running out of stock for one item and having too much of another? We all do, but things have gotten a lot better now. 

Another vital benefit of the inventory management system is identifying the correct number of SKUs. It sends alerts of a possible stock-out in advance to requisite people or places the order itself. It enables curb back-orders or excess inventory levels and contributes to faster customer complaint redressal while managing stock levels and lead time issues.

5. Improves business forecasting

Forecasting is one of the most vital e-commerce functions for a business owner. To be successful, you have to be proactive, gauge what is to come, and adjust your stock accordingly to meet customer demand with ease. 

Having solutions like inventory management software allows you to draw key analytics that employs historical data and AI to predict upcoming trends and future demand. It allows you to skip stockpiling unnecessarily and save time and cost by ordering critical items in advance.

Unicommerce’s Dashboard and Reports is an intuitive e-commerce KPI dashboard that enables you to keep track of sales, returns, fulfillment, and inventory in real-time. The integration also allows you to draw key analytics that augments decision-making. 

Wrapping up
The benefits of an inventory management system are many, making it integral for every online e-commerce business. The right software can improve stock management, reduce inventory turnover, give you granular inventory control, and its advantages seep down to other functions too. But be careful to choose one that is in sync with your e-commerce goals and contributes towards achieving them.

Schedule a FREE demo with Unicommerce Inventory Management consultants.

Related Read:

• Top E-commerce Trends to Watch Out
• Order, Inventory, And Logistics Management In The UAE
• Why Use Inventory Cycle Counting for Effective Warehouse Management?
• How can you Streamline Inventory Management using Barcode Scanning?
• Overcome Inventory Challenges With FIFO Based Picking

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