3 Ways to More Efficiently Manage Inventory
An e-commerce boom is creating new challenges for retailers, including the behind-the-scenes task of inventory management. The need to efficiently manage the fulfillment process and update inventory positions in real time is a critical component of the e-commerce process.
When done well, inventory management accurately matches inventory levels and back-end systems to actual demand, enabling retailers to rapidly expand without sacrificing the quality of the customer experience. For those focused on omnichannel, it starts with managing inventory across multiple store locations as well as a centralized distribution center.
I've seen the value of effective inventory management firsthand at some of the nation's most successful online retailers. Here are three strategies I've learned create more efficient inventory control within an organization:
1. Electronic inventory management. In omnichannel retail, it's critical for brands to leverage technology as a driver of effective inventory management. By prioritizing the implementation of electronic inventory management solutions and systems, retailers and fulfillment providers significantly improve the management of inventory levels by removing the likelihood of human error.
For example, at Dotcom Distribution we typically work with retailers that have implemented enterprise resource planning (ERP) and merchandise management system (MMS) solutions. By collaborating with systems electronically, third-party fulfillment and logistics providers are able to provide better inventory visibility to retailers, thereby helping to minimize the potential cost of carrying dead inventory in the warehouse or disappointing a customer because the item they ordered isn't available.
2. Optimized product distribution. In many ways, communication between the retailer and fulfillment provider is the key to successfully managing inventory. When purchasing, marketing and other departments fail to communicate with the brand's fulfillment provider, it's only a matter of time before the retailer experiences misalignment of inventory with demand.
Ideally, retailers should leverage advanced shipping notices (ASNs) to communicate when new merchandise is on the way. Once the inventory is received, the fulfillment provider needs to electronically communicate inventory receipts along with any future adjustments to ensure inventory is in sync.
Optimized product distribution also allows your organization to reduce the labor costs required to shift inventory to different locations while helping to minimize multiple shipments to fulfill an order. By maintaining seamless, real-time visibility into inventory, it's easier — and cheaper — to allocate the right products to the right locations.
3. Cycle count programs. Accurate inventory counts are a must for meeting customer expectations. Cycle count programs take inventory management a step further by ensuring inventory accuracy year-round. By focusing frequent inventory counts on higher-volume products, your brand benefits from fewer operational disruptions and a more efficient inventory management process.
Inventory management enables multichannel retailers to rapidly scale and better meet consumer purchasing demands. In many cases, improved real-time visibility into inventory and enhanced communication channels can be leveraged as catalysts for special offers and other activities that drive bottom-line business growth.
Maria is CEO and co-founder of Dotcom Distribution, where she has played an integral role in developing and defining all aspects of the operation, including sales and marketing, operations, finance and IT. Her strategic leadership helps the Board and senior management to establish long-range goals, strategies, plans, and policies. Maria has developed the systemic and procedural infrastructure necessary to provide timely and accurate analysis of budgets, financial reports and financial trends in order to assist the Board, senior executives and clients in performing their responsibilities. Maria holds a CPA. Prior to founding Dotcom, she began her career as an Auditor at Arthur Andersen and was the CFO of GoodTimes Home Video.