Key Inventory Management Strategies To Boost Your Business In 2023
Inventory management involves ordering, stocking, and keeping a close eye on the products and managing them effectively. Mastering the technique of inventory management is very crucial for e-commerce retailers.
In today’s times, Customers will not wait for your stock to arrive, instead, they will go to other platforms to look for items they didn’t find in your store.
We know, getting out-of-stock of products is massively harmful to your overall sales. Likewise, having overstock is also a waste of resources and a blow to your cash flow.
Hence, it is essential to have an effective inventory management strategy in place to ensure that you have enough inventory to meet your customer’s needs.
We have previously shared tips to manage your inventory in one of our blogs. We will now move a notch higher in this blog to discuss the inventory management strategies for your store.
So, let us roll in!
Inventory management strategies
The Push strategy
To begin with, The push strategy is the kind of strategy that focuses on pushing products directly from manufacturer to warehouse or store without engaging any distributing channel.
From there, customers can buy them from the inventory on hand. For the successful implementation of this strategy, you should accurately forecast the demand. Accurate forecasting can be obtained from CRM like Salesforce which can give insight into customer behavior and inventory records.
The pull strategy
The pull strategy is the reverse of the push strategy. Unlike the push strategy, products from manufacturers are pulled down to stores only when there is a demand for the said product.
However, This strategy works out well when you are dealing with very expensive or specialty items.
The Just in Time strategy is a lot like the pull strategy where businesses procure products from manufacturers just in time, as per demand.
This strategy helps to reduce inventory costs as businesses order less inventory to avoid dead stock and improve cash flow. Again for the strategy to work, you need to have accurate planning and forecasting.
FIFO and LIFO
FIFO means First In, First Out. An important principle of inventory management, this strategy says the oldest product should be sold first. It is a great way of keeping your inventory fresh especially, for perishable items.
LIFO, on the other hand, means that Last in, First out that believes newer goods are sold fast. Assuming that prices are constantly rising, LIFO refers to the last purchased goods as high-priced.
A high purchase rate means less profit and hence, low-taxable income. That is why Businesses mostly prefer LIFO over FIFO.
CRM software for inventory management
A CRM system can help you understand your customers better, manage sales, track sales pipelines, and provide accurate forecasting. Therefore, Managing inventory with a CRM like Salesforce will help you to organize your inventory and boost productivity.
With Salesforce Einstein Analytics with Real-time Data analysis, you will get accurate forecasting of your inventory, which is the basis of management strategies.
Inventory forecasting is an inventory management service that forecasts the demand based on the past performance of the product. It consists of two models: quantitative and qualitative forecasting.
Quantitative forecasting is based on past sales, and it is more accurate if you have a large database and a steady customer base. On the other hand, we have qualitative forecasting where you should have a strong understanding of market research, customer feedback, and much more.
Multi-channel Inventory Sync
Syncing inventory automatically saves lots of your time and reduces human intervention and hence reduces errors. Multi-channel syncing helps your inventory to be updated, it automatically updates the inventory in case of return or refund. Also, in case of the addition of products and sold-out products, all inventory will be updated. Your updated inventory helps you forecast the requirements of your business and helps to manage your inventory.
ABC strategy is a way to categorize your inventory based on priority. This categorization helps you to meet the demand and supply chain in addition to benefits your business. It determines the ordering quantity and the frequency of the product and is beneficial in your inventory management strategy.
The products are categorized into A, B, and C categories. Category A are expensive products that are needed in fewer quantities, whereas Category C are low-priced items that are needed in large quantities. Category B products are in between A and C and are moderately priced.
80/20 Inventory Rule To Manage Your Inventory
We are aware that 80 percent of your profit comes from 20 percent of your stock. So you need to plan your inventory management strategy by focusing on the 20 percent of stock and closely monitoring it. You need to monitor its complete sales cycle as it is the one making most of the money.
Salesforce integration with Shopify Made Easy
Shopify Made Easy is one such app that not only integrates your store’s legacy data with that of Salesforce but also provides a unified platform for you to manage your inventory seamlessly.
One of the most popular Shopify-Salesforce connector apps, this app is quick, simple, and secure for data migration.
To conclude, With the tips shared in the blog, you can choose the right inventory strategy and start implementing it now.
And, if you want to learn more about the Shopify Made Easy app, book yourself a demo here. Cheers!