Inventory Management is a really wide term referring to all the techniques used to make sure that a seller earns maximum revenue by putting in the minimum of inventory costs. If we were to put this term for an online seller, the term means how can a seller keep rotating his inventory without having to stock too much in his own warehouse?
Inventory costs are a function of many things such as
- Actual Cost of Goods – The cost at which a whole-seller purchased the goods from a manufacturer or a retailer from a whole-seller. For manufacturer it would mean the cost of raw materials they incurred while they were actually producing the good
- Stock – The quantity of goods a seller produced or purchased.
- Inventory Keeping cost – The cost of storing all the stock, such as the rent/cost of the premise in which they are being stored or the manpower required to manage the stock.
- The warehouse time of goods – The number of days the stock has been lying in your warehouse.
- Life of goods – The amount of time in which the goods would be rendered inconsumable, such as for medicines or food and beverages the expiry dates or for Fashion products the changing season.
- Market trends – The trends in which the market is moving, in case at a point your products are rendered completely useless, owing to a government regulation or owing to a change of adaptation by the market. (E.g. the hit the simple phone manufacturers suffered at the advent of era of smart phones.) And many more.
Different techniques or a checklist that you should put up to manage your inventory efficiently
- Expose the same inventory at multiple places – Do not be dependent on only one channel to help you sell. Check out as many different methods as possible. The quicker you sell, the more you would be able to stock, the larger profits you would be able to make and the better rotation of money will you be able to achieve. For e.g. you have an inventory of 10 for an SKU, make sure all your channels show 10. Whenever an order is received from a channel the inventory is reduced to 9 at all the places.
- Put alerts on low stock inventory – Never buy everything in one go. Try defining steps of your buying process. Set alerts in your inventory whenever the stock of a specific SKU reaches a shortage level. For E.g. a certain SKU is well developed and is selling like hotcake, set an alert whenever it reaches 3-4 to buy more immediately. You can take it a step further. Whenever the inventory reaches 10 buy 5 more, and if within a day it reaches 3-4 buy 20 more.
- Decide FIFO, LIFO – If you have 10 pieces of an SKU, how would you be sending them to the customer. The first piece that came in stock would be sent first. (FIFO – First In, First Out) while some people use the techniques of sending the last piece of inventory came in first. (LIFO – Last in, First out). For e.g. a medicine retailer would like to use FIFO as the pieces checked in first might have the nearest approaching expiry dates while a fashion retailer might want to use a LIFO as the newest stock can be sold at higher prices and yet be profitable.
- Punching in returns efficiently – Returns can become a headache for any seller. Punching them back in the inventory correctly is very important. In case the inventory has an upcoming expiry date it is important to put it in a place from where it can retrieved quickly. I.e. for any upcoming orders the return inventory (if in proper condition) can be sent immediately.
- Audit – Stock Audit is a regular activity and should be done at least fortnightly if not weekly. Damaged pieces, lost pieces or pieces incorrectly returned all add up to the cost of inventory management.
How should you use Orderhive for inventory Management?
- Punch in Every PO that you are generating for your suppliers – The purchase mechanism is where business begins. Whenever you are sending anybody a purchase order, make sure you are putting up an entry in Orderhive about it. Also add Performa invoices as and when received for any kind of advance payments.
- Input inventory by scanning barcodes of SKUs – Orderhive provides a facility of inputting every SKU with every piece in the PO to be individually entered within the system just by scanning its barcode. This improves your QA processes and let’s your warehouse employees keep exact track of the inventory in-warded.
- Add locations to as many warehouses you might have – If you are dropshipping or you have your own multiple warehouses, make sure you enter single inventory in Orderhive along with their location. This would make picking and packing processes simple.
- Add as many selling channels as possible – We recommend a minimum of 4, the more the merrier. The more places you sell, the quicker would be your return on investment.
- List your complete inventory at as many possible locations – In case some part of your inventory is in FBA or you have gotten into an agreement with people on selling certain SKUs only on certain portals, otherwise we recommend listing your entire inventory on all the locations. Let Orderhive manage your inventory at all of those locations.
- Check Orderhive everyday – Orderhive will list all the orders you would have received, which ones are being packed and which ones are in transit and many more things. Keep a tab on reports that Orderhive is presenting you with. Allow Access of Orderhive to your warehouse employees also, let them know which orders are still in “To ship” and how quickly are their SLAs breaching.
- Set low inventory alert – If you can resource certain SKUs, and you have currently stocked them in low quantities, you can set a low inventory alert, which means Orderhive will notify you as soon as the inventory of that stock reaches a low.
- Download pick and pack forms, labels and invoices from Orderhive – Without any interaction with any marketplace, download all packing labels and invoices from Orderhive. This will help you make entry at all locations, without having to open any individual marketplace and will also make sure the picking packing is happening exactly as planned with barcodes.
- Integrate Orderhive with accounting software – Integrating Orderhive with accounting software is important as it will make an inward and outward entry for every piece of invoice generated by you or generated for you. This will help in tax filling and all forms of government compliances.
- Track your shipments as they are being dispatched – We understand this one is a cumbersome task, but tracking at least your COD orders is necessary, the COD orders take away a lot of your logistic cost. Especially the fact that buyer hasn’t paid anything yet and the buyer is not found at the address, the decision should be taken on which warehouse is the closest and can the delivery be made to the closest warehouse so that lowest losses are made on “no-reply” COD orders.
- Punch in your returns regularly – Orderhive lets you select your inventory management mechanism, Whether a LIFO or FIFO. Make sure you punch in your returns correctly, on the same day if possible or at least on the upcoming day. So that the FIFO LIFO mechanism for the orders can take care on its own.
- Numbering in barcodes – Barcodes should be unique for every single product within every single SKU, Orderhive allows you to add EAN number also, make sure you utilize them efficiently.
- Download stock count form and conduct an audit on weekly basis – Weekly or fortnightly, make sure you audit your stock on regular basis to make sure you have whatever is left of the inventory and what got sold. Orderhive lets you take out an excel sheet listing of each and every SKU and the count within it. You can scan barcodes and the entry for all those inventories would be made, so that discrepancies can be highlighted.
- Keep checking Orderhive reports – Orderhive has a very powerful reporting mechanism, make sure you utilise it perfectly. Plan buying of quick moving SKUs, plan sales offers for slow moving SKUs and game the system of all the marketplaces.
Orderhive can definitely do much more for you than all the above listed activities. But these basic best practices will get you going for running a successful online/offline retail business for a long period of time. Check us out, or just let us know how can we be of help to you, Orderhive can customize itself to accommodate your workflows? Try checking Orderhive enterprise.