Inventory management is a challenge for most organizations. There is a lot that goes into managing inventory effectively and profitably. It’s important to have an inventory management system that can help you avoid the common pitfalls that most businesses make.
Let’s take a quick look at the most common pitfalls and how to prevent them. Knowing and understanding what to do about these pitfalls can also help you pick the best inventory management software for your business.
1. Not forecasting
As the old saying goes, “if you don’t plan, you plan to fail.” There are, of course, many details that go into operating your business and making sure you’re able to meet the needs of both your staff and customers. But if you don’t take the time and utilize tools to forecast what your inventory needs are, you’ll inevitably end up with too much inventory in stock on some items, and too much of others. This leads to reduced capital, and unhappy customers when they can’t get what they want, which has a significant impact on customer loyalty.
The good news is, forecasting doesn’t have to be difficult, and it doesn’t mean you have to repeatedly manually count inventory and spend hours and hours in an excel spreadsheet. When you utilize an inventory management platform that has automatic forecasting built-in, you can effectively forecast needed inventory levels without having to spend extra hours in the evenings and weekends to do so.
Doing so can also help you plan in advance for seasonality. There’s nothing worse than not having enough inventory to take advantage of holiday sales, or ending up with way too much inventory on-hand after holiday sales, eating into the boost in revenue you gained.
2. Not automating
Are you still counting inventory manually monthly and even weekly? Maybe you don’t know there’s an easier way. Or maybe you like long hours in the warehouse? I didn’t think so. If you’re still counting inventory manually, it’s time to stop. With technology today, and the affordability of automated inventory management systems, there’s no reason to keep going it old school to count your inventory levels.
A modern inventory management platform can not only keep track of your inventory levels, it can alert you to low and out of stock items automatically. What’s more, you can keep track of your inventory turnover rate and automate reorders to help ensure you maintain healthy inventory levels on both popular and not so popular items.
Can you see yourself spending more time focusing on other areas of growing your business instead of manually counting inventory and reordering needed items? Well, now you can. And you don’t have to worry about getting cleaned out on a popular product and not knowing about it. You can automatically be notified, and even automatically reorder an appropriate level of inventory and restock on those popular items.
3. Selling out of stock items
If you’re not aware you have either run out of stock, or that you’re about to, a common pitfall of inventory management is selling products to an online customer that’s out of stock only to have to contact them to let them know it’s out, and now on back order.
What customer wants this experience? It’s so frustrating to online buyers when they want to purchase a product only to find out they can’t because it’s out of stock that they’ll just take their business elsewhere. According to A.T. Kearney, “Online retailers may suffer brand loyalty, as shoppers instantly look elsewhere for available products.” Don’t risk losing a customer forever by letting them experience trying to purchase out of stock (OOS) items.
This problem can be solved through automation. When you utilize an inventory management system that not only is aware of and alerts you of low and out of stock inventory, but that also automates reordering before you run out of stock you can avoid losing customers to your competitors.
4. Poor relationship with your vendors and suppliers
Your business relies on your suppliers and vendors getting the inventory you need to sell to your customers. Your relationship with them is as important as that with your customers. There’s nothing worse than having the demand from customers and having problems getting the items you need from your suppliers when you need them. A poor or ineffective relationship with your vendors can be the death of your business.
True, you are your vendors’ customer and they should be doing everything they can to ensure customer satisfaction. But you can’t control what they do. You can only control your side of the relationship. To help make sure you have a good relationship with your vendors and suppliers you should set clear expectations for the relationship from the get-go, and make sure you become one of their favorite customers. Doing so can even help you get more favorable treatment as a customer:
- Timelines – Expectations on timeliness from order to delivery
- Communication – being made aware if/when your vendor is out of stock themselves on any items and when to expect they’ll be available again.
- Who is your main point of contact, when, and how quickly can you expect them to respond. Who to go to when they can’t be reached or are on vacation, etc.
- Make sure you respond quickly to your vendors as well. If you’re going to be unavailable for any reason, make sure you have team members in place and ready to communicate with your vendors in a timely manner.
- Be proactive – Ask your vendors to keep you in the know of when they will be closed for certain holidays, and their holiday hours. But be proactive and ask the question in advance to make sure you’re in the know.
- Make sure you provide vendors with everything they need from you to process your orders quickly and smoothly on their end. Make sure these details are included in your automated reordering process. Don’t become the bottleneck to your vendor quickly processing your orders.
- Ask your vendors if there is anything else they need from you, or that you can do to make things easier for them for processing your orders, and then do it.
Inventory management doesn’t have to be a challenge. Following these guidelines and utilizing an automated inventory management system can help make sure the backbone of getting products out the door and into customers’ hands can not only save you gobs of time but can help you be a much more profitable business. Learn more about how Fiddle.io can take the pain out of inventory management for your business.