How to Improve Inventory Management

Inventory management is a core component of an order management system and essential for the operations of many businesses. The landscape for inventory management has shifted over the past few decades to accommodate the increasingly digital market. Around-the-clock ordering is more popular than ever, which can boost sales but can also be difficult for companies to keep organized. Retail online revenue share is expected to increase to 26% of overall retail sales in 2025, so it’s important to become familiar with the latest technology and methods. There are several modern solutions that offer different strategies and tactics to manage and optimize a business’s inventory effectively.

Why is Inventory Management Important?

Inventory management, or the process of overseeing ordering, storing, and purchasing in a business’s inventory, can be utilized in many different ways. Successful inventory management provides the necessary infrastructure to optimize operational efficiency and ensure a seamless purchasing experience throughout the ordering, storing, and selling processes. Inventory management can offer a business:

• Improved Cash Flow: Since inventory amounts can determine cash flow levels, careful management can reduce the possibility of lost revenue opportunities and mismatched stock levels.
• Ensured On-Time Deliveries: Inventory management strategically organizes stock for quick and methodical delivery.
• Reduced Errors and Shortages: A well-organized inventory system minimizes the risk of shipping errors, stockouts, and high return rates.
• Improved Customer Satisfaction: Since orders are often less likely to arrive late or incomplete, a successful inventory management process can result in positive reviews and customer loyalty.

Ways to Improve Inventory Management

The first step to improving industry management is assessing your business’s current standards and methods. Take note of what is working and what isn’t and the areas where you’d like to improve. Analyzing your brand’s internal and external presence can offer insights into the inventory management systems that will be the best fit for you.

Use Sale & Trend Data to Predict Demand

Demand forecasting refers to predicting the future demand for a product or service. This is often measured by analyzing data on current trends, sales, and inventory rates. Common circumstances that impact customer demand include seasonal changes, sales and discounts, and customer location. However, demand forecasting is not foolproof, and numerous factors go into purchase trends that sometimes can make them difficult to predict. 

Improve Supply Chain Efficiency

The process from when a customer places an order to when it arrives at their doorstep can be complex. Proper inventory management impacts the entire supply chain order cycle, and maintaining exceptional supply chain operations provides businesses with the omnichannel success needed to support customer orders through their entire lifecycle.

Optimize Inventory

Inventory optimization refers to strategies that help businesses manage orders and control their inventory stock levels. This can be implemented through several different solutions, including:

• Inventory Control: Balances inventory supply and demand to avoid excess stock.
• Cross-Channel Inventory Management: Allows retailers to manage inventory across multiple sales channels to maximize profits.
• Safety Stock: Refers to extra inventory held to prepare for stockouts and unexpected demand shifts.
• First In, First Out (FIFO): Organizes inventory items from the date they were acquired from oldest to newest and sets up the oldest items to be sold first.
• Last In, Last Out (LIFO): The opposite of FIFO, this organizes items from newest to oldest and sets the newest items up to be sold first. 

Monitor Inventory in Real Time

Retail is an ever-changing business, so inventory levels can significantly shift daily, even hourly. To run one of these businesses successfully, careful attention to store operations and inventory is vital. Inventory management techniques that offer real-time updates and daily information about inventory data can allow for continuous improvement in demand forecasts and more accurate inventory optimization.

Tools for Inventory Analysis

Since many different types of businesses need to keep track of their inventories, there are several tools that can be used to analyze a business’s inventory based on their individual needs. These formulas allow business owners to effectively manage their stock and make data-driven decisions to optimize their inventory.

• Economic Order Quantity (EOQ): This formula measures the order quantity that minimizes the total holding and ordering costs. EOQ aims to meet demand while keeping costs low by determining the optimal order size for inventory.
• Day Sales of Inventory (DSI): This ratio measures how long it takes for a business to convert its inventory to revenue. While it can help companies reduce overstocking and improve cash flow, the accuracy of DSIs can depend on a business’s industry.
• Reorder Point (ROP): This model helps determine the reorder point, or the minimum amount of an item that a business must have in stock. This number can be found by multiplying average sales per day by lead time and adding safety stock.

How Automated Inventory Management Sets You Up for Success

Thanks to the rise in popularity of online ordering, inventory is no longer determined solely by items sold in-store. With new sales coming in at all hours of the day, it can be difficult for brick-and-mortar and ecommerce businesses alike to keep up with shifting inventory levels. Automated inventory management allows you to streamline order processes and time-consuming manual tasks to gain a competitive advantage in your industry. These benefits include:

Real-Time Inventory Visibility

Automated inventory systems provide end-to-end visibility that allows you to view available-to-sell (ATS) inventory at a glance. This allows you to maintain optimal inventory levels while prioritizing customer service. 

Reporting & Analytics 

Automated systems provide immediate reporting results to help make informed inventory decisions. This allows for more accurate analytical data that can be leveraged for several areas of your business.

Faster Order Processing

An automated inventory system checks stock levels immediately when an order is made. This eliminates the need for manual searching and any human errors that might come with these methods.

Increased Revenue Growth

Since it’s easier to keep track of financial statuses with automation, there are more opportunities to accurately measure and increase revenue.

Improved Order Tracking

Streamlined order management allows you to keep track of items in your inventory and orders out for delivery more easily.

Reach Out to Deck Commerce Today for Inventory Management Solutions

At Deck Commerce, we understand the importance of having effective management systems in place for your inventory. Our Automated Inventory Management makes it easy to keep up with changes in your business and stay on track to navigate any situation. Request a Demo to talk with one of our order management experts and find out which solutions might be right for you.