Inventory Management Best Practices that Work

The strength of your organization rests on the weakest link in your supply chain. For too many retailers, that Achilles’ heel is persistent inventory management errors. Maybe it’s a lack of inventory management software (IMS), or it could be poor execution on orders and returns. In both cases — and many more — the result is the same:

Add it all up and you’ve got waning margins at a time when your competitors are already eating into your market share. Below are several inventory management best practices that can help alleviate this commercial stress and course-correct your company’s backend processes.

Ever-expanding delivery channels mean once-solid inventory systems require regular updates and optimizations. This is evident in the growth of Buy Online, Pickup In Store (BOPIS), shoppable social media platforms and other disruptive trends triggered by e-commerce and COVID-19. Your inventory management system must be capable of fulfilling orders from an array of sources both on and offline — while consistently and accurately restocking.

To accomplish this shipping and supply cycle, you might decide on one of the following inventory control methods:

These common inventory methods promote lean warehousing and efficient controls at all stages of the product life cycle. There are dozens of other methodologies to choose from as well. To help decide which system might work best, consider two metrics:

There’s no shortage of key performance indicators (KPIs) by which to measure your business. The United States Postal Service promotes and explains 10 metrics here, including:

NetSuite discusses 33 various metrics, too, grouping them into four subcategories:

As you can see, there are plenty of data points to track and monitor. But here’s where retailers run into trouble: classic analysis paralysis. Without a software solution that continuously mines, surfaces and analyzes this data, the numbers are locked away in spreadsheets, paper files and other forms of non-integrated tracking systems. So, define the KPIs that matter most to your organization, then adopt a software that can support and operationalize these findings.

A lack of visibility into your inventory data results in lost opportunities and wasted resources. More specifically, that means missing out on chances to:

The inventory management software you implement must fulfill a number of tasks, such as:

The rise of the reverse supply chain adds another dimension to your warehouse inflows and outflows. All of your reordering policies must account for products being returned at higher rates in recent years and months — potentially as much as 40% can be expected to be returned. Without an effective returns policy, you might be stuck with:

Receiving your inventory back to your facilities means your inventory management system must pull double duty — something it may not originally have been designed for. To avoid returns in the first place, ensure your product descriptions are accurate, your product photos are updated and your website specifies your exact policy. Returns management is a vital part of inventory management. Contact Green Mountain today to get the most out of your inventory management.