This is a guest post for the MELD Coworking blog written by Beau Christian.
Starting a business, or growing an existing small business, requires having the inventory on hand to meet customer demand. Yet balancing that stock to align to your existing shipping capabilities is not an easy process. Even running a small product-based business from your home or coworking space can have its complications.
Without the real-time data at hand, you may end up constantly being out of stock and without the customers to make your business profitable. Let us look at the following strategies that can help balance inventory numbers to match your business scale.
Change Your Mindset About Out-of-Stock Items
It is easy to assume that being out of stock on products is a positive sign. It shows you which items are the hottest customer choices.
However, there is a downside to this way of thinking: Statistics show that seven out of 10 people who shop online will not wait for a business to restock the item. Instead, they will cancel the order and search for the business that has the stock on hand.
While knowing which items are in demand is good, your out-of-stock numbers should not be the defining factor. Instead, the use of inventory management software will provide you with clearer analysis regarding your sales orders and customers’ purchase history. You will know which items are in demand without being out of those specific products.
Stock Inventory Properly
Missing orders and manufacturing delays can cripple your brand reputation. Customers will not return to a company that cannot fulfill their needs based on their schedules. Also, the customers will tell others about why they did not purchase it from your store.
This issue leads to a snowball effect where less customers frequent your business. Yet the problem may be that you have the inventory on stock, but you just do not know where it is located.
The product could have been stocked incorrectly on shelves to where it is difficult to find. The inventory numbers may also have been entered incorrectly into data systems, as it shows there are no products available but there are plenty of items left on shelves.
Solopreneurs running a product-based business from home should especially consider focusing on the accuracy of their inventory. The scale of orders may be smaller, but the harm done to the reputation of the business due to mismanaged sales and inventory could be more impactful.
Invest in automated tracking methods to know where the product is at all times. The moment the product delivery arrives, tag it and use real-time tools, such as barcode scanning. These automated tools are connected to your network systems.
Whenever the product is scanned, the information becomes immediately updated in these systems. You will know where it is located within your warehouse or on store shelves. This method will also tell you when it was picked and packed to complete a sales order and track its delivery to the end customer.
Outsource Inventory to Fulfillment Centers
To counteract the issue of not having enough inventory to fill orders, you may end up ordering more products than you need. Since your business is still small, all the excess inventory can take valuable space on shelves. This problem leads to increased overhead and inventory management costs, as well as product waste — if the item is no longer in demand by customers.
If your operations are still too small to house a lot of inventory at one time to meet customer demands, hiring a third-party logistics and fulfillment company may be the best option. These companies have the warehouse space, staff, and carrier network partnerships on hand to store your inventory.
They can also negotiate shipping prices with carriers so your product can take the best delivery routes at the lowest costs. You can order the product volume you need without overstocking the items that may lead to product waste and higher overhead costs.
Having out-of-stock products and order delays can hamper your business operations and lead to a damaged reputation. Revamp the way you want to store your inventory, create product demand forecasts, and track inventory movement throughout your supply chain.
These strategies can help you keep the right inventory numbers to meet demand without constantly running out or overstocking on products that customers do not want.
Be sure to read the accompanying resource for more information on inventory management:
About the Author
Beau Christian is Director of Marketing at WSI, a leading third-party logistics provider that specializes in fulfillment, chemical warehousing, transloading, transportation, and more.
Having the 17th-largest 3PL network in the United States, spanning more than 15 million square feet, WSI delivers tailored end-to-end supply chain solutions to customers who seek to increase efficiency, shorten lead times, deliver more reliable performance, and minimize costs.