How to Reduce Inventory Overstock and Free Up Warehouse Space

Inventory management is a strategic issue that affects profitability and customer service. Additionally, many fulfillment centers are overstocked with slow-selling merchandise tying up valuable inventory locations. While an item’s inventory cost is the majority of the expense, it is only part of the costs incurred when you consider credit borrowing. labor and facility expenses to maintain and store inventory, plus lost opportunity costs should be considered when thinking about where to use cash elsewhere in the business.

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Top 6 Features to Look For In An Inventory Management System

Many businesses moved from inventory management system solely maintaining records and reporting on inventory to more strategic inventory requirements to plan, project and fill customer orders and improve profitability. With all of the options available today, how do you know which solution will work best for you and your business? And what features should you be looking for?

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The True Cost of a Backorder

A backorder is a customer order for a product from a retailer or supplier that cannot be shipped immediately or by the promised date.  Simply stated, backorders are a temporary out of stock condition.  An order is not a sale that you can take to the bank until the item is shipped or picked up at the store, the transaction is invoiced, and funds are deposited.

The rate of backorder – the percentage of order lines that cannot be shipped out of the total items ordered for the day - is an excellent measure of your inventory management and the customer service you are providing.  An even better measure is the initial customer order fill rate, discussed below.

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Warehouse Inventory Management During an E-Commerce Warehouse Relocation

The biggest challenge you’ll face in relocating a warehouse is disruption to your business. If you are fully invested in inventory at an existing 3PL or your internal facility, how will you transfer inventory to start up the new facility without having to shut down for days or even weeks?

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Evaluating Inventory Costs For Multi-Distribution Center Processing

In operating multiple DCs, one of the major on-going costs is the additional inventory at the SKU level that will be required. Many times, companies are surprised at the magnitude of the inventory increases. Our experience is that a second DC adds 30% more overall inventory in a company, then just having a single DC. A third center may add 50% more overall inventory, then a single DC. Obviously, the increase doesn’t automatically correlate to the company being able to achieve 30% and 50% higher sales without some major marketing and promotional changes.

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10 Considerations In Developing Your Inventory Strategy

As Amazon’s multi-DC strategy puts pressure on multichannel merchants, having an effective inventory strategy to maximize sales, profits and customer service becomes all that more crucial. Inventory is the largest balance sheet asset in most companies. Let me give you a few examples of how other companies are focusing on inventory in their businesses.

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Inventory Best Practices Assessment Show Issues in Systems to Fix

Since inventory is the largest balance sheet asset in most companies, this is certainly a hot spot for all inventory best practice assessmentscompanies. “Systems” don't take into account the total costs of owning slow-moving inventory (occupancy, interest on the investment, distribution center labor to maintain and control it, etc.). Only management can analyze these expenses and methodically reduce them.

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How Well Are Your Inventory Management Techniques?

Inventory is most likely the largest balance sheet asset in your company. How well you use inventory management techniques to plan, purchase, and manage your inventory largely determines your level of customer service and profits. But selling goods in multiple channels and titles means dealing with channel- and title-specific planning and inventory management needs.

Based on our inventory management best practices assessments with clients, we've come up with some inventory management techniques to consider when managing multichannel inventories.

READ: 23 Ways to Improve Your Inventory Management Processes 

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Inventory Management Techniques From a Financial View

Inventory is the largest balance sheet asset in your business: If your margin is 50%, that means your cost Inventory management techniques financialof goods is 50%. In other words, 50% of your net sales are spent on inventory and inbound freight.

So why aren't merchants more aggressive in dealing with inventory? In particular, marketers need to do more to liquidate aging inventory, and look closer at how to achieve the optimal balance point between high order fill rate and increased inventory.

READ: 14 Inventory Best Practices to Implement in Your Company

Most multichannel companies have plenty of room for improvement in how they manage inventory. These 10 inventory management techniques will allow you to deal with inventory more aggressively and make more profit:

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How to Create a Vendor Scorecard For Your Business

How do you evaluate your merchandise vendors? If you ask Merchandising, Operations and Accounting Vendor Scorecardabout vendor compliance and their performance, chances are you’ll get widely different answers. The merchandisers will consider the sales and margin and the vendor’s product development capabilities. Operations has to deal with QA and defective product problems, vendor packaging rework and late deliveries being escalated. Accounting will tell you about the vendor’s paperwork practices which are not according to your vendor compliance standards and result in chargebacks. Many companies are developing a holistic view of vendor performance through a periodic formal vendor evaluation using a vendor scorecard.

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