Share this
by RepSpark Team on August 27, 2024
Customers know firsthand that few things are more frustrating than arriving at a store, only to find that the product they wanted is out of stock.
Whether it's DTC or wholesale, you want to make sure you focus on the aspects of your operations that control your supply chain to ensure you avoid long-term damage to your brand due to customer dissatisfaction related to supply.
So, let’s take a look at some practical steps you can take to keep stock at levels that drive sales and customer loyalty.
Understanding Inventory Management
Which products you have in stock, the amount you have in stock, where that stock is located and what’s the stock’s turnover – these are four key components you need to pay attention to for efficient inventory management.
It’s not just about knowing your numbers, it’s about staying on top of things to ensure a smooth purchase process for the customer. To keep them happy, you need to provide them with relevant and up-to-date information on your offerings, and the best way to do this is to keep yourself informed.
Basics of Inventory Management
Inventory management is a balancing act of supply and demand. It comes down to keeping just enough product in stock to meet customer demand without overstocking your shelves with more product than you can efficiently sell. The best way to go about this is maintaining accurate records – know what you have in stock, how much is on hand and how quickly items sell to maintain a steady flow.
Software like RepSpark can connect directly to your ERP so you, and your customers, know exactly how much inventory you have of your product.
Role of Inventory Management in Product Availability
Instead of guesswork or real-time improvisations, inventory management keeps you in the know 24/7. By analyzing sales data, market trends and seasonal fluctuations, you can accurately predict what customers want and make sure your products are always ready to go.
Optimize Inventory Management
Now that you have a grip on the basics, time to move to strategy. You’ll need to do a lot more than simply count your products, so let’s see how to fine-tune your process and make the most of your resources.
Implement ABC Inventory Classification
While you’ll want to get rid of all your products effectively, you already know that some items are fast-moving, while others take their time. Separating one from the other is a must. And ABC inventory classification is exactly that – prioritizing products based on their value and turnover rate.
Typically, A-items are high-value and require close attention, B-items are moderate and C-items can be managed with less scrutiny. Stock up accordingly.
Calculate Optimal Stock Levels
Too much stock ties up your cash and increases storage costs, while too little stock leads to lost sales and customer dissatisfaction. So, figuring out the sweet spot will take some know-how. Think about lead time, changes in demand, reorder points and EOQ to get a clear read of your operations.
Analyze Sales Data and Trends
As far as business is concerned, the past predicts the future. This means that by analyzing your previous sales performance, you’ll get valuable insights to trends and patterns, informing your upcoming decisions and ensuring that the right products are on hand at the right time.
Identify Seasonal and Cyclical Patterns
Why aren’t there Christmas decorations in May? Or rather, why are there so many come winter time? Because most products fly off the shelves at certain times of the year, knowing which best goes when will go a long way for adjusting inventory levels.
Think back-to-school shopping, holiday promotions or summer sales; they come and go in a flash, but you know they’re coming. So, you proactively anticipate the trend, stock up optimally and improve your efficiency.
Streamlined Supply Chain
A smooth-running supply chain is the backbone of a successful business. It’s a synergy where every moving part works together to get your products from raw material to the customer. Here’s how to keep it going.
Build A Resilient Supply Chain Network
Unexpected bumps in the road are inevitable in business. And if you’re not agile, they can disrupt even the best-laid plan. A resilient supply chain can help minimize the blow. If you want to maintain momentum in challenging times, think about diversifying suppliers, exploring alternative shipping routes and building strong partnerships.
Establish Strong Relationships with Suppliers
Suppliers aren’t just vendors, they are your partners, and a strong partnership shows. By nurturing your relationship, you can negotiate better terms, get priority service and adapt to changes in demand quickly. Here, communication is key – stay in touch, keep everyone in the loop and work together to solve problems.
One of the best ways to establish new partnerships is utilizing the RepSpark Community, designed to connect you to retailers and suppliers.
Prevent Stockouts
When customers come looking for a product and find it out of stock, it’s not just a missed sale; it’s a missed opportunity and a disappointed shopper who might decide to take their business elsewhere. Luckily, there are plenty of strategies to avoid empty shelves.
Stockout Alerts and Notifications
Set up alerts to get real-time updates on inventory levels. That way, if you’re running low on something you’ll know ASAP and know to reorder before running out.
Backorder Management Strategies
Despite your best efforts, some products might still run out. But this doesn't necessarily mean losing a sale. Instead of losing a customer, offer them the option to place a backorder. This means they can order the out-of-stock item with the promise of delivery as soon as it's back in stock. It's a win-win – you keep the customer happy and maintain potential revenue.
And if you’re using RepSpark, your customers can even order against future stock. Golf apparel brand Marie Birdie chose RepSpark, in part, because of the ability for her customers to order future stock.
Cross-Selling and Upselling
If a product is out of stock, and backorders or future orders aren’t an option, have a plan to keep that customer in your pipeline. Keep the sale going by providing a viable alternative to their desired product. Granted, this may not be what they came in for, but with a great substitute, you may still be able to keep the customer happy.
Leverage Technology
You don’t have to do all this on your own. There are several software options in the market that you can use to make doing all this much simpler.
We’re going to be biased for our platform, but you can see that there’s plenty of people that would agree with us. (You can also use the website we linked to for other options to research)
But, let’s see what kind of features you’d be looking for in software.
Inventory Management Software
A personal assistant for stock control, inventory management software automates the process of tracking items, setting reorder points and generating reports which are the backbone of order management. This frees you up to focus on the big picture, but keeps accurate, real-time, actionable data at your fingertips – so you’re never caught off guard.
For example, RepSpark has inventory management features that integrate with your ERP that power up your reports and forecasting to make inventory management not just easier but smarter so you aren't sitting on wasted inventory.
Demand Planning Tools
We’ve covered how past sales data and market trends can feed into future business projections. Demand planning tools are a trusty companion that helps out with that by monitoring peaks of customer activity, so you aren’t behind the curve, guessing and hoping for the best. This way, you can plan optimal inventory levels ahead. A lot of times this is covered by reports in the software that can help you understand how your inventory is selling.
Data Analytics
It goes without saying, all this is heavily data-driven. Meticulous analytics can uncover valuable insights about your business, so have a look at sales data, customer behavior and inventory performance to identify new opportunities and make informed decisions.
