Last week we introduced the four things you want to get right when it comes to inventory management: getting the right amount of product, at the right price, at the right time, and in the right place. Of these four aspects of inventory management, we talked about the importance of getting the right amount of product at the right price.
Today we’ll be looking at the other two things you want to get ‘just right’ for your business: ensuring you have your products at the right time and in the right place.
1. The Right Time
When you’re placing an order, you want it to arrive at just the right time. Ideally, that would be once your stock-on-hand sells out, so you can simply top up your inventory levels without needing any additional storage space.
If they arrive way too early, you may find yourself short of space to store these items. But if they arrive too late, you’ll be forced to announce that you’re out of stock, which will almost definitely result in losing sales.
When it comes to going out of stock, there’s a couple of ways that’ll let you get out of such sticky situations. On one hand, you may choose to keep safety stock for emergencies like this, which can compensate for unexpected lead time delays.
Or you could opt to sell products you don’t have. Maybe you’re facing an unexpected boom in sales after some unexpected celebrity endorsements, and you now have more orders than you can handle.
When that happens, it’s time to open a backorder. After all, if your customers really want a certain product that’s unique to your store, they’ll be willing to wait.
2. The Right Place
Due to the increasing popularity of eCommerce, the likelihood of having the right products in the wrong store is decreasing. After all, you’ll be fulfilling all your eCommerce orders from the same warehouse.
When you’re selling on multiple channels, you need to allocate your inventory to different channels. Once you sell out the allocated amount on one channel, you can’t simply continue selling what’s still sitting in storage. If you want to tap into stock allocated to other channels, you’ll need to manually adjust all your stock levels across the board, or risk having all your inventory levels go haywire.
If you’re using spreadsheets for multichannel inventory management, getting everything just right can be quite a challenge. And if that’s the case, you may want to look into getting inventory management software. By automating inventory management, you’ll be able to sell across every sales channel from a single dashboard that automatically updates your inventory levels across the board whenever you make a sale.
One of my favorite pieces of inventory management advice comes from L’Oreal, one of the top global supply chains. The cosmetics and skincare giant limits their SKU (stock keeping unit) count with a “One in, one out” policy, which basically means you’ll have to phase out an existing product in order to introduce something new… And it’s a great tip to save your inventory from becoming bloated.
As for what’s a SKU and how you can use this to optimize your inventory organization… we’ll be going into that next week, so stay tuned!