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Running a business

Inventory management tips

By QuickBooks Australia

Published on June 4, 20246 min read

Effective inventory management should be a top priority for businesses that stock inventory, particularly e-commerce owners. Having a well-defined inventory management process is essential for optimising how you control inventory and improving business operations overall. With a few changes to your current practices, you can start implementing inventory management techniques that benefit both your business and customers.

From having goods stocked on your site to ensuring that orders are fulfilled quickly, there are a lot of steps to consider when managing inventory. To help you get started, we’ve put together our inventory management best practices to show you how to manage inventory effectively and save you time. Read from start to finish for all the best ways to manage inventory, or use the links below to jump ahead.

How can better inventory management transform your business operations?
Six tips for improving inventory management
Tip no. 1: use insights to inform decisions like reordering and pricing
Tip no. 2: automate as much as possible
Tip no. 3: use order tracking
Tip no. 4: focus on consistency and processes
Tip no. 5: streamline internal communication
Tip no. 6: update your inventory management system

How can effective inventory management improve your business?

Inventory management is an essential aspect of operating an ecommerce business. Its impact is widespread, from sales and customer satisfaction to the efficiency of your internal processes.

To give you an idea of just how important it is to improve your inventory management strategy, here are just a few examples of how adopting inventory management best practices can improve your business:

Optimised stock levels: knowing how much inventory you have at all times, across all your different sales platforms ensures you have sufficient stock levels to meet customer demand and provide a good customer experience.
Reduce carrying costs: optimising your stock levels and keeping on top of your inventory turnover rate allows you to reduce warehousing, carrying or holding costs.
Gain business insights: insight into inventory sales data helps you understand how your stock moves, including which products are selling and which aren’t. These insights can help with sales forecasting, knowing which stock to order, refining your offerings, reducing deadstock and making smarter business decisions.
Scale your market visibility: improved inventory management allows you to sell more effectively on multiple channels, including some of the top marketplaces
Save time: adopting inventory management techniques such as automations through inventory management software allow you to save time so you can focus on other aspects of your business.
Improved supply chain management: streamlining your inventory management process allows businesses to improve communication with vendors and suppliers leading to an optimised supply chain strategy.

Let’s dive deeper into how you can optimise your inventory management practices.

Inventory management tips: how to improve inventory management

Effective inventory management starts with having inventory management best practices in place. Making some slight changes to your inventory management process is easy and worth the investment of resources. Here are six stock management tips to improve your current practices:

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Tip 1: Use inventory insights to inform decisions like reordering and pricing

Inventory reports and sales data like ABC analysis are invaluable for making decisions on how to handle inventory. These insights can provide information regarding which of your products are popular, which are moving slowly and which simply aren’t selling.

When you see the most sales based on customer demand and seasonality, you get in-depth inventory analysis. This data can then be used to base decisions on facts instead of assumptions and estimates.

Inventory data and reports can provide valuable insights and help your business:

Keep track of inventory counts across all sales channels to ensure stock is available where your customers shop
Estimate reorder points and calculate the reorder point to ensure you have sufficient stock levels to meet customer demand
Optimise order quantity based on the performance of various products ensuring a positive customer experience
Reduce carrying costs to improve cash flow
Improve your pricing strategy and offerings to increase profitability

Two men review sales reports while entering data into a laptop.

Tip 2: Automate inventory management processes

Inventory management can be time-consuming, especially if you’re dealing with high sales volumes. One way to cut down the demand that inventory management places on your time and personnel is to automate as many aspects of the process as possible. Automation will save you a lot of time and money, and it will improve accuracy.

Automating inventory management can include:

Automating stock level updates across platforms
Uploading new products into the system
Completing purchase orders
Automating confirmation emails and invoices
Using a barcode scanner to scan items
Setting up stock keeping units (SKUs) with QuickBooks free SKU generator

Tip 3: Update your inventory management system

When it comes to inventory control, manual data entry and a disjointed process may be your downfall. One of the best inventory management tips is to adopt inventory management software to easily overcome these challenges and improve the way you manage inventory.

QuickBooks Inventory Management Software is built for small businesses like yours and offers features to automate and streamline your inventory processes. With QuickBooks you’ll be able to:

Automate virtually all aspects of inventory management
Easily track inventory, manage orders and improve fulfilment across all of your online shops
Identify the right level of safety stock so you can account for stock replenishment lead time and avoid stockouts
Automatically update the amount of inventory available
Get low-stock alerts
Keep inventory information organised and up to date for all your SKUs
Sync and manage products across all of your e-commerce platforms, like Amazon and Shopify
Add and manage more sales channels so you can expand your reach and sell more
Generate powerful reports that provide key insights into sales
Streamline bookkeeping with QuickBooks accounting integration
When you use an effective inventory management software, you improve these processes and your efficiency. This opens up more time for you to focus on growing your business. Learn more about how using cloud inventory management can simplify the way you sell.

Tip 4: Use order tracking

However, your inventory management system is set up—whether it’s a spreadsheet or software—careful order tracking is essential. By organising all that data into easily accessible and useful lists, you can easily filter orders that:

Have been paid
Haven’t been paid
Are overdue
Haven’t been fulfilled yet

With a more organised system for order tracking, you’ll have a clear view of order statuses and a better handle on order fulfilment overall. And, with order tracking, you’ll be able to provide your customers with updates.

Read our article on online shop inventory management to learn more tips for e-commerce inventory management.

Tip 5: Focus on consistency and processes

One of the best things you can do to make inventory management run more smoothly is to follow consistent processes across the board. This is especially true if you have multiple team members involved in inventory control. Whether it’s how you go about managing physical inventory, updating inventory tracking, restocking or adding new inventory to your sites, consistency is key. Otherwise, you may run into issues like inaccurate data, having too little or excess inventory, or displeased customers.

Establish an inventory management process that everyone can follow easily to keep everything running smoothly.

Tip 6: Streamline internal communication

Oftentimes, mistakes are made due to poor communication. By implementing systems that can help streamline communication in your business, you can ensure everyone is on the same page. It will also help you significantly cut down on errors.

Keep your whole team in the loop with real-time status updates and periodic action emails. Depending on how your business operates, you may want to send these action emails weekly or daily. This ensures your team is receiving the information they need when they expect it.

Implement these changes and strengthen your business’s inventory management

The best way to manage inventory varies from business to business, but these inventory management tips can only improve your current processes. Refining your inventory management strategies might seem like a large undertaking, but with the right tools, it can be fairly simple. Adopting an inventory management solution can help streamline your approach, optimising stock levels and reducing costs for greater efficiency.

With QuickBooks, you can quickly and impactfully transform your multi-channel business’s inventory management practices. Get started today to see how this advanced system can help you achieve effective inventory management and empower you to take control of your business.

Man and woman working in a stock room. The woman checks inventory while the man enters information into a spreadsheet.

Frequently Asked Questions

How can you improve inventory management?

Business owners can improve their inventory management processes by following these six effective inventory management tips:

Tip 1: use inventory insights to inform decisions like reordering and pricing
Tip 2: automate inventory management processes
Tip 3: update your inventory management system
Tip 4: focus on consistency and processes
Tip 5: focus on consistency and processes
Tip 6: streamline internal communication

What are the benefits of improving inventory management processes?

What tools can I use to improve the way I manage inventory?

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