How Effective Inventory Management Can Win You Customers
Inventory management is the logistical balance companies must achieve to accurately measure how well their supply keeps up with demand. Good inventory management tracks the movement and level of products to increase productivity, cut costs and make the best use of resources.
For many companies, the goal of the inventory management process is simply to boost efficiency and profits. While effective management certainly accomplishes these goals, it also significantly impacts customer satisfaction. Companies can gain customer loyalty through accurate inventory management that anticipates consumer needs. Learn more about how effective inventory management can win you customers and improve efficiency.
What Is Effective Inventory Management?
You want your business to live up to customers’ expectations at every step of the sales funnel. An effective inventory management system can guarantee your inventory is always in sync, helping you “wow” your customers and gain their trust.
Research from 2015 found that worldwide, retailers lose $1.75 trillion annually due to overstocks, preventable returns and lost business because of out-of-stocks. Out-of-stock and overstock situations occur when a company lacks a complete grasp on its inventory levels. Ordering too much inventory can lead to a business swallowing its losses, while ordering too little can lead to a waitlist, which most customers prefer to avoid.
Neither of these situations is ideal for either party. According to a 2020 poll, 51% of U.S. retailers believed their inventory solutions needed improvement. Effective inventory management aims to minimize costs while increasing customer happiness. It supports supply chain efficiency and enables you to purchase the right amount of inventory when you need it. Correct inventory management leads to productive use of your funds and time, saving you money on product and handling costs while ensuring fast and accurate order fulfillment.
Satisfy Your Customers’ Needs
Inventory tracking can become more complicated when your company has multiple outlets through which customers can purchase your products. You may sell a limited number of products from several sales channels at once, like your company website, physical store or indirect sales channels like Etsy. There may be a scenario where your product sells out on your website but still registers as “in stock” on another channel. If your inventory management software is not equipped to handle multiple sales channels, inventory inaccuracies like these can happen frequently.
When customers try to order a product that isn’t available, they may look to other vendors for their needs. Alternatively, a customer may see the item is unavailable on one site when it’s actually in stock at another location, resulting in a loss of a potential sale. Customers will never see inside your warehouse operations, but they will feel its effects when they click the “Add to Cart” button to make a purchase. Effective planning and good management of inventory levels are crucial for company operations.
Use Inventory Management Strategies
Good inventory management allows you to meet product demand. It backs your credibility and supports your marketing, customer service and sales operations by enabling you to fulfill customers’ needs.
If you are researching how to win customers with your inventory management strategies, consider these approaches for ensuring your inventory is appropriately stocked. Incorporating some of these techniques can help you please your customers and maximize profitability.
1. Overstock Strategically
Finale’s inventory management software can prevent overselling by automatically updating stock levels. We host over 40 software integrations, from shopping cart software to marketplace platforms, that give you an accurate reflection of your available inventory. You can track online and offline purchases from a central location that accounts for every sales channel.
Overstocking may be helpful in certain situations. For example, if your company sells popular gift products or seasonal items, you may overstock before the beginning of the busy holiday season. Overstocking, in this case, would help satisfy the upcoming increase of orders and avoid delays. A good overstock strategy involves following demand fluctuations and anticipating customer interest in your products.
2. Improve Your Picking Logistics
Inefficient inventory management can lead to losses in several areas. Poor product tracking can cause product loss along the supply chain, which is a cost that businesses must absorb. If inefficient inventory management leads to a warehouse worker picking and shipping the wrong product, a customer will return it and may ask for a refund. These are avoidable costs which a business still sometimes incurs because of poor inventory tracking.
Finale Inventory’s scanning software alerts workers when they scan the incorrect item so employees can avoid pulling the wrong items from warehouse bins and shelves. You can input your warehouse layout into the software to show workers an expedited path through the warehouse floor, decreasing time spent searching for products.
Increased efficiency in order picking saves customers time spent returning orders and saves you losses on preventable refunds. When there are order or stock discrepancies, Finale’s stock history reports let you investigate where the order went wrong so you can correct the issue in the future.
3. Use Automated Stock Alerts
Finale’s multichannel inventory management software connects to all your sales channels and actively updates product availability. As customers make purchases from any medium, your inventory will automatically update to reflect each order. Simultaneous sales will all congregate in Finale’s central system as the software updates total inventory levels correctly. You will have access to real-time digital records on the cloud so you can view inventory levels from any location.
4. Make Inventory Reorders on Time
Some products have a higher sales velocity than others, which means they are bought more quickly in the same time frame. Finale shows you product sales velocity so you can adjust orders accordingly. Leveraging data like sales velocity can give you insight into when to reorder and avoid out-of-stocks.
Finale also helps you reorder stock at the right time so you can avoid over- or under-ordering. Based on your sale history, the Days Until Stockout metric alerts you to how many days your current stock will last. You can adjust your ordering time frame and go beyond minimum/maximum reordering methods. The Days Until Stockout metric makes reordering dynamic and empowers you to make smarter purchasing decisions.
Start Managing Inventory With Finale Inventory Today
If you want to start using inventory management to boost sales and gain customer loyalty, Finale Inventory is ready to help. Our software solutions equip you to track changing inventory levels. The software will update inventory across your sales channels, enabling more efficient warehouse operations and greater customer satisfaction. The team at Finale Inventory will work with you to meet your company’s unique inventory management needs.