Stockouts are situations that no online store owners want to encounter, but they can sometimes be inevitable. However, with some planning and preparation, you can avoid them by knowing ahead of time what your customers want to buy and how to manage your product’s journey from the factory to the customer’s doorstep.
The Challenge of Inventory Management in E-commerce
Stockouts can significantly impact your business. Not only do you miss out on a sale, but your customers may also go to a competitor to find what they need.
One key to preventing running out of products is to have an adequate inventory tracking system in place. This will give you real-time data on what’s in stock and what’s running low. Consider it your control panel, your central station for knowing what’s happening with your products. Integrating advanced tools like Visual CPQ (Configure, Price, Quote) can further streamline this process by allowing customers to customize their orders while ensuring inventory levels are accurately reflected in real-time.
SKUs (Stock Keeping Units) are unique identifiers that help you keep track of each product’s details like its size, color, and other attributes. Efficient SKU management allows you to track each individual product and keep it in the right quantity at all times.
Predicting Future Demand
Ever wish you had a crystal ball to predict what your customers will want to buy and when?
At its core, demand forecasting is all about predicting what your customers will want in the future. By analyzing past sales data, trends in the market, seasonal fluctuations, and other relevant factors, your business can anticipate how much of each product you’ll need in stock. Getting this right can help you avoid the dreaded stockout and ensure you always have what your customers want when they want it. Here’s how to plan for future demand.
Review past sales data: The past can be a great indicator of the future. Look at your historical sales data to see patterns and trends. Did certain items sell better at specific times of the year? This could indicate a seasonal demand that you should prepare for.
Stay in tune with the market: Keep an eye on overall trends in your industry. Are there new products or features that are gaining popularity? Use this information to anticipate what your customers might be looking for.
Consider promotional activities: If planning a big sale or promotional event, factor this into your demand forecasting. Promotions can significantly increase demand, so you’ll want to make sure you have the promotional products in hand.
Regularly update your forecast: Demand forecasting isn’t a one-time thing. The market changes, trends evolve, and new information comes to light. Make sure you’re updating your forecast regularly to reflect these changes.
Forecasting isn’t about making a perfect prediction. It’s about creating an informed estimation that helps you better manage your inventory and ultimately provide a better experience for your customers.
Supply Chain
Supply chain management is the pipeline that keeps your business running smoothly. On the other hand, inventory tracking focuses more on the details: how much stock you have, where it’s located, and when it’s ready to be delivered or sold. But these two processes are two sides of the same coin, and together, they can improve the customer experience.
Here’s how a well-managed supply chain can work in your day-to-day operations.
Predictability: With an efficient supply chain, you’ll have a better idea of when new stock will be available. This can inform your inventory tracking and help you anticipate when to reorder items.
Availability: A robust supply chain ensures that products can be replenished quickly when stock levels are low.
Efficiency: When the supply chain operates like a well-oiled machine, it’s easier to track inventory in real time and adjust quickly to changes in demand or issues in the supply chain.
So, how can you ensure your supply chain is helping rather than hindering your inventory tracking efforts?
Good relationships with suppliers: Building solid relationships with your suppliers will make them more likely to go the extra mile when you need to adjust your orders quickly.
Have a backup plan: Sometimes things go wrong, but having backup suppliers can help you meet demand when the unexpected happens.
Invest in technology: Supply chain management software can give you real-time insights and make tracking inventory more manageable.
Continually optimize: Look for ways to make your supply chain more efficient and effective to remain one step ahead.
Efficient Warehouse Management
Warehouse management is about optimizing the storage, organization, and movement of inventory in your warehouse, an intricate dance that, when done well, keeps your inventory tracking accurate and your customers happy.
Why does it matter so much? Here’s why:
Accurate Inventory Levels: Proper warehouse management means knowing where every item is and how much you have in stock. This prevents both stockouts and overstocking, saving you from unnecessary costs.
Speedy Fulfillment: Efficient warehouse processes mean you can pick, pack, and ship orders quickly and accurately. This helps you meet customer expectations but also helps maintain a correct and real-time overview of your inventory levels.
Space Optimization: An efficiently managed warehouse makes the best use of available space, meaning you can hold more stock and navigate it quickly.
How can you bring your warehouse management game to the next level? Here are a few strategies:
Use a Warehouse Management System (WMS): A WMS can help automate many warehouse tasks, keep track of stock levels in real-time, and provide valuable data to help optimize warehouse operations.
Implement a Bin Location System: Assigning every product to a specific location (bin) in your warehouse can dramatically speed up order picking and put-away times, reducing the chance of miscounting or losing track of inventory.
Regular Stock Audits: Even with the best systems in place, occasional manual checks can help catch discrepancies and ensure your inventory data is accurate.
Implementing Effective Order Fulfillment
Picture this: you’ve done everything right so far. You’ve nailed your demand forecasting, your supply chain is a well-oiled machine, your warehouse is organized, and your inventory tracking works like a charm. But there’s another piece to the puzzle – order fulfillment. The smoother this process, the quicker your inventory turnover and the better your chances of avoiding stockouts or overstocks.
Order fulfillment isn’t just about speed; it’s about accuracy too. Rushing through orders can lead to mistakes, affecting your product count. So, how can you make sure your fulfillment procedures are efficient and accurate?
Warehouse Organization: Make sure your products are easy to locate and retrieve. Use clear labeling, create designated areas for different types of products, and keep high-demand items easily accessible.
Use of Technology: Use UPC sticker labels or RFID tags for quick and error-free product identification. You could also use automation for tasks like packing and sorting.
Inventory Updates: Remember to promptly update your inventory counts when a product is selected for shipping.
Order Accuracy: Implement quality checks at various stages of the process to ensure order accuracy. Incorrect orders not only lead to returns but also mess up your inventory counts.
Staff Training: Regular training sessions can help your team understand the importance of their role in inventory management and how to avoid common errors.
Every step you take is a step towards a more successful e-commerce business. Start small, make incremental changes, learn from your experiences, and gradually, your business will transform. Stockouts will become less of a concern, customer satisfaction will rise, and your e-commerce venture will thrive.