In this article, we’ll share a general approach towards inventory management methods. This means we won’t be going over methods like ABC, FIFO, LIFO or such. Instead, we’ll take the discussion more towards having an understanding of the working parts and how they influence your business performance.
Top inventory management methods
If you understand the problem, you can create inventory management methods yourself. So, let’s freshen up our knowledge on several points:
- Stock levels & Reorder points
To run your business smoothly, you have to micromanage the amount of goods you stock. If you don’t keep enough - you’ll lose sales while out of stock. If too many - the money you’ve put into those products could be used actively somewhere else, rather than collecting dust in the warehouse. Setting the correct amount is not easy. It involves customer behavior, seasonal changes and trends. With time, you’ll get better at it. But only if you put effort into estimating on a regular basis. This task alone can be the difference between going under and succeeding.
Whereas stock levels focus on the levels of a particular product, reports will help you figure out which products are worth selling. Analyzing your performance is essential. You’d be surprised how many merchants operate day by day without checking which of their products net them most or least profit. That could mean they’re investing into products that bring no value. If they would look into their numbers, they could drop that product and invest that money into something else. Whenever you’re about to dedicate time or money to something, always consider the opportunity cost. If you’re unfamiliar with it, we strongly recommend that you watch this video about opportunity cost.
- Amazon FBA / MCF
Amazon has an amazing service for sellers. Even though you send your products to their warehouse (or order supplies directly to the warehouse). They store, pack and ship them to your customers for you. Even though it’s a paid service, two thirds of Amazon’s top 10 000 sellers use it. Also, you can use this service to sell on any platform, not just Amazon.
The best method
Even though solving small problems one by one will eventually lead to a fairly optimized business, it’s much more efficient to use technology. No amount of manual inventory management methods are going to outperform it. These days, you can adopt software at barely any cost.
Of course, there are providers that charge a lot, but that’s not indicative of the market as a whole. It’s just that the features are so good, they outweigh the costs even then. However, if you do your homework, you can get the same benefits at a fraction of the cost. We’re talking about Multiorders.
Essentially, it’s a single solution to the vast majority of inventory management issues. A simple, yet powerful tool to reach new heights in cost and time efficiency. As a matter of fact, all the aforementioned inventory management methods are in Multiorders.
It’s also much easier to keep stock at healthy levels. For example, you get notified whenever a product dips below par stock. A couple of clicks later, your supplier already has the purchase order. That’s not just convenient, but also efficient.
Reports are also easier with software, because you don’t have to make them yourself. Rather, they’re always there for you.
As for Amazon FBA / MCF, it obviously is optional. But it does integrate into Multiorders seamlessly. That means even less work for you and your team.
However, that’s not all what software does. The sum of all features makes running your business a breeze. We’d like to bring up the opportunity cost again. Imagine what you could do with all the newly-found free time.
You can expand your business into new markets. Maybe dedicate time to your advertisements to make them more creative and effective. You can also work on your product descriptions. The possibilities are endless.
You get the point - there are unlimited opportunities to improve your business that you’re not taking if you’re busy fulfilling orders or managing inventory in some other way.
That’s why we’re as excited about Multiorders as the day we took it off the ground - it unshackles merchants and provides freedom. If you’d like to give Multiorders a try, you can do so for free. We’re confident it’s worth your time to set it up. It only takes a few minutes anyway.