7 Best Inventory Management Practices for Small and Medium-sized eCommerce Businesses

In the world of eCommerce, managing inventory efficiently is important for small and medium-sized businesses in the Philippines. Ensuring products are available when customers need them without bulking up or overstocking can be challenging. Bad inventory management will always lead to waste, overstock, and missed sales opportunities, resulting in financial losses for the business. On the other hand, if you have good inventory management your business will always have the highest stock levels, reduce costs, and improve customer satisfaction by fulfilling orders efficiently and accurately.Learning how to manage inventory well is important for businesses to stay competitive and make money in the long term. Now in this article, we'll explore some simple yet effective strategies to optimize the inventory management processes and improve overall performance.

Best 7 Practices for Inventory Management

Explore seven best practices to streamline your operations and ensure products are available to customers without overstocking.

Regular Stock Monitoring

Regular inventory monitoring involves physically counting and verifying the stock levels of products in your accounts. By conducting these types of audits on regular basis, you can identify differences, prevent stockouts or overstock situations. You can ensure accurate records of your inventory levels. This will help in reducing mistakes chances and maintain the unity of your directory data. Ultimately leading to more informed decision-making. Let's take an example of bakery owner in Philippines who counts the cookies every morning before opening the store to ensure there are enough for customers. By doing this regularly, they can prevent running out of cookies during busy times or having too many leftovers at the end of the day. In this way, they will maintain accurate records of their inventory levels and can make accurate decisions about how many cookies they should bake every day to meet customer demand and satisfy them without any hassle.

Utilizing Inventory Tracking System

Inventory tracking systems, such as barcode or RFID systems, help businesses to track the movement of goods in real-time, like here the product is sold there it would be marked in the system. These systems enable you to monitor inventory levels, identify items which are selling less and are low in demand, and streamline order fulfillment processes. By implementing such systems, businesses can improve accuracy, reduce manual errors, and enhance overall efficiency in managing inventory.

Product Demand Forecasting

Demand forecasting involves predicting future requirements for products. The prediction is based on their previous sales data, market trends, and other factors. By accurately forecasting customer demand, businesses can expect requirements, optimize inventory levels, and prevent excess inventory. This enables Philippine businesses to align their records with actual demand, leading to improved turnover and reduced carrying costs. Like Let's say you own a bakery and you want to predict the demand for your popular chocolate chip cookies for the upcoming month. Using last month's sales, you predicted that you will need 120 cookies on weekdays and 140 on weekends and holidays at your bakery. This will ensure you meet customer demand without running out or having too much stock.

Just-in-Time Inventory Management

Just-in-time inventory management is another strategy that can be adopted by businesses. It involves keeping inventory levels minimal by only ordering and receiving goods as you need. This strategy helps businesses minimize storage costs, reduce inventory holding costs, and improve profits by avoiding excessive bulking of products in the directory. JIT inventory management requires close coordination with suppliers to ensure timely deliveries, so that they will send products when needed on time, and requires accurate demand forecasting to avoid stock-outs for the products required.

ABC Analysis of Your Business

ABC analysis categorizes inventory items into three categories based on their importance and value to the business according to their selling.

• Category A items are the most valuable and typically represent a smaller portion of the inventory but contribute a significant portion of revenue.
• Category B items are moderately important.
• Category C items are the least important and represent the bulk of the inventory but contribute the least revenue and sales. Like they are just taking the space.

By prioritizing inventory management efforts and resources on Category A items, businesses can optimize their management processes and focus on maximizing profitability.

Maintaining Good Relation With Supplier

Maintaining strong relationships with suppliers is essential for effective inventory management. By cultivating good relationships with suppliers, businesses can negotiate favorable terms, secure reliable and timely deliveries, and access better pricing and discounts. This helps in ensuring a regular supply of goods, reducing delivery times, and minimizing disturbances in the supply chain, ultimately leading to improved inventory management. And maintaining good relation with supplier is a vital rule for success in businesses to make your business succeed as supplier is the person who will provide you the products for your business and without products you cannot operate in the market.

Optimization of Economic Order Quantity

Economic Order Quantity (EOQ) is a formula that helps businesses find the perfect balance in ordering inventory to minimize costs based on factors like demand, ordering costs, and holding costs.

Benefits of EOQ

Cost Reduction: EOQ minimizes total inventory costs, including ordering costs and holding costs.

Optimal Order Quantity: It calculates the ideal order quantity to make a balance between ordering costs and holding costs.

Improved Efficiency: EOQ optimization leads to improved inventory management efficiency, resulting in cost savings and streamlined operations.

Conclusion

Effective inventory management (EOQ) is crucial for the success of businesses. When you will implement these strategies effectively, can help businesses optimize their inventory management processes, minimize costs, increase customer satisfaction, enhancing overall operational efficiency, and ultimately achieve growth and success in the competitive Philippine market.