Proper inventory control is essential to your supply chain. How your business manages stock directly impacts your ability to meet customer demand. Having the right amount of inventory in the right place at the right time is critical.
For retailers managing overseas shipments or fast-moving stock, inventory control directly impacts margins and reputation. The significance of inventory control cannot be overstated for your business.
What Is Inventory Management?
Inventory management is how you handle your stock levels across the supply chain. The way a business controls stock levels and tracks everything in real time influences profit, waste, overstocking, customer satisfaction and freight speed. Inventory control is critical when you’re dealing with global logistics. Goods move through ocean cargo, air freight and consolidation hubs. Without a solid plan, you can quickly lose track of your product. This can have long-term effects on your supply chain, even if you can’t see them yet.
Critical parts of inventory management include:
- SKUs: Each product or unit has an identifier, called a stock-keeping unit, that lets workers track it to its destination.
- Stock levels: How much stock do you have? Businesses need to maintain enough inventory to meet demand without overstocking or creating long lead times.
- Shrinkage: Damage, errors and theft all lead to shrinkage. The higher your shrinkage, the lower your profits. Businesses need inventory controls to reduce loss.
- Lot tracking: Businesses will track lots or product batches. Businesses can identify the bad batch by the lot number if there’s a quality concern.
- Reorder points: These are set amounts that trigger reorders. If the stock gets low enough, it hits a reorder point and more products are automatically ordered to keep up with demand.
Why Is Inventory Control Important?
Inventory control’s importance extends to all aspects of your business. Any losses, seasonal demand spikes or shipping delays will affect your inventory. If you’re not prepared for these events, it’s easy to over or understock. The purpose of inventory management is to help mitigate these risks.
Accurate inventory improves shipping and product compliance, reduces shrinkage and makes order fulfillment more accurate. Companies looking to reduce costs and waste while growing their businesses need effective controls in place.
How Controlling Inventory Impacts the Supply Chain
Inventory management helps you meet customer demands, avoid overstocking and maximize profits. You may experience slowed operations if there is excessive unsold stock or product issues.
Similarly, running out of inventory means customers have to wait even longer for products, reducing their satisfaction with your business. Retail managers must maintain accurate stock data to support their supply chain success and maintain happy buyers.
Prevent Stocking Issues
Managing inventory means balancing overstocking and understocking. If businesses have overstocked warehouses, they tie up their warehouse space and capital on unsold product. This is especially expensive if you’re handling imported shipments. How will you make room for incoming shipments?
Understocking leads to lost sales and poor customer reviews. The longer it takes to get products sent out, the more profits you leave on the table. Accurate forecasting lets retailers balance their stock to avoid going one way or the other.
Improves Budget Planning
Knowing what’s in stock, what’s on the way and what’s in demand makes budget planning easier. Real-time inventory data allows retailers to make smarter purchasing decisions.
You can reduce the chances of needing emergency shipping if you have exact numbers and stock levels on demand. If you’re consolidating products or storing them in bonded warehouses, real-time insights are critical. Manual processes can leave your operation disorganized — and cost your business in the long run.
Streamlines Returns
Returns and exception handling are just part of the industry. Returning, rerouting and replacing products means expending additional resources. Real-time data on SKU location, condition and origin makes solving these issues more cost-effective and faster.
Working with a logistics partner can also help streamline this process. They can handle returns and reroutes with shipping and last-mile delivery services. This way, your company can track inventory without redirecting resources the logistics partner already provides.
How to Optimize Your Inventory Control Process
E-commerce is especially fast-paced, and it’s not enough for businesses to be efficient. Your operation needs to be competitive. The right strategy and technology can give you an edge over other businesses. You should develop proactive management strategies. Invest in data, automation and strong logistics partnerships to create the most effective inventory control process.
1. Use Real-Time Data and Forecasting Tools
The ability to make decisions based on current inventory levels is invaluable. Real-time data lets retailers spot stockouts and overages before they become problems. Using software designed for supply chain management can help. These solutions offer updated shipment information, detailed inventory reports and product tracking. Combine this with forecasting tools, and your teams can plan around inventory cycles and seasonal shifts.
2. Keep Detailed Inventory
You need barcode scanning, regular audits and automated lot tracing to optimize inventory tracking. Barcode scanning can reduce errors in inventory counts, speeding up the process. Regular audits will help you catch problems early so you can close gaps and prevent more expensive consequences in the future.
Lot tracing ensures inventory is easy to monitor based on batch, SKU or expiration date. This information is critical for high-value or regulated products. The more detailed your inventory and tracking, the better you can control loss and product movement.
3. Optimize Warehouse Layout
Warehouse zoning is how businesses organize their warehouse layout. Managers might choose to organize by size, order frequency or product type. Whatever you choose, it should be consistent to improve picking efficiency and reduce misplacement.
Combine this organization with inventory turnover tracking to streamline your product management. Inventory turnover tracking helps retailers identify slow-moving SKUs, adjusting outshining strategies to accommodate this. Choose a warehouse provider that lets you optimize your layout for speed and accuracy.
4. Work With a Logistics Partner
A third-party logistics provider (3PL) gives you the resources to improve shipping without dramatically increasing costs. 3PL providers have the infrastructure and experience to handle your freight, last-mile delivery and customs clearance to make supply chain management easier. They’ll tailor their solutions to your company’s needs, so your business can meet customer demand.
With 3PL provider technology and your inventory control solutions, you can ensure your inventory is easy to track while remaining cost-effective.
Streamline Your Inventory With a Global Logistics Partner
Inventory management takes strategy, technology and experience. EMO Trans is here to help you manage your supply chain. We offer businesses the solutions they need to master logistics. From balancing stock levels to navigating international shipping, we have the infrastructure and insights to support your success. Our Track & Trace (Quick Track) technology, accessed from our portal, gives you insight into your inventory. Plus, with facilities as large as 30,000 square feet and tailored freight options, we can handle your supply chain from end to end.
Get customized retail logistics services from EMO Trans. Make your inventory more efficient when you request a quote online today!