It is common to see best practices by phrases such as “operational excellence” or “world-class”. But these descriptions are a little more than a phone.
To give this a bit lengthy description, keen down to the alluded text, as – WooCommerce inventory management.
True best practices are achieved through continuous improvement, which binds each operation with customer value, and a collective mindset that embraces technology to create lasting success.
Here are 10 that I can guide you…
Kick with Your Own Data
The ability to effectively leverage large amounts of data was cost-prohibitive for small organizations. Today, the best strategies surround collection, aggregation, and insight from one source of truth… yours.
Inventory management software has changed the game by allowing SMBs to:
- Easily create that single source of truth, and
- Benefit from the congested learning that builds into the solutions themselves.
Inventory Turnover Rutting Up
Inventory turnover measures how many times a specific item has been sold and rearranged over a given period of time. This is the ratio that first divides the COGS by the average inventory:
Then, divide your inventory turnover rate by 365 to determine how many days it takes to turn that inventory into a turnover:
Maximizing inventory turnover can help you increase profitability by helping to determine the right reordering point and thus reduce costs as well as worsen.
Learn Your XYZs
To get the maximum turnover, you need to know which list to prioritize. Not all products are created equal.
Highlighted above, ABC inventory management classifies products into three categories based on the value of your business. This is a variation of the Pareto Principle: 80% of all effects come from just 20% of causes.
Apply to list:
- X: High value (70%) and a small number (10%) items
- Y: Goods of medium value (20%) and in moderate numbers (20%)
- Z: Small Value Items (10%) and Large Number (70%)
As you assign merchants to each category, align the value with your company’s goals. Generally, it is profitability but it can also increase market share through gross sales.
Forecast Demands to Inventory
Today forecasting is the biggest demand in every department. So, with the demand volatility, we all have to make a standard that also to be universal which succors you in inventory optimization.
Traditionally, accurate demand forecasting has been simplified. Not only that but also the extensive factors such as sales channels and promotional offerings have made more simplified which was a very difficult job to do.
Especially if you rely on spreadsheets and travel through versions of historical data.
Today, however, automated demand forecasting for intelligent inventory management systems is available to businesses of all sizes.
Automation of Each Used Technique
Workflow automation refers to organizing part or all of a workflow to improve efficiency and less human dependency. In short, this means using technology to center a complex web of working parts while reducing the need for manual labor.
All or all of the supply chain automatically has huge benefits – that is, freeing its people while increasing productivity and accuracy. In fact, a report by McKinsey suggests that automation can increase the productivity of the global economy annually between 0.8% and 1.4% of global GDP.
Following are the right system which succors in workflow automation is achievable for any of the business, as follows;
- Customize the storefront experience for B2C and B2B buyers.
- Selling streamlines across multiple channels and stock locations.
- Set-and-forget your purchase and order processes.
- Automatically track revenue and expansion goals.
- Apply bulk actions to high-order volumes.
Batch & Expiry Date Tracking
Tracking from raw material to finished goods, batch and expiry date allows you to see where each “collection” of inventory has come from, where it is going, how much is left, and when it will expire.
Batch and expiration date tracking are important for several reasons:
- Avoid inventory malfunction
- Identify which batch to sell first
- Make sure you are selling checked-in items
- Remove specific batches in case a product is recalled.
FIFO or LIFO Following
First-in, first-out (FIFO) is an accounting discipline – as the name implies – the first item in your inventory is also the first to leave: that is, the oldest items go first. In the last, first-out (LIFO) is the opposite: that is, the latest items take precedence.
If you sell perishable items, FIFO is a requirement. Otherwise, you will end up with a spoiled inventory that you will have to write off as a loss.
For non-perishable goods, LIFO is usually the default because you do not have to rearrange the warehouse or rotate batches. The only caveat is that if you sell highly seasonal products as well as both non-seasonal staples, in that case, you will need a mixed approach.
Many businesses let incoming shipments or their 3PLs decide for them.
Pipeline inventory refers to any item that has been purchased but has not yet reached its final destination. For example, if a wholesaler buys stock from a foreign manufacturer, that stock is considered a pipeline – that is, within the supply chain of the business – during the shipping and receiving process.
The optimal pipeline inventory can be calculated by multiplying the lead time – how long it takes to place an order and receive stock – by the demand rate – how many units you sell between orders:
One of two safety measures is to keep your pipeline running smoothly so that you don’t run into a stockout.
For Safety Decouple Inventory
Decoupling inventory – or decoupling stock – refers to goods that are set aside in case of an interruption or stagnation in production. This inventory is also known as a safety stock.
If one or more components are unavailable and (2) orders are not fulfilled in case of a stockout, the discounted inventory (1) provides a safety net to reduce the risk of a complete halt in production.
It is important to consider pipeline inventories and decode inventory simultaneously because they help you strike the right balance between risk and cost. Maintaining that balance makes for effective inventory management and continued growth.
Increase AOV with Kit and Bundle
Inventory kiting – also known as “product bundling” – groups, packages, and sells individual items as a unit.
B2C and B2B businesses can be benefited from bundling, as follows:
- Average Order Value Increase.
- Keeping and shipping cost down.
- Providing convenience and flexibility to customers.
- Tracking and maintaining stock levels more effectively.
- Stopping deadstock by selling old or unwanted inventory.
In order to manage your inventory effectively follow out these ten practices mentioned above.
Well, these practices will make your online business stand like k2. And to give a finish to these practices, keen to the best WooCommerce inventory management plugin.
Last but not least, if you find the article informative then do share and comment some appreciating lines in the comment section below. Gazing for the positive wave.