Inventory falls right at the center of your retail business and keeping a constant track of it is a difficult job.
Selling products that aren’t in stock is impractical, and storing slow-selling items consumes valuable warehouse space. However, astonishingly, 43% of businesses either employ manual methods or neglect inventory tracking altogether.
Fortunately, with careful planning, an effective system, and some experimentation managing inventory across channels and sources can be simplified to a great extent.
So what’s the trick?
Utilizing a real-time multichannel inventory management system is crucial for effectively tracking and overseeing your inventory, offering advantages that positively impact your performance.
In this blog, we’ll explore the functionality of a multichannel inventory system, its advantages, and a guide on selecting suitable software for managing inventory across multiple channels.
Let’s dive right in!
Multi-Channel Inventory Management: What Is It?
Multi-channel inventory management, also termed multi-channel inventory control, refers to the procedure through which businesses account for and monitor orders from diverse sales outlets for inventory stored across numerous locations, encompassing marketplaces, e-commerce platforms, retail, and wholesale channels.
Through cloud-based software, this system synchronizes stock levels across all sources, ensuring accuracy and a unified source of information.
A crucial aspect of this process is the dissemination of information across the organization, as various departments require inventory data for various purposes. Access to a trustworthy inventory data source which is accessible to all stakeholders, eliminates a problematic layer of coordination.
Why Using A Multi-Channel Inventory Management System Is Beneficial For Your Business
Given the challenges and time constraints of manually managing inventory across various platforms and channels, multichannel inventory systems offer several advantages.
1. Real-Time Visibility
Picture this.
A customer buys the last vanilla candle from your physical store. Shortly after, an online shopper purchases the same item before you get the chance to update your inventory.
Multichannel inventory management prevents such situations by automatically synchronizing stock levels across all platforms, concealing out-of-stock items on your website.
Here’s why real-time visibility is crucial for your business:
- Real-time insight throughout your business is essential, especially during peak periods, for optimizing profits.
- It allows you to easily identify products requiring replenishment to prevent missed sales and streamline the process for greater efficiency.
- This visibility also helps avoid overstocking items that are stagnant or can be redistributed to other locations.
2. Improvement In Customer Service
Not being able to meet that vanilla candle order might lead to an unsatisfied shopper.
By ensuring precise inventory management, you minimize the likelihood of losing customers to competitors.
- Multichannel inventory management elevates customer contentment by enhancing delivery choices.
For instance, up-to-date stock levels can optimize options like buy online and pick up in-store (BOPIS) by directing customers to the location with available stock.
Additionally, you can propose shipping or home delivery from the nearest warehouse or store to the customer’s address, thereby decreasing shipping expenses and delivery time.
3. Valuable Insights
- Multichannel inventory management offers valuable insights pivotal for strategic business decisions.
For instance, by analyzing historical sales data, you can gain an understanding of high-demand products. This data can guide new product selections by highlighting categories preferred by your clientele.
- Furthermore, insights aid in forecasting optimal inventory levels, allowing for scaling up during peak periods and downsizing during slower seasons.
- Data facilitates the identification of slow-moving items that could benefit from discounts through flash sales and exclusion from automatic reorders.
4. Cost Effective
If you sell an item that’s unavailable, you will need to refund the customer unless they’re willing to wait.
- Maintaining optimized inventory levels saves money tied up in deadstock occupying shelf or warehouse space, possibly requiring liquidation later.
- Multichannel inventory management can cut costs by shipping from the nearest location, reducing transportation expenses, particularly crucial for retailers offering free shipping.
5. Growth In Business
- Utilizing multichannel inventory systems facilitates business expansion by simplifying sales across multiple channels.
- With automated tools synchronizing sales and inventory across platforms, retailers gain the flexibility to venture into new platforms and access a broader customer base.
Inventory Management Techniques
Multi-channel inventory techniques form the backbone of good inventory control. Here are a few techniques that you can incorporate:
First In First Out (FIFO)
The FIFO method is widely adopted, particularly for storing perishable or time-sensitive goods. Under this practice, orders are fulfilled with items from the oldest stock in the warehouse. This minimizes the risk of inventory spoilage during storage and ensures proper rotation of inventory.
Maintaining Minimum Product Levels
This is often referred to as Par Levels and ensures a predetermined quantity of stock before reordering, establishing a universally recognized threshold.
ABC Inventory Analysis
An ABC Inventory Analysis recognizes your top-performing products by revenue and volume. This facilitates better organization of warehouse space and changes in price based on market availability.
Routine Audits
Regularly performing inventory audits establishes a foundation for evaluating productivity, stock levels, and overall inventory operations. How frequently you conduct such audits depends on factors such as the size of your business, workforce size, and product range, allowing flexibility in determining the appropriate schedule.
Sales Forecasting
Sales forecasting is the crystal ball of inventory management.
Using historical sales data from corresponding timeframes the previous year, previous month, and previous week, among others, you forecast future sales patterns.
This task can be done manually or entrusted to an inventory management system for accuracy and efficiency.
How To Manage Inventory: Choosing The Right Software For Multi-Channel Inventory Management
When searching for multichannel inventory management software, it’s crucial to opt for a system that streamlines inventory management and includes features conducive to business expansion. Here are several factors to take into account:
- Automation Capabilities
Your multichannel inventory management system should automatically update inventory levels following any changes in stock counts. Look for a system enabling you to establish alerts when inventory falls below specific levels, generate automatic purchase orders with vendors at predetermined inventory thresholds, and provide the option to receive daily stock-alert emails, ensuring constant awareness of your inventory status.
- User-friendly
Choose a system that is user-friendly and facilitates effortless uploading of product images from mobile devices or iPads to your point-of-sale (POS) system, alongside easy cataloging with accompanying descriptions.
- SKU Generation
Systems that automatically generate SKUs assist in cataloging new inventory when introducing a new item variation or producing a barcode label. Automated SKU generation can minimize expenses and enhance data accuracy, ensuring that individual inventory aligns with your business objectives.
- Analytics
Effective inventory management software should provide comprehensive real-time analytics to aid in inventory forecasting and support decision-making. This includes generating reports on sales, profit, cost of goods sold (COGS), and sell-through rates.
- Integrations
Your system should provide seamless integration with other tools you utilize, including staff scheduling, loyalty programs, and accounting software, ensuring smooth operation across all aspects of your business.
Your inventory management software should enable you to establish a centralized hub for enhanced visibility and control over your business operations. As your business expands, your multichannel inventory management software should grow alongside you, providing effective tools for selling across various platforms and channels.
FAQs: Multi-Channel Inventory Management
What are the common challenges businesses face when implementing a multichannel inventory management system?
Common challenges include inventory synchronization issues, the complexity of managing multiple sales channels, the need for accurate and real-time data, the risk of overselling or stockouts, and the difficulty of integrating various systems and software solutions.
What sets multichannel inventory management apart from traditional inventory management systems?
While traditional inventory management systems typically concentrate on single-channel sales, multichannel inventory management extends its reach to encompass the orchestration of inventory across various sales channels, including online marketplaces, physical stores, and e-commerce platforms.
How does proficient inventory management enhance profitability?
Maintaining surplus inventory involves expenses like storage, insurance, and taxes, which accumulate rapidly. Efficient inventory management helps businesses in reducing waste, thereby enhancing profitability.
Conclusion
Navigating the realm of multichannel inventory management presents a mix of challenges and opportunities. There’s much to deliberate, whether addressing the risks of overselling and stockouts or leveraging the advantages of automation and channel-specific forecasting.
At its essence, proficient multichannel inventory sync aims to cultivate smooth customer experiences while prioritizing efficiency and profitability for businesses.
However, the key to success lies in selecting the appropriate software. Qodenext emphasizes the significance of well-organized multichannel inventory management. Your inventory management software should enable you to establish a centralized hub for enhanced visibility and control over your business operations. Follow this comprehensive guide on selecting the suitable software for managing inventory across multiple channels.
