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10 Best Practices For Inventory Management

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E-commerce firm operators should prioritize inventory management. A well-defined inventory management procedure is critical for improving inventory tracking and boosting business operations in general. You may begin employing inventory management tactics that help both your company and your consumers by making a few adjustments to your present processes.

There are several inventory management processes to consider, ranging from keeping items available on your website to guaranteeing that purchases are completed efficiently. To assist you in getting started, we’ve compiled a list of fast and easy ideas that can save you time and improve your inventory management overall. Just read from beginning to end for all the best practices for inventory management.

Best practices for inventory management

Best practices for inventory management

Comprehend Your Company

As a company owner, you are the most familiar with your inventory flow. Would a periodic or continuous review method be preferable? If you’re not certain, the following are the details:

  • Continuous Review Systems: In a continuous review system, you order the same number of goods with every order. You must keep eye on your inventory levels and replace your inventory if the number of a product falls below a certain level.
  • Periodic Review: A periodic review method requires you to order things at the same time every period. After each period, you calculate how many things need to be ordered depending on the quantity levels. There are also no predefined ordering levels for this system.

Create Your Own Cycles Count

A cycle counting system is required for good inventory management. Once you do, consider the following factors:

  • Counting frequency: How many tallies can your employees perform per year? What implications does cycle counting have on the production, receiving, and delivery processes?
  • Counting strategy: Once you’ve determined your frequency of counting, you may decide whether to distribute inventory between sites or by classification, product, or value.
  • Who Is In Command: Find a reliable individual who will be in charge of maintaining a strict cycle count system. This is crucial if you want to realize the advantages of such a strategy in your company.

Inventory Management

Your inventory level would be determined mostly by the size and type of business you operate. The number of things held in a warehouse, for instance, might fluctuate greatly between a fresh food delivery service and a garment factory. Generally, it is advised to maintain stock levels low in order to save operating expenses. 

Inventory management

Inventory management

As a result, cash flow improves since you’re not burdened by the high cost of holding shares for extended periods of time. An inventory management system will assist you in determining what levels of inventory are most helpful to the operation of your specific firm. As your business grows, you may track critical data like seasonality, sales patterns, and prior turnover to make more informed strategic decisions.

Employ Quality Assurance

Quality control is critical in any size firm and should be introduced as soon as feasible. Getting a quality assurance procedure in place may be directly connected to customer happiness and business success. Establishing quality control processes is as simple as creating a checklist that includes all of the steps that staff must follow while inspecting the items they receive. For example, you might assign staff to inspect items for the following characteristics:

  • Leaks, rips, or damaged seals are all signs of deterioration.
  • Colors, styles, and dimensions of products must all match the description of the customer order.
  • Pricing and payment terms
Quality control implementation

Quality control implementation

Once all staff work to achieve the same objectives, quality improves. If things do not match business requirements, they are instructed to return goods to the supplier. This inventory management recommended approach minimizes wasteful stock increases, and personnel will no longer provide improper items to consumers.

Determine the warehouse environment where the items will be housed once they have met quality criteria. Could the following have an effect on the quality of your inventory, including lights, temperature, and humidity?

Inventory Optimization

The essence of excellent inventory management is knowing what you have on hand and handling it effectively. When inventory-appropriate procedures are used, your company may optimize inventory levels in order to increase productivity and also fulfill ever-changing client demands. 

Buyers in today’s market will not refuse to publicly share their negative experiences if you fail to satisfy their demands. Or just use the mouse to find another firm. It cannot be overstated how important optimization tactics are to the financial health of your firm. The inability to adhere to inventory best business practices may lead to client loss, inventory reductions, and, finally, employee layoffs.

However, many organizations continue to invest heavily in less important technology while ignoring inventory management entirely. More emphasis is being placed on putting out flames in day-to-day operations. What you may not realize is that a few of these issues might have been averted if inventory management appropriate procedures had been implemented in the initial place. Making inventory management a priority can assist you in avoiding obvious bottlenecks in your operations and assist you to make future plans more precisely.

Prepare Immediately

Obviously, as a small business owner, you may not want your firm to become stale. You want to develop. This can’t possibly happen until you plan ahead of time. Make inventory management a major topic of discussion as you prepare. 

Prepare Immediately

Prepare Immediately

Best practices for managing inventory, or the absence thereof, may make or ruin a small organization. A good, simple system completely removes the human mistake that manual data monitoring produces. As a result, your employees will spend less time moving documents and more time on critical tasks.

Keep Your Workflow Visible

Sales data analyses, like the ABC system, are essential when making decisions. These insights might reveal which of your items are popular, are just not selling, or are slowly moving. You receive a thorough inventory analysis once you notice the greatest sales depending on client demand and seasonality. This information may then be utilized to make decisions based on facts rather than assumptions and projections.

Effective inventory management can benefit you:

  • Maintain inventory levels throughout all retail channels.
  • Time reorganization
  • Order quantity should be optimized
  • Reduce your carrying expenses.
  • Increase your cash flow
  • Increase your profits


Inventory management may be time-consuming, particularly if you have a significant number of sales. One method to reduce the time and human demands that inventory management makes on you is to automate as many components of the process as feasible. This may include:

  • Using automation to update stock levels throughout platforms
  • New goods are being added to the system
  • Purchase order completion
  • Automating bills and verification emails
Automating bills and verification emails

Automating bills and verification emails

Using barcode technology to look over stock with your staff might be beneficial. Automation, on the other hand, will help you save a significant amount of money and time while also improving accuracy.

Plan Everything

Inventory planning and management are critical components of successful e-commerce. It’s because a company without a comprehensive inventory strategy or an inventory planning system is far more prone to overselling, understocking, and late order processing. At the end of the day, it all boils down to the client experience.

When it comes to inventory planning, best practices and procedures must be followed at all times. Inventory planning requires a delicate combination of human competence (people), clever thinking (process), and the appropriate instruments for the task (technology). 

Plan everything

Plan everything

When first developing an inventory plan, it’s a best practice to ask yourself some basic questions that will guide your future strategy.

  • What is the expected volume of your goods?
  • What factors could have an influence on my inventory?
  • Am I putting efficiency first?
  • Do I have the proper KPIs?

Inventory Should Be Decoupled For Added Safety

Decoupling inventory means that all phases of a manufacturing process may continue even if there are inventory shortages or bottlenecks in other places. 

The “ultimate product” created by that step of the production process is decoupling inventory. In the particular instance of a computer company, for example, motherboards with central processing units (CPUs) connected and prepared to receive other elements in the following production stages can be set aside to guarantee that commands can keep going even when there are problems with providers, machinery, or employees at the motherboard initialization step.

Inventory disturbances in one manufacturing process can have major effects on other parts, hence built-to-order manufacturing organizations frequently employ decoupling inventory. The notion of decoupling inventory, on the other hand, is relevant to supply chain management in all sectors.


The ideal technique to handle inventory differs per firm, but the above best practices for inventory management can only help you enhance your present practices. Improving your inventory management tactics may appear to be a difficult task, but with the correct tools, it can be rather straightforward.


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