No matter the size or location of your company, effective inventory management is essential for running a smooth business. High street stores and home eCommerce both share this need for efficient stock management because poor inventory management will lead to escalating complications that will harm every stage of your business.
While high street stores have the physical presence to withstand mistakes like this, smaller online stores need to confirm repeat business through accurate sales and happy customers. To ensure the prosperity of your online business, you must employ inventory management that is efficient and accurate.
Why is Inventory Management a Must?
At its simplest level, inventory management is organising your stock so that you know exactly how much you have for sale all the time. Inventory management is a process that’s easy to take for granted when running an online business. Still, there are many reasons why you should employ an effective system.
Beyond that initial purpose, inventory systems will assist you with your stock planning. Being able to predict how much of a product you’ll need to acquire and knowing you’ll most likely be able to sell it for a profit will be a significant factor in the growth of your online business. This becomes increasingly important as the year progresses. In addition, the shifting commercial changes that come with seasonal shopping are opportunities that shouldn’t be missed due to lack of stock. Similarly, if your online business deals with perishable goods, you won’t want to overstock when interest is low and have expensive stock wasted.
This estimates and positive results method is only possible through an accurate inventory management system. For example, by investing in a barcode warehouse management system, you can optimise your business to make it financially efficient and significantly increase your returns on your investments.
Labels For Effective Inventory Management
Labels are a highly effective way of organising your stock, no matter where it’s stored. Paper-based systems with handwritten labels are a thing of the past. These older systems leave your business open to any number of mistakes through human error as well as increased wasted time handwriting labels your products. A far superior improvement is to invest in a barcode inventory system.
With technological advances, barcode printers and mobile computers have become affordable options for online businesses. This gives many more managers the benefits of using barcodes to track their incoming and outgoing stock. But what are the specific benefits of adopting a barcode-based inventory system?
When barcodes are combined with an inventory database significantly speeds up working processes whilst simultaneously helping to eliminate human error. Maximising the accuracy of your inventory management is vitally important as any errors here will have a knock-on effect later, whether it’s ordered that cannot be fulfilled or an overabundance of stock.
Sales Data Analysis
When developing your online business, there are two connected methods you can take to grow and improve, and these are called the 80/20 rule and the ABC model.
The 80/20 rule states that 80% of your profit should come from 20% of your stock, thereby focusing on selling that 20% as a priority. This is achieved through monitoring the sales you conduct through your online transactions and analysing the complete lifecycle of these products from acquisition to sale to see how many you sell at any point of the year, especially with seasonal purchases.
ABC analysis is the next step after the 80/20 rule. This analytical tool will assist you in determining the actual value of your stock as a percentage of your revenue. It also helps you develop that predictive system, as you discover the high demand products that you can’t run out of over the less popular items that you can afford to buy less of.
The term ABC is a label system that categorises your products during the analysis:
- (A) Products are high priority, in-demand and provide your highest profits. These are the items you should always ensure you have. These are the ones that will make up that 80% previously mentioned.
- (B) products are not as valuable but will be roughly 15% of your revenue. These could be cheaper products or seasonal products. You can purchase these products in smaller quantities when it’s not their season.
- (C) products are your least profitable, only roughly providing 5% of your revenue. Keeping your stock of these products low but consistent will allow you to maintain its limited revenue but also gain from not buying too much of it.
This is another area in which a barcoding inventory system can help. When scanning each item as it arrives and leaves, you can swiftly develop a thorough database of all this relevant data, ready for analysis so you can optimise your business to its utmost potential.
Total Barcode Solutions From GSM Barcoding
With more businesses joining the eCommerce landscape every day, ensuring your business is running at its peak efficiency is vital and maintaining an effective inventory management system will help dramatically.
At GSM Barcoding, we can provide your business with high-quality, durable barcode labels in various sizes and substrates to meet your exact requirements. In addition, we offer a premium design & print barcode label service for your consideration.
Alternatively, we offer hardware solutions also. For example, Barcode printers, scanners and mobile computers are all available online. Please browse our selection to learn more about how we can help your online business thrive.