How to prevent stock outs and overstocking in your business?

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Keyword: e-commerce inventory management

E-commerce inventory management, due to its ever-changing nature for which reason it is termed as dynamic. Constantly poses challenges in meeting and keeping with the expectations of consumers. Whose preferences also undergo changes from time to time.  Promising consumers with options without accurate details of inventory may lead to falling short on delivery. This means the risk of losing consumers that in the ultimate end cost your business dearly. The way forward in e-commerce inventory management lies in integrating inventory visibility with accuracy. To accomplish this, we need to take measures that would avoid the extremes of stocking out and overstocking. We will discuss such measures in this article.

Avoid inventory inefficiencies

If the distribution channel within the firm is lacking in connected visibility, it is likely to result in such inventory inefficiencies in e-commerce inventory management as listed below:

  • Too little inventory leading to stock-outs
  • Too much of inventory blocking cash flows
  • Longer lead times, which can add to labor, transportation, and costs. Inconsistent methods deployed to purchase inventory to meet the demand.

These bring out adverse implications for e-commerce inventory management, some of which are in the form of:

  • Out of stock situations arising out of depletion in inventory
  • Reduction in margins due to slow-moving items
  • A compulsion to offer end of season discounts or even liquidation of stocks due to haphazard systems being a place

In short, if the e-commerce inventory management is flawed, it would result in disappointed customers whose leaving can result in loss of trust, missed revenue opportunities. And overall stress on the finances and eventually the balance sheet.

Tips to prevent stock-outs and overstocking

Consolidation of forecasting and demand planning

When there is a lack of unity across the distribution centers, it can result in supply chain redundancies or in conflicting priorities. Systematic collaboration in the form of group planning would allow for flexibility. And bring about changes in the forecasting based on facts and knowledge, which will go towards resolving issues that distort the balance between capacity and supply.  It would be the task of the collaborative team to make appropriate changes in the demand and supply parameters. Which would enable the distributors to take advantage of their offerings, including discounts if any. For this, the distribution centers would have to be on the same page.

Avoid Siloed inventory

Siloed inventory can lead to out of stock situations, which leaves it open to the generation of conflicts with the preferences of the consumers, with end result of piling up of disappointed consumers, reduced profitability. Or even losses due to forfeiting of sales altogether, arising out of nil inventory. Which otherwise has been shown to exist, due to wrong or inaccurate forecasting. A major negative factor of siloed inventory in the e-commerce inventory management relates to the complexities it poses in forecasting resulting in difficulties in the management of stocks and sales, which could be avoided by avoiding it.

An appropriate and customized distribution management solution that fits the needs of your business would have to be put in place. It can facilitate the enhancement of collaboration between the teams, by having access to the inventory data in a unified manner. It would enable them to take better inventory decisions. This would improve e-commerce inventory management paving the way for efficient operations and profitability of your business.

This article has dealt in a realistic manner with the issues businesses face relating to stock-outs and overstocking. Both of these are bad in that they can cause erosion in the revenues and pose danger to the viability of your business. By suggesting ways and means prevent stock-outs and overstocking in your business, it has fulfilled its key objective of focusing on the implementation of an effective and efficient e-commerce inventory management system.

KEYWORDS: e-commerce inventory management, inventory management, business, AVOID, consumer, stock-outs and overstocking, distribution







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One Response

  1. An outstanding share! I have just forwarded this onto a friend who had been doing a little homework on this. And he actually bought me breakfast because I found it for him… lol. So let me reword this…. Thanks for the meal!! But yeah, thanks for spending the time to talk about this topic here on your web site.

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