Posted by Fred Lizza, CEO, Dydacomp
#2: Ineffective Management of Inventory
The last thing an SMB needs is too much inventory on hand and too few orders coming in, leading to reduced margins. Excessive inventory ties up cash that could have been invested in new equipment, enhancing your eCommerce store, or boosting your marketing efforts to drive additional revenue. On a similar note, not having enough inventory on hand results in backorders, cancellations, and lost customers. It’s a balancing act, but based on a recent Industry Directions survey, it’s clear that this is a major issue for all companies. 83% of survey respondents said that overstocks were common in their organizations. And 60% of respondents said their forecast accuracy was below 80%, even for time horizons as short as three months.
Visibility into your inventory and accurate forecasting is critical to a healthy operation. You need to be able to track inventory across all eCommerce operations and catalog fulfillment even if you use eBay, Google Checkout, an eCommerce platform, popular third party eCommerce software such as Yahoo, offsite fulfillment centers or shopping channels like Amazon fulfillment. This information will help you determine what products are selling, what periods may require more inventory, and when you may want to consider unloading inventory on a business channel such as eBay.
In order to effectively manage inventory, you may also need to:
- Track those inventory products that you don’t actually stock yourself but are shipped directly to your customer by your supplier
- Manage inventory products made up of other items and sold as a set or group with a special price
- Manage continuity programs like a “fruit-of-the-month” club where you determine what is shipped and when
To be continued…