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Is enterprise inventory management software, or an inventory management platform, really needed for an eCommerce company that only sells a few specialty products? Let’s just say that those who make the investment are poised to handle sudden growth, equipped to seize opportunities for expansion if and when they are presented.
We have yet to find a company that does not hope to make more sales and grow. Even a business with modest goals for selling a single product will almost certainly welcome the opportunity to scale. Their one item could suddenly take off and experience widespread demand. Or the company might decide to expand its product line.
New and small companies must be prepared for what could lie ahead for their products. One way to do that is with tools like inventory management software. Business owners may think that their operations are too small, or that their manual systems are working just fine. But implementing an inventory management system early can increase efficiency—even for one or two SKUs. Not only will the company be poised to handle sudden growth, they will be equipped to seize opportunities for expansion if and when they are presented.
Simply put, the more product you sell, the greater the need for inventory management software, even if it is just for one item.
Running out of inventory is unacceptable. Having too much brings its own problems in the form of carrying costs, spoilage, and dead stock. These issues might not seem very important when sales velocity is low, as new items can be manufactured just in time to replenish stock. But the faster things start moving, the more difficult—and critical—it is to keep up.
Inventory management software gives sellers the ability to know not just exactly how much they have on the shelves at any given time, but how quickly that stock is likely to last based on sales data. Couple that info with manufacturer’s (or vendors’) lead-time data, and it is easy to see how low stock can get before ordering more. Managers can even get an alert when inventory falls to a preset level. They can order more or set up an automation that will generate the order for them.
Getting a product in front of more customers often means adding sales platforms. This might mean signing up with Shopify or a similar platform for online sales, getting shelf space in a local brick and mortar shop, or signing a contract with a big-box retailer (think Target or Walmart) or an online heavy-hitter like Amazon or Etsy.
Signing one of these deals is great news for a small company. But along with the possibility of making a single product a household name, it also brings complications and responsibilities.
Multiple sales channels can create problems with having the right amount of inventory in the right places. Consider a product that is in five different retail locations. One place might continually sell out, while at another the items may languish on the shelves for a long time. An understanding of this data can help the seller move inventory where it needs to be.
Once a company lands one of these highly coveted contracts with a big box retailer or online platform, letting them down is not an option. Inventory management software can predict when it is necessary to earmark or set aside inventory for a specific channel or an unusually large order. The seller can then ramp up production or place additional orders to make sure no sale is missed.
Linking inventory management software with an API or with a company’s EDI will ensure that purchase orders and shipping documents are exactly as the company requires.
It is true that with each new sales channel, sales volume will increase. But margins for the seller may shrink as each platform takes a piece of the pie. These other companies may also dictate a specific price point for a product. To maintain sufficient margins, it is essential that the manufacturing and production process as well as fulfillment procedures are running with maximum efficiency, even if it is for just one or two products.
Inventory management systems can work with WMS to analyze data from supply chain partners to get materials or ingredients at the best prices and from the most reliable vendors. The same is true for shipping partners. Once a product moves from local sales to being sold to customers in different regions, shipping costs and on-time data will become key.
Inside the warehouse, allowing inventory management software to determine the layout, including setting up forward picking areas based on velocity data, can optimize the space. Letting it choose pick paths and packing protocols can speed things up.
Each step that employees take while fulfilling orders translates into time, which in turn costs money. As inventory and time-on-task data are tracked throughout the fulfillment process with barcode scanners, opportunities to improve speed, accuracy, and overall efficiency will become clear.
Customers today expect to be able to track a product they have ordered during every step of the fulfillment process. They may even want real-time alerts telling them precisely when their order is picked, packed, and finally on its way.
Without inventory management software updating an order’s progress this is nearly impossible to accomplish. A seller would have to send emails themselves rather than having them generated automatically by the software.
Small companies or those selling one product are expected to provide this information in the same way a large retailer does. It is part of the overall customer experience and can help promote brand loyalty, good reviews, and repeat business.
A company may go on forever selling just one product. Or they might add a few more or an entire line of things. Often, companion products develop organically. Someone knitting winter hats may add more style and colors, or expand to include scarves and mittens. Or a cosmetic maker might start selling a makeup bag or caddy.
Adding just one or two more SKUs can result in disorganized storage, mispicks, and backorders if inventory is not tracked properly. Inventory management software that is set up when only one or two SKUs exist can easily scale to more. It will also make kitting certain items possible, allowing for an entirely new revenue stream.
In addition to tracking a product or products, inventory management software’s benefits can also extend to packing materials. For example, there might be special branding or logos incorporated into boxes, tissue paper, or packing tape. If these items run out, how will you ship your one and only product?
Implementing inventory management software before inventory becomes overwhelming can help business owners make the decisions that can grow their companies. It can show them if, and when, it is time to launch a new product or negotiate with a new sales channel.
Analytics that reveal trends and seasonality will keep them from lagging behind when their product is in demand. They will also have the data to help them decide when to retire items that are not selling or where the margins are no longer profitable.
When selling a small number of products, there is sometimes a tendency to stick with spreadsheets and manual systems for tracking inventory. Even small companies might be missing out on all that inventory management software has to offer.
Automating inventory practices eliminates human error in counting, checking, and fulfilling orders. Beyond that, it is a powerful tool for keeping things organized and making decisions for any company that intends to grow and scale.
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