To optimize fulfillment and streamline cash flow! Also, to stay ahead of competitors and customer demands. After all, everyone wants to automate their store orders, shipping, and returns rather than enter logs in countless spreadsheets.
Having inventory management eliminates human errors such as overselling and wrong data entries. But that’s not the only reason to consider it for your Magento store. Below we have listed down the six best advantages of using a Magento 2 inventory management.
1. No Manual Tasks
Nobody wants to sit around and do manual data entries or complex calculations with every purchase order. Perhaps, that’s the most significant benefit of using the Magento 2 inventory management system. It automates all the data recording and tracking processes, leaving no room for errors such as data duplicity or wrong entries. You won’t have to waste long hours on complex calculations by yourself.
The features like a barcode scanner will give you an accurate inventory count in real-time with no physical effort. Purchase order management will help you generate digital invoices and manage them in one place. In short, the automation of key business processes will help you manage inventory easily, save time, and avoid human errors.
2. Reduced Risk of Overselling
Overselling is the primary concern in the sales process. It results in overwhelmed customers, lost momentum, and in most cases, suspended from the markets like Amazon and eBay.
The reason is you sell more than you have or can offer. However, you can avoid it with an inventory management tool. Here’s how:
Synchronize your orders and inventory levels across all the platforms. It ensures that stock levels are managed at each sale and helps you understand selling limits. By notifying you of the out-of-stock or limited stock, it warns you from overselling.
3. High Cost-Savings
A Magento 2 inventory management system can help you avoid the costs associated with human errors along with ineffective management like overstock and deadstock situations.
Moreover, it will reduce your supplier time by improving supplier management. It will allow you to reduce excess and obsolete stocks and calculate the cost incurred. You can also calculate the safety stock through product history. It will give you an idea of the product demand so that you can refill the stock accordingly.
The next benefit explains that well.
4. Balanced Stock Control
Keeping stocks means you’re investing your money in it. And you don’t want to squander it. You want efficiency at the stock management level so that the cash flow is positive. But balancing it can be challenging.
If you have little stock, it can lead to stock-out along with customer dissatisfaction and sales loss. On the other hand, if you overstock a product, it can take up valuable space in your warehouse and result in unnecessary charges.
Whether it’s less stock or overstock, it comes at a price. Stock-out results in loss of sales, and overstock causes waste of money.
Fortunately, with stock management, you can balance the stock levels. You can track the stocks and reorder when the stock level is low to avoid stock-out.
Moreover, you can keep tabs on the product history and sales to identify the stock level to be ordered. It will restrict you from overstocking products.
5. Data Security
There’s no transparency. While updating the data manually, you can’t limit the user access as per your requirement. This lack of security can result in misplaced data, wrong entries, malicious attacks, and more.
However, with inventory management, you can restrict access. You can give rights to selected users so that no mistakes take place. Most importantly, it provides security at all levels.
For example, if an employee changes the data, others/managers can view those changes and know who made them.
Also, managers can cross-check the data entries to see if they are right.
Overall, you can decide who can view data, who can retrieve and access which information, and who can make changes to it. Every activity is traceable. Hence, there’s no chance of data loss or leakage.
6. Ability to Make Sound Decisions
Magento 2 inventory management provides you with invaluable sales data to drive business decisions. For instance, managers can check average products sold, total sales, number of orders placed, etc., on a personalized dashboard. They can then forecast the trends and demand based on this information and get a competitive edge.
With access to reporting, inventory metrics, and configuration options, inventory management will help you make strategic decisions. Moreover, it will help you identify your turnaround rate and opportunities to reduce inventory and lower inventory carrying costs.
So that’s it.
Some of the benefits of using Magento 2 inventory management! To help you sell better and efficiently, below, we’ve listed down a few of the common inventory management tips and best practices.
Inventory Management Techniques
Set Par Levels
Set the amount of inventory that should be available at all times.
Par levels, i.e., periodic automatic replenishment level, define the minimum stock level that your inventory can reach. It’s considered a safety stock. It helps you ensure that the stock remains over the demand level and you’re not overselling or missing out on opportunities.
To identify what your par level should be, use the reorder point formula:
(Average Daily Sales Volume * Lead Time) + Safety Stock = Reorder Point
Have a Plan
The first rule of business is to expect the unexpected. After all, problems can arise anytime, and not having a plan to tackle those can affect your business.
So, always have a plan B for those unexpected sales spikes, lack of storage space during the seasonal sales, slow-moving products, and suppliers running out of products.
You can solve the storage space problem with the help of a third-party logistics provider. For example, you can have more than one supplier for similar products. To sell those slow-moving products, you can bundle them with popular products and sell them at a discounted price.
First in First Out
This is a supply chain practice to reduce obsolete inventory. It means dispatching the inventory in the order it came. The reason is that prices may rise or drop. For example, the first stock price was $500, and the latter came at $350. So, you don’t want the first stock to remain in your warehouse while you clear the 2nd one. That’s a total waste of products and money. Hence, always sell the stock that came first. This way, you can keep with the market value and reduce inflation.
FIFO is often applied on products with expiry dates, especially used in F&B industries. But there’s no rule that you can’t apply it to yours.
First Expired First Out
If you sell perishable items such as foods, beverages, cosmetics, or pharmaceuticals, use this approach – ship the products with imminent expiry first.
It’s an invaluable technique that stops you from loss, product wastage, and unhappy customers.
For better results, consider using a Magneto 2 inventory management with expiry traceable capabilities.
Just in Time
Just in time means purchasing and receiving the stocks when required. With this approach, you can increase efficiency and reduce costs. It frees up warehouse space and reduces unnecessary storage costs.
Just in Time approach is beneficial for businesses that provide customized products like custom furniture, luxury cars, and jewelry. But, it also has its disadvantages. Purchasing products only when the sales orders come leaves little room for errors. Also, the price may shock.
Note: ABC Inventory control and dropshipping are also effective ways to manage inventory.
And with this, we conclude our teachings about Magento 2 inventory management. Understand the importance of inventory management software, and don’t forget to implement these strategies. They will help you cut costs, free up warehouse space, and streamline business processes.
Meanwhile, if you need help with inventory management software selection, check out our MageMob Inventory Management Extension.
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