An order-fulfillment process has various elements that can impact your relationship with customers. Inventory Restocking is one of those. It is a common term in fulfillment. But is it as simple as it sounds? Let’s break it down!
What is Inventory Restocking?
Any product business, retail or wholesale, needs an inventory management system. One of the vital parts of this is inventory restocking. It is more than just ordering products from suppliers and stocking them on shelves.
Inventory Restocking includes forecasting and insights into demand, proper inventory allocation, and how long your product takes to arrive and store inventory for different fulfillment.
What does Inventory Restocking consist of?
There are various elements to consider when we talk about inventory restocking. Let’s have a look at them:
Knowing What To Restock
Whether it’s the upcoming holiday season or influencers promoting your product, demand can shift at any time. Predicting it can be a hefty task, and insights can be helpful.
Having an understanding of what items are selling faster will help you stock, manage, and optimize inventory better. You can stop investing in stocks that are not selling and re-think about the ones that are slow sellers.
Knowing When To Restock
It’s not always that the empty shelves are a sign to restock the inventory. It requires more insights into the demand of the consumers, the time it takes to receive the product, inventory management, the number of SKUs, and different stages of the supply chain.
Various apps in the market predict which product is going to be on-demand, and our 5-in-1 cloud-based software provides you with inventory insights and forecasting based on your product sales and demand.
Read more about the software here.
Knowing How To Restock
Many factors decide how to restock the inventory. You have to consider inventory allocation, receiving process, and how long your team will take to make the item ready to sell.
Methods that you prefer to restock need to have an efficient system to manage returns. The way you handle returns should help you understand if the returned items are sellable and can be placed back on shelves for future sales.
Why do you need an inventory restocking system?
A poor inventory restocking system can negatively impact your business. There are many challenges that you might face when you have a terrible inventory restocking system. It can negatively impact your business. Here are some of them:
When you fail to order inventory on time, you face inventory stockout. It cost you more than just money; it can lead to lost customers, canceled orders, returns, and negative customer reviews.
A safety stock amount is needed for this, and to calculate this, you need the following information:
Maximum daily usage
Maximum lead time
Average daily usage
Average lead time
Furthermore, you can use this formula to calculate it:
(Maximum daily usage x maximum lead time) – (average daily usage x average lead time) = safety stock amount
Similar to stockout, overstocking can negatively impact your brand. It can hamper your inventory management and can lead to dead stock, which means unsellable stock.
Deadstock takes up unnecessary space that would have been used for other sellable items. It can lead you to pay more for the stock and space, ruining your resources and affecting your business growth.
To get over this problem, you need insights into your sales. From products that are selling and those aren’t, slow-sellers, what next to order more, which products to remove, and all around it, are must-know for you to optimize your sale strategy.
Increased fulfillment cost
Either you have inventory stockout or overstock, you are at a loss. When you don’t have enough stock and your customer orders, you have to split inventory. This means you have to order it from another fulfillment center, which leads to twice the shipping charges and can give your customer a bad experience.
With the knowledge of your inventory locations and by keeping them at key locations, you can have an optimized shipping strategy by reducing shipping costs and transit times.
Automate your inventory restocking with Fulfillment Hub USA
At FHU, we operate with excellent tech-integrated systems. This makes it easy to track inventory in real-time, provide data and insights into restocking, analytics, and more.
Our software has helped sellers gain insights into restocking inventory, predict demands, and plan effectively. Connect with our experts to get your tech-integrated fulfillment journey started!