Key takeaways:

1. Customers want a seamless and consistent shopping experience no matter where they shop. Good inventory management gives customers a consistent experience across all your sales channels, improving customer satisfaction and loyalty. 

2. To improve your multi-channel inventory management, identify your core products, set reorder points and safety stock levels, focus on demand forecasting, centralize your inventory, sync offline and online inventory, and regularly audit and optimize your inventory management processes. 

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If you sell products on multiple sales channels, you need effective inventory management to ensure products move through every stage of the supply chain to the final customer efficiently. However, this process can be challenging for many ecommerce business owners. 

By understanding what your customers want and how much inventory is available, no matter the sales channel, you can give your customers a seamless shopping experience. Good inventory management also minimizes the risk of missed sales opportunities. 

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Read on as we examine six effective ways to improve your multi-channel inventory management, enhance your customers’ shopping experience, and increase sales opportunities. 

Why is multi-channel inventory management important?

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Your inventory is the heart of your business. With poor inventory management, you can lose out on sales opportunities, potential customers, and thousands of dollars. With this in mind, effective multi-channel inventory management becomes an inevitable part of your ecommerce business. Here are some reasons why multi-channel inventory management is crucial: 

Monitor inventory 

With a good multichannel inventory management system, you can monitor all inventory across sales channels in a centralized location. By monitoring your inventory, you can avoid running out of stock, identify best-selling products and slow-moving products, and analyze sales patterns for improvement. 

Good customer experience 

Your customers want a seamless and consistent shopping experience no matter where they shop. Whether they are shopping on your ecommerce website, an online marketplace, or in a physical store, they want to find the products they need and see that your brand remains consistent. Good inventory management gives your customers a consistent experience across all your sales channels, improving customer satisfaction and loyalty. 

Efficient order fulfillment

With good multichannel inventory management, you can ensure that your order fulfillment process is seamless. You can streamline your workflows, improve the accuracy and speed of your delivery, and overall improve your customer satisfaction. 

Reduced costs 

Managing inventory on all your sales channels can be time-consuming. Poor inventory management can also lead to unnecessary costs. With a good multi-channel inventory management system, you can reduce the risks of errors, manual effort, and costs. 

Business growth 

As your business expands and you include new sales channels, the need for multi-channel inventory management becomes even more important. With a good multi-channel inventory management system, you can integrate new sales channels, handle increased volumes, and manage inventory across all platforms. 

8 ways to improve your multi-channel inventory management

Here are six strategies that can help you improve your multi-channel inventory management, increase customer satisfaction, and boost sales: 

1. Identify your core products 
2. Set reorder points and safety stock levels
3. Focus on demand forecasting 
4. Centralize your inventory 
5. Review your supply network
6. Sync offline and online inventory 
7. Outline multi-channel inventory KPIs 
8. Regularly audit and optimize 

Identify your core products 

Have you ever heard of the 80/20 rule in sales? Well, there is a high chance that 80 percent of your online sales come from just 20 percent of your products. These products are typically your best-selling products or the most popular products on your website.

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To effectively manage your inventory and ensure you never lose revenue, you need to identify what those products are. Once you can separate your core products from the rest, you can manage them and ensure you never run out of stock. 

One inventory management technique that can help you identify your core products is the ABC analysis. 

This inventory technique categorizes your products into three categories - A, B, and C, based on volume and revenue generated. 

‘A’ signifies the products with the highest value, ‘B’ signifies products with a moderately high value, and ‘C’ signifies products with the least value. After conducting the ABC analysis, your core products will fall under ‘A’. 

Set reorder points and safety stock levels.

You want to avoid stockouts by setting automatic reorder points and keeping safety stock for high-demand or high-risk items. Your system can alert you or even auto-generate when stock falls below a predefined threshold. 

Focus on demand forecasting. 

When selling across multiple channels, you want to maintain a balance. You don’t want to have too much inventory that you can’t sell, or run out of stock, either. This is where demand forecasting plays a critical role. 

Invest in demand forecasting by monitoring your historical sales data. This will show you how your sales fluctuate and help you buy inventory according to that data. You also want to factor in your lead time. How long does it take for your inventory to arrive from your supplier? 

Several multi-channel inventory management software programs can help you with accurate demand forecasting. However, you also want to back this up with research to ensure you’re making data-driven decisions. 

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Centralize your inventory 

Managing your inventory becomes complex and time-consuming as you expand to more sales channels. If you want to become effective, you will need to invest in a multi-channel inventory management system to centralize your inventory. 

Inventory management systems come with multiple features that make the process seamless. Some inventory systems provide real-time inventory counts, multi-warehouse inventory management to prevent overselling or underselling, multiple pick locations to restock and maintain inventory quantities, and other features. 

Review your supply network.

Since the global pandemic, maintaining supply chain efficiency has become a dicey situation. To ensure there are no hitches, it is important to review your supply network. You can decide to diversify your supply network to reduce the risk of using one supply source. You can also find suppliers close to your business location to reduce costs. If you sell raw materials or imperishable goods, you may want to tie up some stock during peak seasons to avoid stockouts. 

Overall, review your supply chain strategy and ensure it works best for your business. 

Sync offline and online inventory. 

If you have an offline and online store, you want to ensure you have an accurate and holistic view of your stock. You want to invest in a multi-channel inventory management system that connects both offline and online data. With offline and online data synced, you can easily analyze offline and online sales and look out for trends that may differ between both channels. This can also increase visibility and business growth. 

Outline multi-channel inventory KPIs 

Being able to measure your inventory performance is one sure way to improve it. You want to set the KPIs you want to monitor and use to measure your performance. Here are some multi-channel inventory management KPIs you want to consider: 

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• Inventory Turnover Rate: Your inventory turnover rate measures how quickly your products sell through within a period (typically a year). A good inventory turnover rate indicates that you are generating sales and moving through your inventory quickly. Here’s how to calculate your inventory turnover rate: Inventory Turnover Rate = Cost of Goods Sold/Average Inventory OR Sales / Average Inventory.
• Cost of Carrying: Cost of Carrying measures how much it costs to store your inventory every year as a percentage of your total inventory value. This gives you insight into the efficiency of your inventory management operations. It will help you identify storage costs for products that are obsolete, large, or delicate, and so on. Here’s how to calculate the Cost of Carrying: Cost of Carrying = (Inventory Storage Costs / Total Inventory Value) X 100%. 
• Customer Order Fill Rate: With this metric, you can ensure your orders are delivered to your customers on time. With the customer order fill rate, you can measure your customer satisfaction and work to ensure you’re providing good customer service. Here’s how to calculate your Customer Order Fill Rate: Customer Order Fill Rate = Orders that are Shipped in Full/Total Number of Orders.
• Inventory Accuracy: This metric measures your recorded inventory side by side with your actual inventory. Not having an accurate representation of your inventory can lead to higher costs, poor accuracy, and a decrease in customer satisfaction. With this metric, you can identify unreported damage, potential theft, and other discrepancies. Here’s how to calculate your Inventory Accuracy: (Items Counted / Items Counted in System) X 100%.

Regularly audit and optimize

Ensure you run frequent cycle counts and full inventory audits to align both your physical and digital stock. Review your performance reports to identify slow-moving or dead stock, variations in performance across channels, fulfillment delays, or stock inaccuracies. Make adjustments regularly based on data. 

Final thoughts 

Managing your inventory across all your sales channels is no easy task. However, with some best practices, you can streamline the entire process and generate revenue more than ever before. You can examine and implement some of our strategies above for better inventory management. How do you go about managing your inventory across multiple sales channels? 

Frequently Asked Questions (FAQs)

How can inventory management be improved?

To improve inventory management: 

• Use barcodes, QR codes, or RFID systems to track inventory in real-time.
• Use inventory management software like Zoho Inventory and QuickBooks to automate your inventory management process and reduce errors and delays.
• Analyze your historical sales data, seasonality trends, and competitor activity to forecast your demand accurately. 
• Identify slow-moving items using aging reports and offer discounts, bundles, or promotions to clear these items.
• Monitor key inventory KPIs to help you make data-driven decisions. 

What are the three 3 tools used to improve inventory management?

The three tools used to improve inventory management include:

• Inventory management software: This provides real-time tracking, stock level optimization, and automation of inventory tasks. Some inventory management software includes Zoho Inventory, NetSuite, and QuickBooks. 
• Barcode and RFID scanning systems: This streamlines receiving, storing, picking, and packing processes, e.g, Zebra barcode scanners
• Forecasting and analytics tools: Forecasting tools like Inventory Planner help predict demand and identify trends to avoid stockouts or overstocking.

What is multi-channel inventory management?

Multi-channel inventory management is the process of tracking, controlling, and optimizing inventory across multiple sales channels from a single, centralized system.

So, if you're selling products on platforms like Amazon, Walmart, and a physical store, multi-channel inventory management ensures that your stock levels are accurate and in sync across all these platforms in real time.

What are 5 steps to effective inventory systems?

If you want to create an effective inventory system, minimize errors, improve efficiency, and grow your business, here are 5 steps to creating an effective inventory system: 

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• Set clear inventory goals: First, you need to define what success looks like. Determine what your KPIs are and figure out how you will handle orders, reorders, and returns. Clarity in goals helps prevent stockouts or overstocking.
• Organize your inventory: Create a structured way to track and locate items. Use SKUs or barcodes and categorize products (by type, location, sales velocity, etc.)
• Use inventory tracking tools: Use technology to monitor your inventory in real-time. Use inventory management software with channel integrations and leverage barcode scanners or RFID for faster, more accurate tracking. This helps to minimize errors and keep stock data accurate. 
• Regularly audit your inventory: Carry out cycle counting or periodic full counts. Analyze your inventory reports, paying attention to slow-moving stock, shrinkage, and demand trends. Adjust your safety stock or reorder levels based on data. 
• Continuously improve: Creating an effective inventory system means you have to make continuous improvement. Forecast demand using historical and seasonal data and incorporate feedback from warehouse staff or sales teams. Review and refine your inventory management processes quarterly or after peak seasons. 

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What are the 5 R's of inventory management?

The 5Rs of inventory management ensure the right inventory is available at the right time, place, cost, and quantity.

1. Right quality: This involves stocking the right quality products that customers want to buy. 
2. Right quantity: This involves maintaining optimal stock levels - not too much, not too little.
3. Right place: This involves ensuring inventory is available where it’s needed, whether that is at the warehouse, store, etc.
4. Right time: This involves receiving or moving inventory when it's needed, not too early or too late.
5. Right cost: This involves holding or moving inventory at the lowest possible cost without compromising on providing quality service. 

What are the 3 major inventory management techniques?

The three major inventory management techniques commonly used by businesses across industries are:

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• Just-in-Time (JIT) Inventory: JIT is a method where inventory is only ordered and received when it's needed for production or sales. It is best for manufacturers, retailers with predictable demand, or businesses with limited storage space.

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• ABC analysis: This inventory management technique segments inventory into three categories based on value and importance: A - Products with low volume but high value, B - Products with mid-volume and mid-value, and C - Products with high volume and low value. ABC analysis is great for businesses with large product catalogs or a wide variety of SKUs. 

‍First In, First Out (FIFO): Under FIFO, the oldest stock is sold first. This is especially important for perishable goods or items that may become obsolete. This inventory management technique is great for food, pharmaceuticals, and any inventory with expiration dates or high turnover.

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