What is inventory management?
Inventory management is the end-to-end warehouse operations process of everything from the importing of finished goods from suppliers, to the storage of your products and optimisation of stock levels, through to the fulfilment and delivery of your products to your customers.
Key to eliminating errors, minimising overstocking and understocking, effective inventory management will ensure you do not miss out on sales opportunities and don’t overspend on the stock that is unlikely to sell.
Whether your business or an outsourced third-party manages your inventory effectively, this process can be critical to your retail sales and success. At Whistl we provide mid-market online retailers and global brands with inventory management tailored to your product orders and business needs, as part of our complete fulfilment offering.
Inventory Management from Whistl involves:
- The storage of your small lightweight products, large bulky items, or garments within specific barcoded locations
- The stock selection process of picking and packing products and items, powered by RF (radio frequency technology) and Whistl’s own warehouse management system (WMS)
- Rigorous auditing procedures of cycle counting
- Full stock management optimisation and reporting
What are the different types of inventory?
The word ‘inventory’ can apply to these types of physical entities:
- Raw materials - the total cost of all component parts currently in stock that have not yet been used in work-in-process or finished goods production
- Work-in-process - materials that are in the process of being produced or manufactured into finished goods to be sold to customers
- Maintenance, repair, and operations supplies (MRO) inventory - materials, equipment, and supplies used in the production process at a manufacturing plant but are not part of the finished goods being produced
- Finished goods - refers to the number of manufactured products in stock that are available for customers to purchase. Retailers such as Ethical Superstore outsource the inventory management of their finished products.
- Pipeline & decoupling inventory - consists of items that are in the transit "pipeline" between locations, such as that en-route from the warehouse to the retail outlet. Decoupling inventory consists of inventory stock retained to make the independent control of two successive operations possible.
- Vendor Managed Inventory - where the supplier or manufacturer manages inventory on their own behalf, often utilising an inventory management system and working with a delivery management company
As detailed above, businesses of different types store and manage a wide range of inventory types. This article, however, focuses specifically on the finished goods category, specialising in enhancing the customer journey.
What are the different types of inventory management?
Depending on your business model, there are a variety of different ways to manage your inventory. For e-commerce retailers, have the choice to utilise inventory management software and manage their inventory themselves, or work with a third-party inventory management specialist who will integrate with the retailer’s technology stack to give the merchant full visibility of the superintendence of their finished goods.
Just-In-Time (JIT)JIT is an inventory management method that aims to minimise the number of finished products you store, and simply reorder products to replace those you've already sold. This method is advantageous for minimising storage costs but can result in longer lead times. If your business objective is to minimise the storage space required, and your items aren't time-critical, then JIT can be an effective method.
Materials Requirement Planning (MRP)
MRP is an older method of inventory management that continuously monitors what is needed, how much is needed and when it is needed. Working backward from a production plan for finished goods, MRP converts the finished goods into their constituent parts and raw materials that are required to produce the final product within an agreed timeline. MRP is an effective inventory management method for retailers who also manufacture their products from raw materials, rather than rely on a supplier.
At Whistl, we specialise in helping finished goods retailers, brands, and wholesalers, so our method is Cycle Counting inventory management. A cycle count is an ongoing inventory auditing procedure, in which Whistl's fulfilment team carries out regular and repeated checks on subsets of inventory. Less disruptive to daily operations, the cycle counting method maximises inventory accuracy and can be tailored to cater to fast-moving consumer goods (FMCG) retailers and brands.
How does inventory management work in practice?
Once you become a client of an inventory management specialist, analysis is conducted to map out your product range against barcodes and storage locations, and to assess your required storage capacity, along with an assessment of your daily shipping volumes, product dimensions, weight, and technical infrastructure to ensure seamless integration with your sales channels and order management system, with the inventory fulfilment provider’s own warehouse management system.
What are the benefits of effective inventory management?
Once your finished goods are stored inside the warehouse ready for despatch, and your systems are connected with the inventory fulfilment provider’s WMS, order data will flow in and you will start to enjoy the benefits of effective inventory support. This dataflow will inform the stock selection process of picking and packing your products. On an ongoing basis, rigorous auditing procedures of cycle counting, optimisation, and reporting will ensure you are fed data on the volumes available for each stock line, and the rate at which product categories are selling to help identify revenue opportunities. Working with an eCommerce inventory management specialist such as Whistl, who can take care of all of these processes, will help your business optimise stock levels to avoid missed sales opportunities, avoid customer frustration and accelerate your order fulfilment capacity.
How does inventory management relate to e-commerce fulfilment?
Often used to describe the same service, there are some key differences. The term ‘e-commerce fulfillment‘ applies to both specialist and non-specialist providers (who simply store and distribute items with little complexity and more predictable demand). Specialists such as Whistl offer a more involved process called inventory management, which can become a driver of growth for your business thanks to the transparency and adaptability of its approach. Inventory management can involve more complex processes than simply reworking, storage, and distribution, such as:
- Smart stock storage, including hanging garment rails for apparel
- Batch and date control for perishable or variable product designs
- Keeping control of best before dates
- Stock level alerts
- Managed returns services
- Regular stock checks and reporting
- Cross-dock operations for quick turnaround
How Whistl has helped some of our customers outsource inventory management:
The Ethical Superstore
Whistl provides inventory management solutions to this eco-friendly online retailer. With over 7,000 SKUs and almost 200,000 items in stock at any one time, Whistl's cycle counting comes into play to ensure understocking is minimised and sales are maximised, ready for peak sales events such as Black Friday and Cyber Monday.
The Noble Collection
A licensed manufacturer, distributor, and retailer of film and TV properties including Harry Potter and Lord of the Rings, Whistl has provided order fulfilment and inventory management solutions to TNC’s e-commerce and trade customers for more than 16 years. Unlike other inventory management providers, Whistl’s diverse portfolio of services means they also provide outsourced customer service solutions to this company.
Should you outsource your inventory management?
Outsourcing the storage, handling, and distribution of your product range is a major commitment and is dependent upon whether you are shipping the required volume, and if your products are compatible with available third parties’ warehouse setups. When looking to outsource with a third-party specialist, you should seek to work with a provider who is experienced dealing with your technology, product sector, and business model understands your strategic goals, and has the spare capacity to grow with you.
Recent political paralysis and environmental disasters have impacted online retailers in two ways; directly on their sales, and indirectly a rise in uncertainty has led to businesses delaying major investments in expanding their storage and order fulfilment space. Investing in growing your capacity, such as funding your own warehouse, would be capital-intensive, and so outsourcing the management of your product inventory can help you maximise your sales potential with minimum risk, meanwhile helping you better focus on your core competencies such as product sourcing, marketing and supporting your customers.
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