Inventory restocking on time is critical for both large and tiny online sellers. The more data-driven your restocking technique, generally the better. However, there are a variety of ways to create an inventory restocking plan based on your brand’s resources and demands.
Periodic inventory restocking method
A periodic inventory system is frequently used by small businesses with limited order quantities. This inventory valuation technique refers to a company’s inventory and cost of goods sold (COGS) being untracked in the accounting records after each sale and/or inventory purchase.
Restocking with this basic approach necessitates that inventory be restocked on a regular basis after a predetermined length of time (e.g., each month, quarter, or year). This means that even if the supply suddenly drops to dangerously low levels, the replenishment will not take place until at least one accounting period has elapsed.
This technique is simple to implement and only requires modest data, but it does not include real-time inventory tracking, making it difficult to get data and make decisions when stock levels are out of date.
Top-off restocking method
If you have a lot of fast-moving SKUs, the top-up approach may be beneficial to your company. It guarantees a high inventory turnover rate and low days sales in inventory while also lowering stockouts through the “lean time replenishment” strategy.
When a store uses this approach, goods are restocked to acceptable levels at each storage site every time demand drops. The efforts of picking staff who will have fewer orders to complete may be redirected towards replenishment during slower times.
This technique is also useful for increasing productivity during the busy holiday shopping season.
Profit-based restocking method
You use the profit-based restocking technique to decide whether to restock the inventory (or not) based on how lucrative the SKU is.
If your inventory audit reveals that a certain SKU generates more profit, then you must make sure that your storage depots are fully stocked at all times. To function, you must be able to track sales performance by SKU on a regular basis.
Demand restocking method
Restocking based on future demand forecasts is referred to as demand restocking.
Maintaining healthy levels of buffer inventory reduces the risk of a stockout in case of a sudden rise in demand, allowing you to fulfill daily orders and meet future demand fluctuations.
3 tips for restocking inventory
A retailer’s death may occur due to a lack of restocking procedures. When you don’t restock your stock appropriately, the risk of missing sales chances, losing customer loyalty, and increasing e-commerce warehousing costs rises.
Here are some ideas for streamlining your inventory restocking procedures to reduce risk and meet demand.
Implement an inventory management system
As your supply chain grows with additional warehouse sites and sales channels, restocking becomes increasingly difficult. To simplify inventory, purchase, and shipment processes, most internet businesses use inventory management software.
Inventory management software may also assist save time by automating inventory tracking, which lowers human error by removing manual labor.
Overall, technologies and tools can assist you in obtaining a comprehensive view of your inventory from beginning to end, so you know what and when to replenish.
Leverage inventory data
Having data at your fingertips is crucial. Inventory statistics allow you to analyze previous patterns, anticipate future demand, and adjust inventory levels as necessary.
For example, if you regularly deal with out-of-stock problems around the holidays, you may estimate how much more inventory you’ll need for the following holiday season by taking into account your current growth rate and last Q4 data.
You may also utilize inventory data for other purposes, such as inventory reporting or determining when to hold your next promotion, such as a flash sale, to sell out old goods.
Carry out regular inventory audits
Inventory checks are the practice of cross-checking your company’s financial and inventory records against genuine inventory levels in order to gain greater inventory visibility.
Conducting inventory audits may help you spot inefficiencies or inventory shrinkage, establish profits, and reorder as needed. Simply counting actual objects to see if they match the amount you think you should have is all it takes.