Managing inventory in multiple locations, especially in different geographies, can be tricky. However, multi-location inventory management is essential to expand your operations and scale your business efficiently. In this blog, we will explore inventory optimization techniques to ensure that your products are always in the right place at the right time.
In eCommerce businesses, depending on the scale and spread of customers, the product inventory might be spread across multiple locations. The process of monitoring and controlling the inventory across multiple locations is known as multi-location inventory management. This inventory management ensures that the products are always stocked for businesses with brick-and-mortar locations. Stocking products in advance ensures that your store can always meet customer demand.
If you can manage your inventory effectively across multiple locations, you can improve customer service, decrease costs, and increase profits.
Importance of Multi-location Inventory Management
Suppose a customer orders a product and discovers it is unavailable at their local store. In that case, the customer must wait for a considerable amount of time before they can get the product they ordered. Using multi-location inventory management, you can keep track of your inventory across multiple locations. Consequently, you can ensure that you never run out of products and always meet the demand. The products and supplies are available whenever and wherever they are required.
A part of effective multi-location inventory management also includes prediction. You can analyze the peak seasons and keep your inventory well-stocked in preparation for those seasons. You will never run out of products, which makes your customers happy and leads to increased sales and more profit.
Complications of Multi-location Inventory Management
Managing inventory across multiple locations is not obstacle-free and comes with challenges. You do not have unlimited room to stock your inventory. So, the inventory stored should be enough to meet customer demand comfortably without flooding the storage space.
The following are some of the major complications that you may face during multi-location inventory management:
- When expanding to a new location, you cannot predict the demand. So, here comes the risk of either be over or understocked.
- Demands for certain products can suddenly increase exponentially due to a viral social media trend.
- The logistics behind moving numerous products across several locations can be challenging.
- If a supplier misses a delivery deadline, it can disbalance your entire inventory management system.
- If you provide complex products, your storage and distribution process become equally complex and challenging.
- Real-time inventory tracking across multiple locations, while ensuring that the data is always visible and the demand meets supply can be daunting.
Tips to Effectively Manage Multi-location Inventory
How can you manage your inventory across multiple locations effectively? The data must be accurate, real-time, and regular. Every business follows certain best practices to manage and maintain this inventory. Although the steps might vary across businesses, the following are the top seven best practices for effective multi-location inventory management:
• Standard Approval
When inventory has multiple locations, each location has its own process for approving product purchases and restocking. Often, these approval processes require manual intervention, thus delaying the inventory acquisition process.
To combat this issue of various approval processes, you must develop a single standardized approval process. This centralized process will ensure that the same guideline and procedure is followed across all locations. It will thus lead to a much faster approval process and avoid unnecessary delays.
• Central Inventory to Manage
When you have your inventory spread across multiple locations, the best practice is to have a central system to manage inventory across all locations. This single system will implement a more efficient overall process to streamline demand and supply.
The centralized inventory management system must have a feature to track the inventory movement on a real-time basis. It should use the barcode technology to ensure that all the movement is immediately registered in the system. Orders for the same location should be clubbed whenever possible to reduce carbon footprint and shipping costs. The warehouses where the products are stored should use their spaces optimally. Furthermore, audits should be carried out regularly to ensure the inventory management system is effective across all locations.
• Audit Inventory Regularly
Auditing the inventory regularly is a best practice for multiple reasons. These audits ensure that the products are stocked accurately. This stocking reduces the risk of ordering excess or fewer products. Audits also identify the various areas of improvement within the inventory management process to eventually correct and improve them. Conducting audits regularly ensures that the inventory is current across multiple locations, reduces wastage, and improves profits.Auditing the inventory regularly is a best practice for multiple reasons. These audits ensure that the products are stocked accurately. This stocking reduces the risk of ordering excess or fewer products. Audits also identify the various areas of improvement within the inventory management process to eventually correct and improve them. Conducting audits regularly ensures that the inventory is current across multiple locations, reduces wastage, and improves profits.
• Analyze Data, Forecast, and Plan
Suppose you invest and implement tools to effectively analyze and forecast data available. In that case, it will be easier to predict the requirement of products and stock inventory accordingly. Such accurate prediction reduces the risk of overstocking or understocking products. These tools also help predict a surge in demand based on previous patterns. Effective inventory management also ensures that products can be restocked promptly. Effective analysis, forecasting, and planning based on that data can considerably improve profits.
• Distribute Logistics Effectively
To manage logistics and distribution effectively, you must know the location and quantity of products. This knowledge helps you procure and restock products effectively whenever and wherever required. Since managing inventory across multiple locations is complex, you can install software to manage logistics and distribution effectively. Alternatively, you can outsource this job to an established and reliable third-party vendor.
• Continuous Visibility
For effective multi-location inventory management, you must have real-time visibility of your products across all locations. The sooner you can make your inventory tracking widely visible, the faster you can react to potential issues.
Process automation is the way to ensure visibility across multiple locations. Manual intervention will not be as effective as automation. GPS tracking and barcode scanning technologies are a few ways to automate inventory tracking.
• Central Procurement
Having a central system for all purchasing-related activities can ensure that issues such as duplication are avoided. From the first step of identifying and sourcing a supplier to the last step of product delivery, all details should be entered into a central system for visibility and real-time tracking. With a centralized procurement system, you can reduce purchase costs by ordering products in bulk from a single vendor. Bulk product delivery will also reduce shipping and delivery costs.
Conclusion:
If you are dealing with multi-location inventory, you must have an efficient system in place for effective inventory management. You can install an inventory management system or outsource to a third-party vendor. Effective multi-location inventory management system/software can ensure that all the activities are visible in real-time. The data generated are analyzed, and the trends are predicted. This prediction helps in accurately preparing for any potential rise in product demand.
Connect with XPDEL for expert guidance on multi-location inventory management.
About XPDEL:
XPDEL helps eCommerce brands accelerate their growth, empowering them with multi-channel fulfillment, whether shipping directly to consumers, delivering to businesses, or selling through retail stores. We are founded and operated by veterans with experience from Amazon, FedEx, UPS, JDA, Walmart, Target, and other leading companies in eCommerce and Retail. Guided by these experts, we provide customer experiences that help you grow your business.
