5 Ways to Improve Inventory Management

With the rising popularity of e-commerce business models globally, the need for proper inventory management is now more than ever. Whether your business has a B2B model or a B2C model, inventory management is of the utmost importance. Even if you have been doing this for several years before, you’d be surprised at how much more you can gain by tweaking a few things in your inventory management practices. Regardless of whether you operate a retail store or an e-commerce business, you can get some valuable information from this article.


Mismanagement of inventory is one of the most significant factors that your business might not be doing as well as it should. You can improve profit margins significantly just by placing proper inventory management practices in your processes. The longer you’ve been in the business, the better since you will have a better idea of your projected sales and demand products. This information plays a huge role in successful inventory management. Let’s take a look at 5 ways in which you can improve inventory management.

1. Setting Minimum Stock Levels

This first tip required you to know your customers and your business well. Minimum stock levels refer to the predicted minimum of a stock that you should always have on hand. This means that you should always have the minimum amount of an SKU that you think will sell. Overstocking or understocking can turn out to be the bane of your inventory management efforts.

There is no perfect way to calculate this minimum stock. You need to balance the carrying cost of products against the need to have them in stock in case of potential orders. As mentioned above, you must have a great idea of your business for this tip to work. You must have a minimum stock level so that you have enough leeway to re-order something before it runs out. This will also give you enough time to analyze the demand of a particular SKU.

2. Tracking Inventory Accurately

Inventory tracking is aided by the latest technology these days. Using a combination of software and hardware, you can keep track of the entire ingoing and outgoing inventory movements. If you have an operation with multiple locations, you need this even more. More locations mean more data to keep track of. Inventory management software can help you keep track of the stock and restock according to the diminishing availability of products.

3. Flexible SKUs

SKU is short for Stock Keeping Unit. It is the scan code on the back of the products used by vendors to keep track of inventory and sales. These SKUs are, in most cases product specific. But when we talk about e-commerce especially, bundle packages and bulk packages are standard practices. The problem is, for those packages, you need separate SKUs.

So, for example, if you’re selling shampoo bottles and have a product package sold with a conditioner, you can’t sell the single shampoo bottles under the same SKUs. This means that if you have a separate stock for single bottles, they might go unsold if you’re not flexible with the SKUs. You can do this with the help of an expert to convert the single pieces into bundles or vice versa.

4. Minimizing Shrinkage

Any inventory loss that is technically a part of your stock because it wasn’t sold but is also unavailable to be sold is called shrinkage. This includes everything ranging from damage, breakage, theft, or loss of any kind. For example, if one of the pieces in your inventory has a manufacturing defect, it is counted under shrinkage.

Keep in mind that this only includes items that have already been logged into your system as a product. To avoid shrinkage, you need to carefully monitor the products before they are filed into the inventory systems. After this, avoiding shrinkage is all about professionally taking care of inventory, whether at your retail store, home, or warehouse.

Professional management of inventory can be tricky, especially if you lack the expertise. This is why hiring a Third-Party logistics company is a practice a lot of businesses are following. This way, they can be free of mind about inventory management and other supply chain requirements and focus on business.

At ARK India, we provide a wide range of supply chain management and related services. This includes high-class Inventory Management, which is proven in multiple industries. Drop us a mail at info@arkindia.co.in for a quote or consultation.