Tell me, if this sounds familiar, you have a way too
much inventory and you don't know what to do with it.
Or how about a customer places an order, and you don't
have those items in stock.
So if you're an e-commerce entrepreneur and you're dealing
with problems like these, that's because you need to improve
your inventory management.
So you've come to the right place, in today's video we're going to
be talking about what inventory management is and how to make
it efficient so that you can save yourself money, time, and
logistical headaches in the future.
Okay.
So first of all, what is inventory management?
So to put it simply inventory management is how you organize
and how you manage your stock.
So your goal with inventory management is to strike
a perfect balance.
You want to minimize the cost of holding inventory,
but you still want to have enough so that you're getting
your product into customers' hands as quickly as possible.
And finding that sweet spot is going to be at the heart
of every successful business.
So why is proper inventory management important?
Okay.
Think of it this way.
Inventory is product that you've already paid for with cash, and
you're going to sell it for cash.
But while it's sitting in your warehouse, it's
definitely not cash.
Money spent on inventory is money that is not spent on growth.
So that being said, how does poor inventory management
actually affect your business?
Well, if you don't have enough inventory, you could be
losing out on potential sales.
Your days might be filled with making panicky phone calls
to your suppliers or making special trips to the store.
But then on the other hand, if you have too much inventory, you
might be holding onto products that are going to go bad, or maybe
they're going to go out of style before you could even sell them.
So, especially if you are the only one that's running your
company, you want to make sure that you are focusing your
efforts on growing your company, not putting out fires because
of poor inventory management.
So here's how you can start making your processes more efficient.
Tip number one, use Shopify.
So you're gonna want to start by signing up for Shopify and
you guys already know that I had to make this number
one, because if you run your business with Shopify, inventory
management is already built in.
Shopify helps remove that human error as much as possible, and
with inventory tracking on Shopify, all you really have to do is
input how much product you have and then Shopify is going to do
the rest automatically for you.
So if you sell one product, it will subtract that.
Or if you get a return or you get a shipment incoming, it's
going to add that for you.
It's nice because the inventory tracking that comes built in
will help you to avoid selling products that you don't have,
or it will let you know when it's time to order more.
So whether you're just starting out or maybe you're already an
established business, the inventory tracking that comes with Shopify,
it makes processes so much more streamlined, so much easier.
And I'm not just saying this, I truly believe it.
When my friends ask or my clients ask what they should
do, I always say Shopify.
Um, so if you do want a free 14 day trial with Shopify, feel free
to hit the link in the description box and outside of just inventory
management, Shopify is the leading tool for selling online.
So I will be sure to leave a link for you guys in the description
box for that free trial.
Tip number two is to set par levels.
To make inventory management easier, you're going to
want to set up par levels for each of your products.
Par levels are the minimum amount of product that you should be
having on hand at all times.
So when your inventory dips below that number, that's how
you know it's time to order more.
So if possible, you're going to want to order the minimum quantity
that will get you back above par.
So to determine your par levels for each product, take into
account, how quickly the item sells and how long it would
take to get it back in stock.
I'll leave a little formula for you up here on the screen.
Now I feel like this is a little bit intense, might
be a little bit daunting.
But trust me, if you do do this research upfront, this is
going to help you order in the future, and you're not going
to be second guessing how much inventory you should order.
But one thing that I do want to mention is that over
time variables might change.
So you want to make sure that you were checking up on your par
levels during different seasons, just to see that they are still
accurate and don't be afraid to adjust your par levels up or
down as you evolve as a business.
Tip number three is FIFO.
So the next step is the FIFO method.
And this kind of sounds like a cute puppy, but actually it
stands for first in, first out.
So what this means is the first inventory that you get will be
the first inventory that is sold.
So the oldest products are going to be going first.
Now this is especially important if you're selling
perishable inventory.
So if you sell food or skincare, You're definitely going to
want to keep track of this so that you're selling your
inventory before it goes bad.
Even if you're not selling perishable items, this is still
important to follow because over time products become
obsolete, maybe boxes get worn out, things go out of style.
That kind of thing.
So, if you're working with a fulfillment center, you can
definitely just double check that they do do this, but if you're
managing your inventory at home, say in your living room, all
you have to do is put the oldest products in at the front and
the newest at the back, so that you're always sure that you're
reaching for that old product.
As you're packing your orders, tip number four, manage your
relationship with your supplier.
Having a healthy relationship with your supplier is going
to be beneficial for you.
So, for example, let's say you have too much inventory and you
want to return some of that stock.
Or maybe you need them to speed up an order.
They're going to be more likely to work with you if
you are in good standing.
And having a good relationship is about more
than just being friendly.
It's about having good communication and it's about
being proactive as well.
So for example, if you let them know in advance that you'll
need more inventory, they can preemptively ramp up production,
which makes their Workday smoother, and your relationship stronger.
Tip number five is prepare a contingency plan.
So when it comes to inventory management, it's not about if
an issue is going to arise, it's about when, so you want
to prepare a contingency plan.
So for example, when I was working with an e-commerce
jewelry company, I ran this email campaign and it did a lot
better than we had anticipated.
So we oversold or necklaces.
It was definitely a hassle in the moment, but it helped us
develop a contingency plan that included not allowing the option
for customers to buy when things were out of stock on Shopify.
But instead we would allow them to sign up for an email notification
when it was back in stock.
Other classic examples of inventory management road bumps include
well, number one, this is super common not having enough cash flow.
And not being able to pay for products that you desperately need.
Here's another one you might also make a miscalculation
in inventory and have too much or too little stock.
And then also your manufacturer could run out of your product and
you have sales orders to fill.
So these types of hiccups are happening all the time, so you want
to make sure that you are looking at your own supply chain and
thinking about some of those things that could potentially go wrong
and brainstorming ahead of time.
All right.
Favorite part of the video.
It is comment time.
So I'm going to go through some viewer comments and I'm
going to answer a few of you.
So in a recent video on how to research manufacturers,
we had a comment here from JS Keller and they asked; if I
want to hire someone to do this process for me, what is their
job title and who would I hire?
So basically they want to know who they would hire if they
wanted someone to communicate with manufacturers and come up
with supply chain solutions.
So this is a great question.
And you would hire someone that is an inventory manager.
And if you're looking to hire someone, you can find
someone on Upwork, if you're looking for a freelancer.
Or you can hire an employee on Linkedin.
Theresa Rose says stocks are good, but I swapped and
invested in Forex, Bitcoin and other cryptocurrency and I
have been making good profits.
24 lakes, 21 replies.
I think I'm in the wrong line of work.
And Akos UA said, "Makes me more confident in
starting my Shopify store.
Thank you."
I love reading comments like this, because that is what
this channel is all about.
We want to make sure that you guys are feeling well-equipped
and ready to start your own e-commerce journeys, your own
businesses, boss up and really feel in control of your passions
and your business journeys.
So thank you guys for leaving your comments.
So nice to read and make sure that, um, you are leaving comments
if you want to see your questions featured in the next video,
and also leave me something funny, cause that's always fun.
Thank you guys so much for watching.
Hopefully you found this video helpful.
Um, if you do like content like this, like if you are the type
of person that wants simple and actionable tips, like
step-by-step, this is how to start and run and grow your business.
Make sure that you are hitting that subscribe button so that you're not
missing out on any future videos.
Don't forget to hit that notification bell because we
are dropping a video every week.
Other than that, thank you guys so much for watching.
My name is Michelle and I will see you in the next one.
Bye.