Inventory management is a crucial component of a successful omnichannel ecommerce business. The foundation of any effective inventory strategy is knowing how much stock you have and where it is. With the pace of modern ecommerce retail, this can be challenging.
That said, accurate inventory counts are essential for eliminating overselling, avoiding overpurchasing, and generating actionable business data. With accurate inventory numbers, you can optimize your multi-channel ecommerce sales and improve overall customer satisfaction.
No more apology emails for delayed or seller-cancelled orders. No more emergency rush orders from your suppliers. The key is to transform your thinking about inventory.
Omnichannel inventory management platforms are great, but they are only as good as the numbers they work with. At some point, you inevitably need a physical count of your merchandise.
Cycle counting throughout the year is a more thorough, efficient, and cost-effective strategy than relying solely on an annual inventory audit.
The Problems with Traditional Inventory Counting Methods
Manual inventory audits are an outdated, ineffective practice. Conducting a whole warehouse hard count requires a business to grind to a halt. All merchandise and supply inventory is frozen while warehouse workers wander up and down the aisles with clipboards in hand.
Items are counted, quantities recorded, and the individual counts are compiled into a final inventory result. This all-hands-on-deck approach may be how retail inventory has been calculated for generations, but it is long past its practical usefulness as a reliable, standalone solution.
Several key reasons include:
Manual Inventory Counts Are Costly
To ensure an accurate manual inventory count, you must ensure that your inventory levels remain constant for the duration of the audit—nothing new comes in, and nothing gets shipped out. This means that orders are left to pile up, and new merchandise is left waiting to be unloaded.
Furthermore, to minimize the duration of this disruption, inventory audits typically become an ‘all-hands-on-deck’ affair. This pulls employees from their usual roles and disrupts your day-to-day operations. Not to mention, extra labor hours mean extra costs.
Physical Inventory Audits Are Tedious
No one likes to do them. The repetition of moving shelf to shelf, bin to bin, counting, and recording quickly becomes a slog. No one will ever mistake inventory counting for a team morale booster. This leads to the final issue…
Manual Inventory Counting Is Prone to Mistakes
The more a process relies on human effort, the more opportunities there are for errors. Inventory counts require accuracy to be useful. Every miscount, misrecording, or miscalculation further devalues the inventory data you collect. Thankfully, there’s a much more productive and cost-effective alternative.
Cycle Counting: The More Efficient Way to Audit Your Inventory
Rather than relying solely on an annual manual inventory count, many retailers and ecommerce businesses have transitioned to a cycle counting model that makes taking stock of your inventory continuously throughout the year.
Not only does this minimize or eliminate many of the issues outlined above, but it also provides some additional benefits:
Cycle Counting Makes It Easier to Correct Inventory Errors
When you focus attention on your inventory counts more regularly, it becomes easier to spot blunders that would otherwise go unchecked (and cause costly errors) until the next annual audit.
Cycle Counting Can Prioritize Your High-Turnover Merchandise
When you eliminate the burden of counting your entire inventory each time you audit your warehouses, you can focus on maintaining the most up-to-date counts on the products that matter most to your profitability. Slower-moving stock can be relegated to less frequent counting once or twice a year.
Cycle Counting Can Free up Your Warehouse Staff
Rather than diverting your entire labor force to a large-scale inventory audit, you can conduct smaller cycle counts throughout the year as part of the regular routine. Not only do you get more up-to-date inventory data more often, but workers are more likely to be auditing the inventory they are most accustomed to (which means faster counting and fewer mistakes).
Cycle Counting Makes It Easier to Optimize and Customize Your Warehouse Space
Having updated inventory counts throughout the year allows you to reconfigure warehouse layouts and storage decisions to best suit your order processing needs. You can use data-driven decision-making to transition high-volume sales merchandise into the most easily accessible areas and relocate slower sellers and seasonal goods to lower-traffic locations.
Many ecommerce businesses that subscribe to a cycle counting inventory model still conduct manual counts annually.
In some cases, it is more habitual than a necessity. In other cases, cycle counting procedures still include enough errors to require the annual hard count. Regardless, inventory cycle counting remains an important and relevant practice—particularly in the ecommerce world.
Skustack Makes Continuous Cycle Counting Intuitive, Accessible and Affordable
Whether you are looking to add regular inventory cycle counting to your inventory routines or you are simply looking for a way to improve your existing cycle counting procedures, Skustack is the answer.
As an industry-leading omnichannel ecommerce platform, Descartes Sellercloud is well aware of the challenges and headaches of auditing inventory. We also know how important it is to get the numbers right to generate accurate inventory counts.
In designing Skustack, our fully integrated omnichannel WMS (Warehouse Management System) platform, we focused on embedding the inventory cycle counting process into the day-to-day warehouse workflow. Our patented technology centralizes every aspect of your inventory processing from top to bottom.
By trading clipboards for handheld scanners, every member of your warehouse team has the ability to scan, count, and record inventory data quickly and intuitively. As a result, the combination of improved accuracy and time savings will reduce your overhead costs.
Contact us directly for a free consultation to learn more about how Skustack can integrate optimized inventory cycle counting into your warehouse workflow.
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