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How to Scale With an Automated Inventory Management System

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Automation
Employees working in a warehouse, surrounded by packages, using an automated inventory management system.

Any successful venture is a story of increasing ability to handle greater complexity. Inevitably, as mastery in a given domain develops, better instruments are called for. Likewise, ecommerce businesses looking to scale need to call on an automated inventory management system as their instrument.

As ecommerce businesses grow and scale, the tools that first brought those businesses success (manual processes and on-the-fly problem-solving) eventually prevent them from reaching their full potential. Manual structures appeal to businesses early on as they avoid nonessential expenses. But potential cost savings quickly diminish as companies grow, inventory levels rise and processes become more complex. At that point, it's time to invest in automation.

Read on to learn how automated inventory management can improve efficiency, and discover the features you need when considering an inventory management system.

What is automated inventory management?

An automated inventory management system is a platform that provides retailers with real-time data about inventory at all stages and locations. Services such as inventory tracking and forecasting can be updated and completed automatically, instead of manually updating spreadsheets and databases or calculating demand based on static sales reports and unreliable trend forecasts. 

Automatic workflows can be established based on predetermined conditions, such as a preset inventory minimum. These systems can save time and money, simplify your workflows and make it easier to respond to changes in demand. Automated inventory management systems can also sync inventory data across warehouse locations and sales channels, providing a single source of truth for accurate stock-level distribution.

What are the benefits of automated inventory management?

Two primary inventory concerns for retailers are avoiding stockouts and overselling, and this is where automated inventory management systems shine. Automation lets you know exactly how much inventory you need and sets a reorder point for specific times throughout the year to meet customer demand. 

A modern system provides you complete visibility into your stock levels, even those held with your third-party logistics provider, to maintain greater control over your operations. Automation also optimizes product listings based on inventory counts or control stock availability based on expiration dates or inventory flow. 

Manual processes are more dependent on human involvement, which naturally expands the opportunity for potential errors. Many processes can be repetitive in nature, which can make work tedious for employees and make it more difficult to identify structural problems. By using automation, you can reduce or eliminate the need for manual processes and the risk associated with them.

Inventory oversight and automation capabilities can also help retailers control their marketing budgets. For example, the retailer would know instantly if a specific product is out of stock. Instead of continuing to spend budget on pay-per-click (PPC) ads, retailers can halt digital marketing for items that are sold out. 

Retailers often run into this issue during busy sales periods like Black Friday and Christmas shopping. Not only does sending PPC leads to a sold-out product hurt your budget, but it can also cause friction in the purchasing journey and frustrate consumers.

How does automation help the customer experience?

Automation improves business efficiency and can also improve customer experience. Research shows that nine in 10 shoppers prioritize retailers that offer a convenient experience. This experience extends from the moment your prospects or customers are discovering your brand through to final product delivery, returns and any related customer service interactions. 

Because customers expect a seamless shopping experience, automation is critical to have products ready for customers when they need them. Stockouts can be especially detrimental to your ecommerce business. If you’re sold out of a product, customers will quickly abandon your store for someone that has it available. Once a customer has a negative experience with your brand, you’re less likely to regain their business.

Features like barcode scanning can be convenient aspects of automated inventory management systems that benefit businesses and consumers alike. These features make processing orders more straightforward, faster and more efficient. Look for vendors whose offerings integrate into your existing systems where possible. This streamlining centralizes information and helps your employees get more done because they have one place to go for everything they need. 

What features should automated inventory management systems include?

When evaluating automated inventory management software options, consider what it will take to meet your current needs and what will enable you to scale up. While considerations like forecasts and workflows are primary concerns, options such as existing or planned integrations can have a significant effect, too. It’s also important to consider the vendor’s support capabilities and its roadmap for updates or expansions that could add functionality and value to your business.

Read on for features to consider when looking at automated inventory management systems.

Accurate real-time overview of orders

Having real-time inventory and order data insight helps you keep the right amount of stock on hand. Real-time data can also help you compare available stock with predetermined trigger events to automatically reorder stock from the supplier. This eliminates a manual purchasing step in your inventory management process.

Predicting supply and demand

Advanced software can analyze sales patterns to help you predict supply and demand. This can be especially useful when forecasting for seasonal products or complicated market conditions. Stock levels can be temporarily elevated to adjust for a period of increased sales, then adjusted to lower volume as sales and demand return to their typical levels. 

Many businesses still rely on manual processes such as spreadsheets to manage their inventory. This leads to out-of-stock inventory and delayed orders. Inventory automation software helps improve your bottom line by analyzing sales and stock levels across the board and automatically forecasting to optimize stock levels.

By using historical sales data, tracking seasonal trends and analyzing similar products, you can improve your forecasts and capitalize on revenue opportunities. An automated inventory management system helps you know exactly when you need to buy extra inventory based on forecasted sales, lead time or your desired stock cover days.

Automating workflows

Manual workflows are slow, repetitive and tedious. This creates inefficiencies and opportunities for human error. Automated workflows can eliminate this manual work and free up your team’s time for tasks that require more focus and attention. 

Once your customers place orders, a complex system can automatically move into action without additional work from your team. Such software determines workflow rules once the order is placed, leading to efficient fulfillment — and it can even help with logistics and warehouse management processes.

For example, suppose a product is out of stock at the nearest logistics center to your customer. In that case, the order could automatically be fulfilled from a different location where goods are available. Alternatively, the software could pause the order until the goods are in stock at the closest logistics center while still fulfilling the order within the promised shipping window.

Automating managing listings

Some retailers remove product listings, at least temporarily, when a product is out of stock. This helps avoid confusion from potential customers, but it can also lead to missed opportunities. Automating listings management can ensure you keep out-of-stock items listed online while identifying them as “out of stock.”

This means customers can still find the products they are looking for and be presented with alternatives or the ability to sign up for a notification when the product is back in stock. 

Managing listings is notoriously difficult to do across multiple sales channels. With automation, you can write a single listing and share it across all sites and apps where your products are sold. This saves you time spent updating each listing individually, keeps listings consistent and reduces the chance of mistakes.

Targeting copy to audiences

You likely have many unique segments within your core audience, and those segments need different messaging depending on their needs and tendencies. For example, a page targeted to Generation Z buyers could require different messaging than a page marketed to an older audience.

Automation can help by allowing different versions of a listing to be displayed for different types of sites or apps based on audience. Core basics such as dimensions, technical features and environmental credentials remain constant, while dynamic language automatically changes to resonate with the audience reading it. Customized options like pricing and promotions can automatically be tailored to different audiences, as well. 

Even if your business decides that such customization has limited impact, this automation feature unlocks an option you would never realistically have if you were manually overseeing product listings and inventory.

Grouping listings

Another helpful feature of automated software is the ability to group listings by categorizing products that are similar to or complement each other. A purchase order for one product could trigger a notification that there’s a demand increase in a specific category, allowing your team to stock accordingly. 

If replacement stock isn’t available from a supplier for a specific item, then you can stock up on the alternatives recommended by your automated inventory management system. Create urgency and manage expectations by adding a notice to low-stock items such as “selling fast” or “limited availability.”  

Automate inventory with Linnworks

Automating your inventory management allows you to maintain the optimal amount of inventory with the least amount of manual work involved. You’ll see improved efficiency, list the right products at the right time, reduce errors and provide a better experience for everyone involved, especially customers.

By using automation throughout your business, you can scale quickly without limiting your services or functionality. You can respond to external changes in the market while still maintaining focus on your business and your customers. 

Having the best features can save retailers time and allow them to focus on other growth areas. An automated inventory management system won’t eliminate all of your challenges, but it can help you anticipate changes and prepare for surprises. You’ll also free up time to expand your sales channels, which can help your business scale further. Learn more about inventory management in a multichannel selling environment.

Discover Linnworks inventory management software

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