Inventory is something that is continuously on the move in any eCommerce business. You have to receive, store, fulfill, and reorder your inventory simultaneously in order to optimize your eCommerce fulfillment and keep your customers happy. Building and maintaining an accurate inventory record is the fundamental part of an effective inventory management strategy.
Inventory records provide the key information regarding your inventory at any given time. They are also required for accounting purposes at the end of each accounting year to provide the accurate value of your inventory as an asset in your balance sheet.
Inventory records must contain the following information about your inventory
● Stock information, including the number of SKUs, types of SKUs, etc
● Inventory sold, order fulfillment, and recorded information
● Inventory value
● Location of the inventory (within the warehouse and warehouse location)
Importance of Maintaining Inventory Records
In order to optimize your eCommerce fulfillment, you must have an up to date knowledge of your current inventory position. Knowing the accurate number would help you in making the decision of maintaining and reordering the right amount of inventory. It also helps in demand forecasting and adjusting seasonality factors for your orders.
Outdated inventory records could lead to unfulfilled orders due to understocking and higher storage costs due to overstocking. These situations can result in unhappy customers and a loss of profitability for your business. In order to avoid these issues, you should invest in an efficient inventory management solution.
How to Maintain Accurate Inventory Records
Consult Your Accountant
E-commerce is a fast-paced industry and its accounting works differently than traditional businesses, make sure to find a trusted accountant to manage your books. Make sure to discuss the inventory valuation methods and record-keeping with your accountant.
You can choose between FIFO, LIFO & WAC (Weighted Average Cost) methods on the recommendation of your accountant. For accounting purpose you must have an accurate number of beginning inventory, ending inventory, and cost of goods sold at the end of each accounting period.
Be Consistent in Your Inventory Audit
Make sure to perform regular inventory audits and maintain inventory records. Some of the methods of inventory audits are as follows:
- Physical Counts
- Cycle Counts
- ABC Analysis
Be Consistent in Your Inventory Valuation Methods
Inventory valuation helps you find out the actual worth of your inventory so that you determine the financial value of your business to make better financial decisions. It is very important to choose a single valuation method and remain consistent with it throughout the period. Some of the most common inventory valuations methods are:
● WAC (Weighted Average Cost)
Choose the Right Inventory Management System
There are two most common systems used in maintaining the inventory records
1. Periodic Inventory System
Periodic inventory management is done at certain time intervals. Although it can be done using multiple electronic, RFID, and barcode technologies, however, it is much more manual and requires more time.
2. Perpetual Inventory System
Perpetual Inventory system tracks the movement of the inventory in real-time using technology systems to ensure smooth logistics and successful fulfillment. ShipBots inventory management solution provides simplified inventory management based on a perpetual inventory system.
How to Improve Inventory Record and Management with ShipBots
Choosing the right third-party logistics (3PL) partner empowers you with the technology to automate and improve your Inventory record and management process. You can leverage their powerful technology stack to grow and scale your eCommerce business.
Automate Your Inventory Management and eCommerce Fulfillment
ShipBots‘ built-in inventory management solution keeps track of your inventory and stock working on the principles of the perpetual inventory management system. It significantly improves your logistics issues and streamlines the fulfillment process. With the seamless integration option with all the major eCommerce platforms like Amazon, Shopify, WooCommerce, Walmart, BigCommerce, Magneto, and eBay, it automates your eCommerce business. It also provides the inventory level from all the warehouse and fulfillment centers in a single dashboard so that you don’t have to manage multiple sheets or data from multiple locations.
Keep Up with Real-time Information
ShipBots provides real-time reporting on your inventory records, sales, and performance of a certain SKU. Through real-time information, you can minimize the chances of dead stock and inventory shrinkages. You can also get printable customized reports based on multiple metrics like inventory turnover rate, inventory on hands, and SKU performance. This powerful real-time reporting feature of ShipBots allows you to track your sales and business overall performance.
Demand Forecasting & Reordering
The ShipBots inventory record system helps you to predict the future demand of your inventory keeping in mind the historical performance of your products. It helps you determine and notify the reorder point so that in order to avoid the failure of stocking out.
Physical Record Management
Keeping a paper record of the inventory level minimizes the risk of stock discrepancies between your actual inventory and the accounting inventory. The physical record also helps in fraud detection and audit compliance. It is also required by law to maintain physical records of the inventory for a certain period of time.
ShipBots’ inventory management system helps grow your eCommerce businesses by removing the hassle and tedious job of inventory record & management. Its built-in fully integrated solution automates and streamlines your eCommerce journey.
Contact us here for a customized automated plan to ensure your eCommerce business success.