Aside from the obvious expense of purchasing inventory in the first place, failing to properly manage it can lead to shortages for customers, costly overages for product that sits unsold, and consume capital resources. Proper inventory management ensures your subscription box company is operating efficiently, while continuing to meet customer demand.
Here are 3 ways to keep your inventory management process working.
Conduct a Physical Inventory Count
In order to correctly assess inventory, you have to know what you have. This seems obvious, but accuracy with inventory is no simple thing for companies of any size. Take into account not only finished goods, but raw materials and works in progress. Physical inventory counts should be compared against data records to see what discrepancies exist and how the process can be improved. For subscription companies that outsource fulfillment and warehousing, your provider should be performing regular cycle counts to insure inventory levels are accurate. It’s important their inventory counts and yours are reconciled regularly.
Optimal inventory levels means having enough of an item to fulfill a month’s worth of subscription boxes without being overstocked. Inventory for subscription box companies is unique in that products are not typically forecasted by demand, but by number of box subscriptions sold. This means the growth and sales trends with your own business must be considered precisely each month – and not seasonally or annually as with other types of retail businesses.
Systems and Data Maintenance
For growing, larger, or more complex subscription box companies, inventory management can require a core team with the ability and tools to evaluate, analyze, and order product. It starts with a process and system that provides timely access to inventory data. At some point, a dedicated inventory control specialist may be required to oversee inventory operations. Implementing inventory management software, in the form of a WMS or ERP, is another way growing companies stay on top of the challenges that come with controlling inventory.
Getting good at inventory management is not the reason you started a subscription box company, but it can be the one thing that determines the success or failure of it. Implementing these ideas will help to ensure effective inventory management so you always have the correct amount of each item on hand and your customers stay happy.