In 2022, U.S. businesses faced an unprecedented 19.6% surge in logistics costs, with carrying costs accounting for more than half of this increase. If you’re using basic inventory tracking, it might serve you well for now. However, as your business expands, you will need a more sophisticated system to keep up with increasing demands and remain competitive. That’s where real-time inventory management comes into play. By allowing you to monitor sales, fulfill orders more swiftly, and maintain customer satisfaction across multiple sales channels, real-time inventory management can transform your business significantly. Upcoming, we’ll delve into how to track inventory in real time and select suitable inventory management tools for your business.
1. Consolidate Your Inventory System
A real-time inventory management system instantly tracks and updates stock levels across your entire business. It automatically records all inventory changes, from customer purchases and supplier deliveries to stock transfers and returns, providing immediate visibility from the warehouse to the point of sale. A unified operating system that connects all the data from your retail operations optimizes this real-time tracking. By integrating data from your point-of-sale (POS) systems, e-commerce platforms, marketplaces, and partner apps into one centralized location, you can ensure seamless visibility into inventory levels across all channels.
One great example is the French footwear brand Odaje, which faced challenges with data disconnected across 16 physical stores and its online shop. This discrepancy led to inventory inaccuracies and customer service issues. After implementing a unified system, Odaje achieved a 6% increase in conversion rates and a 25% boost in international sales. This case underscores the importance of unifying inventory management tools for not only operational efficiency but also boosting sales and customer satisfaction.
2. Use Real-Time Data Integration
Real-time inventory management significantly improves supply chain resilience. According to the BCI Supply Chain Resilience Report 2024, 80% of organizations faced between one and 10 supply chain disruptions over the past 12 months, with each disruption potentially eroding annual revenue by 6-10%. A unified inventory management system helps protect against these disruptions by providing real-time inventory visibility across all locations, a clear view of supplier delay impacts, and simplified inventory transfers between locations.
For example, Bared Footwear in Australia struggled with separate online and POS systems that couldn’t sync inventory fast enough, leading to retail store closures during online promotions. By switching to a unified POS system, Bared Footwear could keep its stores open during big sales events, maintaining inventory accuracy across all channels. The same principle holds for improving customer satisfaction, as accurate stock information across all channels leads to a better shopping experience. Italian homeware company LisolaStore witnessed a 15% increase in average order value and the lowest inventory shrink rate after adopting real-time inventory management.
3. Implement Scanning and Tracking Tools
Accurate and timely tracking of inventory movement is critical to business efficiency and profitability. The correct technology can help manage stock across multiple locations. Barcodes, for instance, allow for quick identification and tracking of products in stores and warehouses. Scanning barcodes updates inventory data instantly during sales or when receiving new stock, reducing counting errors and keeping physical and digital stock levels synchronized.
Radio-frequency identification (RFID) systems provide additional benefits by allowing simultaneous scanning of multiple items, offering better durability in harsh conditions, and providing encrypted data for enhanced security. Similarly, QR codes, which can be scanned by smartphones, can update centralized inventory databases in real-time and provide secure transactions without storing sensitive data. IoT sensors can also be valuable by continuously tracking inventory conditions like temperature and humidity, triggering alerts when necessary.
4. Set Up Inventory Alerts and Automations
Manually tracking inventory is both risky and time-consuming. Smart alerts and automation can significantly reduce errors and free up your team to focus on more critical tasks. Systems like Shopify Flow enable businesses to create custom workflows that trigger specific actions based on inventory conditions, such as monitoring stock levels across locations and sending automatic alerts when thresholds are crossed.
For instance, if you run a clothing store, you could set up a system that triggers an alert when certain t-shirt variants fall below 20 units, notifying the purchasing team to refill the stock. This keeps inventory levels optimized automatically, ensuring you never run out of best-selling items. Furthermore, features like demand forecasting and automated purchasing recommendations available to POS Pro subscribers through tools like the Stocky app can immensely enhance inventory management.
5. Evaluate Trends and Forecasting
Effective inventory management isn’t just about real-time tracking; it involves leveraging data to make informed decisions about future inventory needs. A unified system allows you to analyze historical data and real-time analytics to optimize inventory planning. Built-in demand forecasting reports can suggest products for restocking based on sales data, turnover ratios, and seasonality, eliminating the need for manual forecasting.
Setting up regular reporting cycles for key metrics like sell-through rates and stock turnover enables proactive inventory management. By configuring analytics dashboards to monitor patterns across sales channels, businesses can identify trends and make data-driven decisions. Automated alerts for significant trends or deviations help maintain optimal stocking levels and reduce costs associated with overstocking or stockouts.
6. Educate Your Staff on the System
Adopting a real-time inventory management system can provide significant benefits. First, it offers instant visibility into your inventory levels, helping to reduce stockouts and overstocks. This means you can make informed decisions and ensure product availability, thereby avoiding lost sales and improving customer loyalty. Additionally, real-time tracking allows for better synchronization with suppliers and reduces delays in replenishing stock.
In the coming sections, we will explore how to implement real-time inventory tracking effectively and discuss selecting the right inventory management tools tailored to your business needs. Embracing this technology can streamline your processes, optimize your supply chain, and ultimately contribute to your business’s success.
