There are numerous benefits from implementing inventory management within your business. In fact, distortion in inventory results in an estimated loss of $1.1 trillion worldwide.
Besides that, in 46 percent of warehouses, human error is a significant problem. Inventory management software can help with both of these issues, reducing human error and reporting accurate inventory results.
However, one area that is often overlooked, where inventory management can be useful is sales growth. You can actually use inventory management analytics to not only reduce costs within your business but help grow revenue as well. In this guide, we’ll discuss the role of inventory management analytics in sales growth, which will hopefully help you begin to grow your own sales numbers.
What is Inventory Management Analytics
Inventory management analytics is a software program that studies information about your inventory. The purpose of inventory management analytics is to help businesses make data-driven decisions that are more beneficial. Inventory management analytics is typically easy to set up, and once you do, your business will be able to make smarter decisions in a wide range of areas.
Ensure Optimal Product Levels
Perhaps the biggest way inventory management can benefit your business is by helping ensure that you always have the correct amount of products in stock. Through inventory management analytics, you'll have a system that is constantly studying the past data and trends of your business to determine future needs. For example, inventory management analytics can determine which seasons are your most productive.
Having the optimal number of products at any time is beneficial for a few reasons. First, it's less likely that a product will be out of stock when a customer goes to order it. You don't want to miss out on a sale just because you didn't order enough products to meet demand.
In addition, just as inventory management analytics can ensure you have enough products, it can also ensure that you don't have too many products. You need to safely store each product you create before you sell it. The more items you have, the more you need to spend on warehousing and security costs. By having just enough items to meet demand, you won't end up spending more on these things than you need to.
Speed Up Customer Shopping Experience
Another way inventory management analytics can help boost your sales is by speeding up the customer shopping experience. It's been shown that if you can decrease the amount of time it takes for a customer to checkout, they are less likely to abandon their cart. It takes a lot of work to get someone to your website and have them add an item to their cart so you don't want to lose them at the last moment.
With inventory management analytics, you can find ways to speed things up for your customer. For example, you can easily see when product levels are starting to drop and restock your shelves (virtually or in-person) before you run out. This eliminates the need for the customer to wait around for more products to arrive or to ask an employee for assistance.
You can also connect your analytics directly to your online line sheet. Line sheets are essential for bulk orders, which have a significant impact on your inventory. By connecting these two things, you can ensure that bulk orders are able to go through quickly and easily.
You can also use your inventory management analytics to discover which products are frequently bought together. With this information, you can then group similar products closer together within your store or suggest them when someone is shopping online. The result for the customer is less time wandering around the store or browsing through your website to find what they are looking for.
Better Customer Experience
It's important to improve the entire customer experience, not just the speed of their checkout process. Customers who have a good experience with a business are much more likely to return again in the future. In fact, return customers are so important that on average, a loyal customer is worth ten times more than their first purchase. In addition, just a 5 percent increase in customer retention can lead to a profitability increase of 75 percent.
Using inventory management analytics, you can make some specific changes that will improve the customer experience. For example, let's say you sell a product that has an expiration date. With inventory management, you can keep track of when those dates are arriving and ensure you remove products from your shelves before that date passes.
You'll also have a more efficient operation, ensuring those products stay on your shelves as long as possible before expiring. The result of this is fewer customers buying expired products and having a poor experience.
Inventory management can also help with the shipping process. When customers order something online, they want to receive it as soon as possible. With inventory management analytics, you can discover inefficiencies in your shipping process and improve them to reduce wait times.
Spend More Resources on Sales Efforts
Finally, by improving other areas of your business with inventory analytics, you'll have more resources to spend elsewhere in your business. For example, let's say you are able to reduce the amount of money you spend on warehousing after you discover the optimal number of products to order. You can then shift these savings towards your sales and marketing efforts, helping you generate more sales.
Even though you're now generating more sales, and therefore require more products in your warehouse, you're still only ordering the optimal amount because your analytics is constantly monitoring the situation. This allows your business to grow in the number of sales while keeping the costs low in relation.
Get Started with Inventory Management Analytics
If you haven’t already gotten started with inventory management analytics within your business, now is a good time. There are many benefits you can receive from implementing it, from reducing warehousing costs to improving your customer experience.
The more data you obtain about your inventory, the better decisions you can make throughout your business. Hopefully, this guide was able to demonstrate the significant benefits you can get from inventory management analytics and before long you’ll be reaping each one of them.