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Inventory management for Ecommerce: how to setup your inventory notifications so that you never run out of stock

Inventory Management
By Ankit | Oct 25, 2022 | 6 Min read
Inventory Management: Know what to order at the right time

Our Aim

How to be on top of our inventory so that we always know beforehand what to order automatically through our system. And identify the non-moving outdated products. So our aim is to know

  • What to Order
  • At what time to order
  • Non-moving products

How we’ll establish this: We’ll use a combination of methods, that once defined will always keep us informed about what product to order and at what time.

We will look at how you can follow a setup so that you can control your inventory through automation.

Product Reports and Notifications Setup

There are typically 3 kinds of product categories

1. Fast selling products
2. Slow moving products
3. Non-moving or outdated products

What you define as fast selling product depends on your internal definition. It could be any range. As an example, let’s say I define a fast selling product as anything that sells more than 5 pieces in a month.

Slow moving products could be those that sell 1-5 pieces/month.

And non-moving products are those that haven’t sold for over 2 months.

In order to automate knowing when to order, we’ll have to define the following 2 values –

1) Alert Threshold – Alert threshold is the low stock value when you want to be notified by the system to order more. This value must be defined for slow moving products. For fast selling products, you may or may not define all alert threshold values

2) Lead Time – Lead time is the time taken for the product to arrive at your warehouse after you place it on order.

Now with a combination of days of inventory left report, alert threshold, and last sales date report, we’ll always stay on top of our inventory.

Days of Inventory remaining report: This report calculates number of days it will take for the product to be sold out if it continues selling at the same rate as it has been selling for the selected time period in the past (30, 60, 90 or 180 days)

Last sale report: The date on which the product was last sold.

With all this setup, let’s take an example of a fast moving product.

Lets say you have the following situation for a product

Total Sales in past 90 days = 450 pieces
Current Stock in hand = 125 pieces
Lead time = 15 days
Low stock alert threshold = 50 pieces

Based on this data, we are selling approx 5 pieces per day. So we should be automatically notified by the system when we have only 15 days of stock left, I.e. 75 pieces.

In addition, you should get another notification when the low stock alert threshold is reached.

This makes sure that you order the product exactly at the right time.

Let’s take another example of a product that is slow moving.

Total Sales in past 90 days = 1 piece
Current Stock in hand = 2 pieces
Lead time = 10 days
Low stock alert threshold = 1 piece

When you sell another piece of this product, According to the Days of inventory remaining report you are selling at the rate of 1 piece in 90 days. So it will show the days of inventory remaining as 90 days. As a result, you will not be notified in time based on past sales and lead time of the product.

However when another unit sells, you want to be notified so you can order it before running out of stock. With alert threshold defined as 1, you are safe as you will get the notification at the right time.

With a combination of Days of inventory remaining and Alert threshold notifications, you can always get the notification to order stock at the right time.

Now we are left with the task of identifying the Non-moving and outdated products.

For this, we can have a look at the last sale date report. This is a simple report that’ll show you the last sale date of this product. If the last sale date is greater than a certain value, let’s say 150 days, you will know that this product is not selling anymore.

Why your online platform may not be giving you correct reports

If you are an online ecommerce seller, with stores on Shopify, BigCommerce, WooCommerce, eBay, Etsy, or Amazon, you may not get the correct reports for these notifications. In most cases, these platforms don’t even support this kind of setup.

Lets look at why that is so –

Selling online involves selling the same SKU in many different forms.

1) You could be selling the same product through multiple listings. The online platform will show you the data considering the multiple listings as different products. While internally you are selling the same product and want to be notified considering the unified sales for all your listings of this product.

2) You may be selling bundles on your store. The online platforms will show you the data in terms of your bundles sold. While, to know to the correct data, you would want to get the reports at the component level. The software you are using must give you the above reports based on the bundle’s component sales. So you can order the components timely.

3) You may be in a Print on demand business where multiple end products are customised from the same base product. Here also, the online platforms will only give you the data in terms of end products. While you may want to get notifications and reports for your base product.

Which software has built in capabilities to handle this kind of automation?

Sumtracker has built in capability to automate this.

You will need to connect your store to Sumtracker. Sumtracker is integrated with Shopify, Etsy, eBay, Amazon, BigCommerce and WooCommerce. You can keep the inventory on all platforms in sync with each other using Sumtracker.

Sumtracker will also sync all your products and orders from the time you turn on the inventory sync. You will need to define the alert threshold and lead time of your products, and Sumtracker will give you all the notifications as described above.

Sumtracker has built in capability to handle multiple listings of the same product and to setup bundles for your store.

Added benefits:
Multi-location support
Sumtracker supports inventory management at multiple locations. This means you get all the notifications for each location.

Incoming stock
In addition to getting notified, you should always be aware how much of your product has already been put on order for purchase, and when is it due to arrive. Sumtracker gives you this data so that all your team members are aware of the incoming stock along with the arrival location.

We offer a 30-day free trial. You can sign up for Sumtracker from here.

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