Entire fields of thought focus on lean business. However, people use the term “lean” in different ways. Generally, lean management seeks to improve business through incremental changes to processes. But in inventory management, it’s more specific to identifying and eliminating waste. The idea is that by making inventory lean, you make your online (or multichannel) business more efficient and more profitable.
The Processes and Tools to Make Inventory Lean
Lean is about holding the right amount of stock across all your channels. Keeping inventory lean in stores can translate to retail success. One apparel retailer that used lean practices saw improved sales across all its channels last year. As with general lean practices, the lean inventory approach seeks to continuously increase efficiency and reduce costs. Ultimately, it should lead to happier customers, regardless of how they buy from you.
Know Your Inventory, Lower Your Costs
You know it takes money to sell your product. However, a big factor to the cost of goods sold is what you spend to store your inventory. Consequently, the longer a product takes to sell, the higher the COGS, the lower the margin. Making inventory lean means having the tools to understand your inventory turns and COGS. When you know what products sell and what products don’t, you can make better decisions that can lower your costs and raise your bottom line.
See the Big Picture, Get Flexible
Lean principles call for tools to understand how your product flows from supplier to warehouse to multiple sales channels. When you know how long it takes to make your products then how long it takes to sell them, you can identify and correct wasteful steps. Moreover, this flexibility to helps with important sales decisions. For example, if a product sells better online than in other channels, you can adjust production, warehousing or sales to make inventory lean and efficient across the entire business.
Make Your eCommerce Customers Happy
Make your inventory lean to make your customers happy. This isn’t a quaint idea about customer service. First, it’s about letting your eCommerce customers know exactly what products are available for purchase. Then, it’s about using your entire supply chain to fulfill that promise, if necessary. For omnichannel businesses, that means the ability to fulfill orders from anywhere in your supply chain. For example, routing orders to the branch where the order can be filled and dispatched the quickest.
Register For a FREE Trial