5 elements of an optimized inventory management system

Retail businesses have an average of 20% inventory to sales ratio. This I/S ratio compares the value of your inventory with the amount you make from selling your goods. The I/S ratio is arrived at by dividing the revenue made from overall sales by the value of the stock that’s kept. So, with a 20% I/S ratio, if you make $100 from selling your items, your stock would be valued at $20. More simply, the I/S ratio here would be five (revenue made from sales divided by value of stock). Maintaining the I/S ratio that’s best for your business is key to maximizing profit. If there’s too much stock, profits are compromised; if there’s too little stock, orders might not be filled. Optimization is the key. What are the best ways to optimize inventory? And, what are the five elements of an optimized inventory management system? Let’s find out.

If you are a businessperson, deciding the amount of inventory you should keep on hand is crucial. If your stock runs out, or if you have too much of it, the consequences could be serious. There could be financial losses and your reputation could be damaged. The only way to avoid this is by having optimum inventory on hand, or the right amount you need. This article will help you to understand what inventory optimization is and explain the five elements of an optimized inventory management system.

 

What is inventory optimization?

Inventory optimization means maintaining an optimum amount of stock, stock being defined as all the stock-keeping units (SKUs) that are being held by a business. When a company has an optimum level of stock, its working capital is being used to its best advantage.

Overstocking inventory can result in

  • Working capital being tied up in unneeded stock.
  • Stock going out of fashion and becoming unsellable.
  • Workers spending time and energy unnecessarily.
  • An elevated risk of loss of goods to theft or accidents.
  • Valuable storage space being used unnecessarily.

On the other hand, understocking and stockouts can result in

  • Turnover being halted.
  • Company reputation being damaged.
  • Production lines being broken.
  • Workers’ time being lost.

Inventory optimization can eliminate these losses. Put another way, when optimal levels of inventory are maintained, resources, like physical space, labor, and capital, can be used in their most efficient ways.

 

5 elements of an optimized inventory management system

As we saw earlier, it is crucial to optimize the amount of inventory you keep at all times. But in order to do this right, what should you be focusing on? Let’s look at the key areas in detail.

Graded policies for inventory management

First, your stock policies should be clearly defined, and you should let the relevant people know about them well in advance. It isn’t helpful if the purchasing department is kept in the dark about these policies.

The inventory turnover ratio indicates the liquidity of the inventory, or the number of times the average inventory is sold during the year. It shows the efficiency and effectiveness of the company in investing its funds.

Inventory turnover time is the number of times a company replenishes its stock in a given period, generally a year. In other words, if you sell stainless steel spoons, the inventory turnover of finished product — spoons — is the number of times you sell out of spoons and replace them. The following formula shows how to calculate the inventory turnover ratio:

Inventory turnover ratio = Cost of goods sold
Average value of inventory

 

where,

Average inventory = Opening inventory + closing inventory
2

Cost of goods sold = Opening inventory + purchase – closing inventory

Now you know how many times a year you have to refill your inventory. The following categories of inventory are dependent on this ratio.

  • Fast moving – Fast-moving inventory is that which is used or sold in a short or easily known period of time. This period is different for every industry. The inventory turnover ratio will be higher for goods in this category.
  • Slow moving – Slow-moving goods are those that stay in your warehouse for a more extended period of time. The inventory turnover ratio for these types of goods will be lower.
  • Non-moving – Non-moving or obsolete goods are those stored in your warehouse for a long time because there is no market for them. This inventory is also known as dead stock.

These three categories should be a major consideration when making purchases. Separate your stock into each one, and invest more in goods that are fast moving than those that are slow-moving.

Realistic demand forecasting

Forecasting demand is, perhaps, the first step when it comes to good inventory management. Forecasting demand accurately is not an easy task, however. There are many aspects that have to be considered: historical sales data, customer biases, future demand, and growth. Additionally, it is crucial to take technological advances and trends into account.

How can you predict demand for your products accurately? Well, quality software can help. Cin7’s system generates reliable demand forecasting reports. Cin 7’s forecasting demand report can make your job a lot easier.

Determining product life cycle

The term product life cycle is defined as the period between the product’s initial production to the time it is no longer sold. If you launch a new product, sooner or later it will stop trending and your customers will move on to something else. There are five stages to a product’s life cycle that impact your inventory management:

  • Introduction – There is less awareness at this stage, so the demand is less, and there is no need to stock a lot of products.
  • Growth – Awareness of the product is on the rise, and the company should be prepared to fill more orders.
  • Maturity – This is when demand reaches a plateau. Demand will still be high, so the company won’t have to make changes to the level of stock it maintains.
  • Decline – Here, the company realizes that demand is dropping. Customers have had enough of the product and are buying less of it. When this point is reached, the company needs to reduce production and focus on replacing it with something new. This is also the time to push more of the product by offering discounts and rewards.
  • Obsolete – Now the product is totally out of demand. Any remaining inventory you have becomes dead stock.

The life cycle of a product can be short (a few months) or long (spread over years). These life cycles have to be taken into account when forecasting demand for your product. Doing this accurately will prevent overstocking or understocking,

Timely restocking

Your purchase department should have clear restocking instructions. Every item in the inventory should have a specific reorder point (ROP), a predetermined level of goods at which they have to be restocked. When determining this reorder point, you should consider:

  • Safety level for stock: This is the minimum amount you will need on hand to tide you over until your new order arrives. You don’t want to run out of stock.
  • Logistics: You have to consider the time it takes to get your goods to your factory or warehouse.
  • External factors: These include weather, political upheavals, and labor issues. Any one of them can affect your delivery time.
  • Supplier lead time: This is the time it takes your supplier to dispatch your products. Suppliers have different lead times.

Management needs to be aware of ROP to ensure stock is replaced in a timely manner. Inventory management software like Cin7 can send alerts that let you know when you reach this ROP.

Investing in reliable inventory management software

If you find inventory management challenging and are intimidated by the sheer number of calculations that have to be made, here’s an easy solution: Cin7. This versatile and easy-to-use software can help you manage your inventory easily. Among the features it has to make your life easier are

  • Determining reorder levels,
  • Alerting you when you reach ROP,
  • Sorting third-party logistics (3PL),
  • Helping you with B2B ecommerce,
  • Generating reports on COGS, forecasting, cashflows, and inventory on hand, and
  • Integrating with other software and mobile OS.

The following video shows how Cin7 inventory management software can help you take your business to the next level:

One of the significant advantages of Cin7 is its inventory management app. This app lets you connect to your inventory management program from anywhere.

 

Final take on inventory optimization

While inventory optimization is a crucial element of a successful business, it is also painstakingly tricky and complex. Overstocking can lead to losses, while understocking can damage your reputation. How can you overcome these dilemmas? Cin7 inventory management software turns the whole ordeal into a piece of cake.

Why wait? Contact our experts for a demo, and unlock the true potential of your inventory.

What is freight shipping and how does it work?

Modern businesses from every industry now operate across multiple states and countries. Thus, they need fast, efficient shipping services.

 

What is freight shipping?

Freight shipping means transporting heavy or large volumes of goods, commodities, and cargo by land, sea, or air.

Freight shipping is important for any business that caters to people in different locations. Most ecommerce businesses serve customers worldwide, and often they partner with third-party logistics providers (3PL) for their freight shipping services.

 

Freight vs. parcel

According to FedEx, any shipment weighing over 150 pounds is considered freight. Any shipment under 150 pounds can be shipped as parcels. For instance, a microwave you booked online and delivered to your home is a parcel. A truck of microwaves shipped to the home appliance store is freight.

 

How does freight shipping work?

When goods are too heavy or delicate to be shipped by a standard ground shipping carrier, freight shipping is needed. Freight shipments involve packing items in wooden pallets or crates to keep them safe during transportation.

In general, freight shipping companies use ground, air and ocean transportation. The freight shipping company can recommend the best suitable mode of transportation based on your freight items and weight.

It’s highly advisable to discuss the delivery options with your freight shipping partner. For instance, if your warehouse doesn’t have appropriate equipment for easy loading and unloading of goods, your freight shipping partner can help you with some loading equipment to unload goods at an additional cost.

Freight shipping companies often send messages with a tracking number and freight carrier details when the truck is on its way. After the freight reaches a nearby terminal, you will probably receive a call from the freight carrier. You can schedule an appointment date and time for your freight delivery. You can inspect the shipment for any damage before receiving it.

As an ecommerce business owner, you must clearly understand freight shipping options before collaborating with a 3PL. Thus, you can choose the best shipping method that suits your business requirements and customer needs. For instance, investing in reliable inventory management software is highly recommended if you sell your products on multiple ecommerce platforms. The software allows you to integrate with diverse shipping service providers and fulfill orders in multiple locations.

 

Types of freight shipping

Let’s discuss the significant types of freight shipments used for commercial purposes.

1. Air freight

Air freight is the ideal mode of transportation if you have to ship high-value items. Air shipment is more common in the pharmaceutical and medical industries. Though it comes with a substantial cost, the shipment reaches the customer faster.

2. Rail freight

Businesses with large goods that need to be shipped within the country prefer rail freight. It is inexpensive compared to other freight modes but it may take a longer time than a truck. Often, businesses use rail in combination with other transportation modes to ship freight.

3. Ocean freight

Ocean freight is an alternative to air freight when you have to ship freight overseas. However, shipments can take a long time to reach their destination with ocean freight. If there is no urgency, ocean freight is a perfect choice.

4. Full truckload (FTL)

Businesses go for FTL freight shipping when they have enough stock to occupy an entire truck. A standard truck can carry around 26 pallets or load more than 15,000 pounds. However, the load weight or the number of pallets varies with the freight shipping company. Thus, it is always advisable to ensure the limits with the freight service provider.

FTL is only cost-effective when you have enough stock that covers the entire truck. Since you will be paying the truck’s total cost, unlike other freight shipping methods, you should make optimal use of every space available in the truck. It may be worth the money as order deliveries are much faster in FTL, as there are no stoppages in the middle for delivery.

5. Less than truckload (LTL)

Businesses opt for LTL when they have minimum freight quantities. In other words, shipments heavier than a parcel but not large enough to occupy the entire truck space are ideal for LTL freight shipping. Generally, shipping companies set minimum and maximum weight limits for LTL freight shipping. The weight limit varies from one company to another but ranges from 150 to 15,000 pounds, around six pallets.

In LTL freight shipping, businesses will share truck space with other companies. For instance, the shipping company will collaborate with multiple businesses and accommodate their goods optimally in the available truck space.

The prime advantage of LTL shipping is paying for what you store, not the entire truck. However, the downside is that goods are often transferred to different trucks before being delivered to the destination, taking more time for delivery.

6. Partial truckload (PTL)

Another option between LTL and PTL is partial truckload (PTL). If your shipment is over 5,000 pounds or six pallets, PTL can be a cost-effective method for you. Otherwise, it works like the LTL freight shipping method. You split the cost of the truck with other businesses, and you pay for what you store. One advantage of PTL shipping is the relatively low chance of transferring goods to different trucks.

7. Intermodal

Intermodal shipping means shipping freight by two or more modes of transportation. With intermodal containers, freight companies move shipments between truck, train, and ship effortlessly. Businesses prefer intermodal shipping as the freight is moved in containers without manual handling of items. Moreover, it is pretty cost-effective as there are no labor costs.

8. Expedited

Expedited freight shipping is the most expensive of all shipments and is reserved for emergency or time-bound shipments. Generally, expedited goods travel by air rather than by ship or rail, making it costlier. Plus, it also involves transporting goods in express shipping lanes for prompt delivery.

 

Importance of faster delivery

According to Grandview Research, the global same delivery market size is expected to grow at a compound annual growth rate (CAGR) of 20.3% from 2020 to 2027. The research further predicts that the market growth will be due to increasing urbanization, rapid ecommerce adoption, and evolving customer expectations towards delivery services.

As an ecommerce business owner, you should address the customer’s expectations of faster delivery. Shipping is a pivotal part of the supply chain as the order is closed only when the product reaches the customer safely and promptly.

Whether you own an online store, sell in multiple online marketplaces, or supply to major retailers like Walmart and Target, partnering with a 3PL company can be a winning supply chain strategy. However, before collaborating with a 3PL, knowing the basics of freight shipping and its costs can help you choose the ideal shipping method.

 

How much does freight shipping cost?

Shipping cost directly impacts your business’s profit or loss. Thus, keeping the shipping charges minimal while offering faster delivery to your customers becomes crucial for long-term success. In general, freight shipping costs depend on multiple factors, including

  • Cargo weight,
  • Cargo package dimensions,
  • Value of the cargo,
  • Shipping destination,
  • The urgency of the delivery,
  • Custom clearance, and
  • Unexpected delays.

Based on these factors, you can narrow down the mode of transportation for your shipment. Especially for international shipping, you may need to choose between air and sea freight. For instance, some loads can be too big or too risky for air shipments. Thus, consider all factors before finalizing the shipment mode.

 

3PL or freight forwarder: Which is better?

As an online retailer, you will ship products to customers all over the world. Partnering with the right shipping company can provide better customer service. Therefore, do your research before partnering with a shipping service provider.

The two most common shipping service providers are freight forwarders and third-party logistics providers (3PLs). Understanding how they work will help you choose the right service provider to align with your business objectives.

Freight forwarder

Freight forwarders are companies that move goods from your warehouse to your customer. They don’t really handle transportation or supervise drivers, but they actively manage your shipment. In short, they act as a mediator between you and the freight carrier. Freight forwarders often decide the mode of transportation – truck, air, or ocean for optimal order fulfillment.

Shipping carriers are generally expensive, but freight forwarders regularly deal with multiple shipping carriers, so they can get you better deals for your shipments. Freight forwarders have the expertise and in-depth knowledge of how various modes of transportation work. They are familiar with customs, as they often deal with importing and exporting goods.

So, freight forwarders can help you ship your products anywhere in the world.

3PL companies

A 3PL company can do all a freight forwarder can and manage the entire supply chain process. A reputed 3PL company will maintain your products in optimal condition, get you the best possible shipping costs, and ensure the right products reach the right customers when an order is placed. A 3PL company also handles reverse logistics.

Furthermore, a 3PL company allows you to receive orders from every sales channel and fulfill them seamlessly. By outsourcing your logistics to a 3PL company, you can focus on your business growth and customer experience.

 

How can an inventory management system help your business to ship freights to diverse locations seamlessly?

As an ecommerce business owner, you will regularly ship your products to multiple locations, catering to diverse customers. Thus, managing logistics is as crucial as managing inventory for your business. Cin7’s multichannel inventory management system comes with around 700+ business tools like accounting, marketplace, 3PL warehouse, shipping, and more that connect all your orders, inventory, shipping, and workflows. It’s an all-in-one software that allows you to manage inventory, ship and track orders, monitor analytics, and more. Reach out to the Cin7 team for a quick demo now.

7 Common mistakes wholesalers and distributors make

Business models such as ecommerce and direct-to-consumer (DTC) are giving a tough time to wholesalers as well as retailers. You may already be struggling with razor-thin margins, and during such situations committing mistakes can cost you dearly. You need to be on top of your game.

This article will share some common mistakes that wholesalers and distributors make while running the business. Understanding these mistakes is a stepping stone to avoiding them.

 

Some common mistakes that wholesalers and distributors make

1. Using outdated methods

It’s surprising to think about how many businesses still rely on manual approaches, like using pen and paper to manage their businesses. Although pen and paper do have their own merit, for starters, they don’t need any electricity to run. However, papers can be easily misplaced or stolen, which you don’t want. Storing them can be a headache too as it will take significant space in your office premises. Plus, it’s not convenient to share them with your business partners.

While some people have migrated to digital forms like spreadsheets, it’s not enough to be successful today. Spreadsheets can get really messy, and you’ll have to spend a considerable amount of time updating them regularly. Plus, it’ll take digital storage space, which is risky if your storage drive gets corrupt.

The best solution is to use a cloud-based inventory management solution. The data gets updated in real-time, so you get accurate visibility over your inventory. As the data is securely stored in the cloud, there’s no risk of losing it.

 

2. Sales representatives lacking information and resources

Sales is the primary revenue generating activity for your wholesaling business. Your sales representatives are entrusted with the responsibility to drive sales, and thus, they must be equipped with all the right tools and knowledge. They need to have full visibility over your inventory and should be well versed with your product and promotional information.

It’s best to also acquaint them with your business process so that they can confidently answer queries about delivery time and product returns. Failing to do this will affect your customer service, and you’ll lose out on loyal customers.

You can leverage Cin7’s inventory management solution to empower your sales team. They can easily get data about your customers, suppliers, and all necessary product-related information. The features of Cin7 aren’t just limited to inventory management. You can also use it to streamline your sales quoting process. Cin7 allows you to offer accurate quotes/prices to your B2B customers and also set the payment terms. On top of that, you can receive payments and generate invoices.

Cin7 is your one-stop solution for managing your sales and inventory.

 

3. Inadequate customer management

Customers can make or break your wholesaling business. You need to ensure that you manage them well and satisfy their expectations so that they continue doing business with you. It is necessary to take their feedback about their experiences with your service, and you should improve accordingly.

You should be fair in your treatment of your business customers irrespective of the revenue that they generate. On top of that, you should also regularly communicate with your customers. Thanks to digitalization, this process is easier than it has ever been. You can use email sequences to broadcast information to your customers so that they feel informed and valued. You can also segment your customer base and then target them effectively with specific messaging in emails.

 

4. Monitoring stock levels

Being a wholesaler, you deal in large volumes of stock. It can be challenging to monitor your stock levels when you’re dealing with multiple buyers and deliveries being made daily. But you can’t afford to lose track of inventory as poor inventory management can lead to situations such as understocking and overstocking (both being undesirable).

You need clear visibility about when the items enter and exit your warehouse. This way, you’ll be able to track and share inventory updates with your customers. Cin7 can help you with inventory control as you get real-time visibility over your inventory in the warehouse. This would help in optimizing your processes to ensure a smooth workflow.

 

5. Ignoring business relationships

In the race to raise your profits, you shouldn’t overlook business relationships. Relationships are necessary, especially in the B2B arrangement that you deal with. Positive experience with customers can lead to more business opportunities as they can endorse you to their business partners. This is the key to long-term success.

Better relationships will ensure that your customers stick even through market fluctuations. Do your best to build these relationships by offering great customer service, making transactions convenient, and fulfilling orders quickly. Good relationships can also help in better negotiation with the suppliers so that you can lower your costs.

 

6. Not monitoring the cash flow

Healthy cash flow is the fuel for your business. Offering credit to your customers can help with increasing your sales. However, overextending the credit is risky for your business as it can lead to defaults.

You should thrive to proactively remind your customers about their payables and you should make it easier and more convenient for them to pay their invoices.

Cin7 can generate sales reports using which you can not only gauge the financial health of your business but can also ascertain your inventory’s performance. To sweeten the pot, we have integration with several accounting softwares such as Xero and Quickbooks.

 

7. Not following up with your customers

The relationship between you and the customers shouldn’t end after finalizing the sale. You need to nurture them so that you make repeat purchases.

You should follow up with your customers after they receive their offerings to check whether everything happened as per their expectations or not. You can send a follow-up email after the product is delivered.

 

Conclusion

Avoiding these common mistakes will help you improve your business practices. As you look for solutions to some common mistakes, consider new software, like Cin7’s inventory management, as part of your solution.

Book a demo now.

How to execute a year-end inventory count

Whether you’re running an auto body shop, a law firm, or a retail store, doing a year-end inventory count helps your business close the books on the past 12 months and organize yourself for the year ahead. In fact, the year-end inventory count is necessary for successful inventory management throughout the year. It allows you to clean up records and gives your business verified data to analyze.

Since retailers have a lot of inventory to manage, counting inventory correctly is crucial and allows you to make informed buying decisions later. Learn how to execute a year-end inventory count and how your annual count can help forecast demand for the year ahead in this article.

 

What is a year-end inventory count?

A year-end inventory count is a physical count of all the inventory on hand at the end of the year. The count is performed to verify that the physical inventory matches the numbers in your inventory management system.

A year-end inventory count is different from an inventory cycle count, which audits a smaller portion of inventory. While a cycle count allows you to monitor your inventory by sampling your inventory throughout the year, a year-end inventory is a physical count of everything you have on hand at one given point in time.

 

How do you conduct a year-end inventory count?

These are the steps that you need to follow for inventory counting:

  • First and foremost, you need to plan the day for conducting inventory count. It’s crucial to pause your warehousing operations while you do perform the counting so that you get an accurate snapshot of your inventory. You should plan a day that causes minimal impact on pausing the operations.
  • Once you finalize the date, you should form the team who will perform the stock counting. It is important to train them about your counting process and acquaint them with the warehouse’s premises. Dry runs can be organized a few days before the actual counting day.
  • You should also prepare your warehouse for the stock counting process. It should be thoroughly cleaned, and steps should be taken to ensure that there’s no scattered inventory. If there are boxes lying around the warehouse, it will slow down the workers who are counting.
  • The warehouse should be organized, and the areas (count zones) should be divided amongst the counting team so that everyone knows their responsibilities.
  • It’s crucial to equip your team with the right tools for counting. For manual counting, you can use counting tags. If you are using tags, then it’s best to let your team work in pairs so that one person can count the inventory while the other can note the values in the counting tag and stick it near the inventory. It’s best to get the counting tags signed by the respective team as it gives you clarity about the person associated with counting for a specific section.
  • To cross-check the accuracy of the counting, you can personally examine the areas to cross-verify the values mentioned in the counting tags. Otherwise, you can allocate members from other teams to cross-check the tag values. Cross-checking is crucial to get an accurate representation of your inventory. In case your inventory is also stored at other locations, you should coordinate to get the accurate values from those locations as well.
  • Performing inventory counts using manual sheets and counting tags can be time-consuming and prone to human errors. Using an inventory management software like Cin7 can be of great help. Instead of using tags and sheets, you can use barcode scanners to scan the inventories on the shelves. The software reconciles the inventory values with the ones already present in the system. This way, you can easily gauge the discrepancies in the inventory that’s physically present with you.

 

Why do year-end inventory count?

The year-end inventory count is essential because it ensures the stock you have on your shelves matches your records. By getting an exact look at your inventory, you can comply with tax requirements, manage corporate audits, and offer accurate data to your accounting team.

Once you complete your inventory count, you’ll have the data you need to complete an annual financial analysis. You also get the data you need to detect inventory shrinkage and forecast how much inventory you’ll need in the year ahead. On top of that, you get the chance to get inventory organized for the new year.

Knowing your year-end inventory allows you to

  • Get a better understanding of what products you have.
  • Hold accurate inventory records for accounting purposes.
  • Gain insight into products that don’t sell well that you shouldn’t order in the future.
  • Understand which products require a new selling strategy.
  • Know the demand and profitability for expansion consideration.
  • Consider adjusting periodic automatic replenishment (PAR) levels for top-selling products.
  • Determine the cost of goods sold and total net income.
  • Make business decisions based on data instead of intuition.
  • Analyze pricing strategy and identify room for improvement.

 

Does your business have inventory shrinkage?

Inventory shrinkage occurs when there’s less physical inventory than what’s listed in your inventory records. Shrinkage occurs due to human error, damaged stock, vendor shortages, lost inventory, or stolen inventory. It can drastically affect profits and is a problem that always needs to be investigated further. Businesses usually uncover inventory shrinkage as they do their year-end inventory counts.

How to handle inventory shrinkage

If you uncover inventory shrinkage during your year-end inventory count, your team should look for more information about what happened. If you are using inventory management software, you can examine past inventory records to determine if there are any trends that need investigation. Significant, widespread shrinkage can indicate theft or fraud, while one-off mistakes tend to reveal clerical errors. Damaged goods are self-explanatory.

Once you uncover and investigate the cause of inventory shrinkage, you can put guardrails on processes to prevent further loss. Some common preventive measures include:

  • Tightening security where inventory is stored.
  • Installing cameras or locking up high-value items.
  • Training employees about proper inventory counting.
  • Allowing only trained employees to accept and inspect new inventory.
  • Reviewing daily transactions on inventory apps.
  • Verifying purchase orders, invoices, and delivery slips when new inventory arrives.
  • Checking inventory shrinkage via cycle counts.

Discovering inventory shrinkage isn’t fun — but it’s a wake-up call for many businesses.

 

What if you have too much inventory?

Once you complete your year-end inventory, you might realize that you have more physical inventory than expected. If you have a lot more inventory than you need or want, you may have to figure out how to deal with the surplus. The first step is to determine if the excess inventory is still good to sell. Then you can adjust plans, orders, and budgets accordingly.

Once you figure out what your business needs for the year ahead, it’s time to get creative. What kind of promotions or sales can you have? What items should be sold at a discount? There may also be items in your inventory that can be repurposed or donated. If you donate excess inventory, talk to your accountant about writing them off for tax purposes.

Finally, you should talk with a liquidator about buying excess inventory. It may not be very profitable, but you can cut losses, clear up space, and move on.

 

Using year-end inventory to predict next year’s demand

One of the best reasons for conducting year-end inventory counts is to understand how your business used (or didn’t use) items over the past 12 months. A detailed snapshot of available inventory helps your business forecast demand for the year ahead.

By reviewing what hasn’t sold, you can plan sales, promotions, and marketing campaigns. These strategies can help you move old inventory and lets you focus on restocking only what your customers want.

 

Cin7’s inventory management software simplifies inventory counts

Cin7 inventory management software allows your business to track inventory using modern technology and powerful automation features. Cin7 is the best choice for inventory management software because it helps save you time, money, and stress. When you switch to Cin7, you’ll be able to:

  • Access your data at any time and place.
  • Set it up quickly, easily, and to your liking.
  • Use ready-to-scan barcodes with your phone’s camera.
  • Customize and allow access to teams, vendors, and suppliers.
  • Generate custom barcodes for unlabeled stock.
  • Create data-rich, shareable reports to help you understand inventory.
  • Get alerts when you’re running low on a product, if it’s expiring, or approaching warranty.
  • Create product histories to answer who, what, and when details.

Ready to see how our inventory software makes your year-end inventory count easier? Book your Demo now.

How consumerization in B2B is driving growth in sales

In today’s crowded space, businesses are doing what they can to grab and keep their customer’s attention. As a result, marketing has gotten much more personal. This trend began with B2C companies creating personalized, relatable content for their audiences, and is known as consumerization.

However, a popular myth associated with consumerization is that it only applies to B2C companies. This simply isn’t true. Consumerization is visible today in the marketing strategies of most B2B companies as well.

In this blog, we’ll try to understand the phenomenon of B2B consumerization and how it impacts sales.

 

What is B2B consumerization?

In simple words, B2B consumerization is the result of companies using more technology to engage with their clients. As in the B2C space, where consumers expect to be able to immediately access information and purchase products through digital means, B2B buyers now expect such options from the companies they do business with.

The shift towards B2B ecommerce is widespread. According to 2020 Gartner research, 80% of total B2B sales interactions will be digital by the year 2025. What’s in it for the B2B Sellers?

Makes sales more efficient

Any B2B marketer will tell you that, conventionally, B2B sales have relied heavily on personal relationships with clients. The biggest investment is the time put in to close a sale.

However, with digital products, companies are able to save their sales teams valuable time. By developing deeper insights into the targeted audience’s behavior before approaching the sale, sales teams can curate personalized sales strategies and offerings for their potential clients. This makes it easier to close more deals faster.

Leverage multiple access points

An access point, or a customer touchpoint, is any point through which the customer comes in contact with your brand. That includes radio ads, pay-per-click (PPC) banners, or elevator pitches.

Today, your business most likely interacts with your target audience using multiple touchpoints. Some of the most commonly used channels for B2B marketing are:

  • Blogs/articles,
  • Emails and newsletters,
  • Push notifications,
  • Digital and conventional advertising, and
  • Social media.

Using multichannel selling, your clients become familiar with your products or services while you have the opportunity to directly interact with potential customers.

Naturally, you’ll  want to reach your target market using as many touchpoints as possible. By collecting data from your customers, and with a bit of computing prowess, you can monitor and predict how your target market will react to your products or services.

 

And the result?

A much more efficient sales strategy with higher sales numbers. If you wish to scale your B2B business, try Cin7. Cin7 not only makes it effortless to manage your B2B orders but also helps in creating an online B2B store. Use it to showcase your product portfolio and boost your sales. Cin7 also comes with built-in inventory management features, so you efficiently manage your stock and prevent stockouts.

To learn more about how Cin7 can help in boosting your B2B business, book a demo with our experts.

Effective inventory management: The secret to Black Friday success

Black Friday, Small Business Saturday, and Cyber Monday traditionally kick off the holiday shopping season. Large and small businesses often prepare for months to capitalize on shoppers looking for deals on these days.

Any glitches, such as not having enough inventory or problems with shipping and delivery, can lead to substantial reductions in profit.

Automated inventory management can ensure the entire sales cycle is managed well throughout the holiday shopping season. And the bonus? When customers have a good experience, they become returning customers.

This blog discusses how a seamless supply chain impacts online merchants and suggests inventory management tips for your upcoming holiday season.

 

Inventory management and supply chain for online merchants

In retail, the supply chain is defined as the process from order inventory to product delivery. Supply chain management consists of manufacturing, fulfillment, storage, and shipping. If any part of the process weakens, sales are negatively affected.

Merchants selling products online must plan for issues that could come up this holiday season.

 

Tips to manage your supply chain and inventory this holiday season

Choose the best suppliers

Online merchants usually work with international suppliers as a cost-saving measure. It’s better to work with domestic suppliers as you can:

  • Prevent customs delays and cross-border shipping.
  • Avoid unexpected new tariffs.
  • Replenish stock quickly and easily.

If you still work with international suppliers for your business, diversify your suppliers. By ordering from suppliers in several countries, you have a backup if there are problems with delivery from one country.

Plan the fulfillment process

If you are a merchant with a large volume of inventory, you can send it directly to a third-party logistics (3PL) provider. The 3PL company can handle fulfillment and shipping on your behalf and let you focus on what you do best: ecommerce strategy and marketing.

You must think carefully while choosing warehouses whether or not you work with a 3PL service. Use a warehouse close to the suppliers and begin ordering inventory early. By planning ahead with time, you will give the warehouse staff enough margin to organize and categorize the products correctly.

Merchants with unused brick-and-mortar stores should consider using the space as a warehouse. Using your own space as a warehouse gives you an excellent visual idea of how quickly your stock sells. It helps you decide which products to push with holiday sales. Thus, you can save money on external services and have more control over stock management.

Another popular holiday season shopping method is buy online, pick up in-store (BOPIS). This method became popular during the Covid-19 pandemic. These click and collect options remove complications related to shipping and let you enhance the customer service you can offer. If you look to implement store pick up this season, ensure your customers know how it works by including instructions on your site’s checkout page.

Talk to supply chain partners early

Your partners in the supply chain are your suppliers and manufacturers. You all must work and succeed together, so take the time to discuss order volume and develop a process that works for everyone.

Contact your suppliers as soon as possible to work out potential issues in the supply chain. The earlier you begin, the more you can anticipate and head off any problems. When discussing the order volume of the inventory, be specific and tell suppliers exactly how much you expect. If they flag any potential holiday supply issues, adjust the product range or diversity accordingly.

Keep in touch with 3PL companies regularly for likely changes as well. They could have staff shortages or a lack of drivers, delivery restrictions, or warehouse closures. Integrated warehouse management software can help you head off fulfillment issues.

Price your products strategically

After deciding on inventory value, vary product prices to control stock levels. Lowering the rates of well-stocked products means you can sell more. Raising the prices of items you have less of may reduce the number you sell.

Adjusting prices is all about finding the sweet spot to meet your inventory goals while maintaining your brand image. The rule of thumb is to keep pricing consistent. Making your products too cheap or too expensive can confuse the customers.

If you look to position yourself as a luxury brand, increase the prices and do a cost-benefit analysis to see what is more beneficial for your company. Lower prices on the products can shift more inventory, but higher prices return better profits and prevent you from running out of stock quickly.

One alternative to amending the products’ prices is to give discount coupons. You can shift the discounts to emphasize different products across your holiday sales season based on inventory levels.

 

Conclusion

Black Friday and other holiday sales events are so much more than placing a few ads and expecting high sales volumes. From a business perspective, they’re more about effective inventory management and best fulfillment practices.

Optimizing warehouse operations for accuracy and speed should be a top priority for any business during the holiday season.

That’s what Cin7 inventory management software is all about.

If your business sells hundreds or thousands of products towards the end of the year, you need an inventory management software with forecasting tools from a reputed company like Cin7. The Cin7 team will be more than happy to help you with your inventory management solution decisions.

Book your demo today!

Top 20 B2B apps to boost sales in 2022

To increase sales and beat competitors, you need the right technology. Apps that improve efficiency, like sales rep management tools, can boost your bottom line.

But it can be a challenge to determine which sales apps are the best for you and your team. So, we’ve done the research for you. We have compiled a list of the best sales apps that can improve your business performance.

Here’s the list of the top 20 proven sales apps to boost productivity.

 

1. Slack – team communication

Connect your remote teams and centralize communication with this best-in-class messaging app. Communicate seamlessly with your team and boost collaborative productivity using Slack. It’s one of the most reliable sales team tools.

You can discuss projects, share files, and maintain transparency within the team. Plus, Slack integrates with other CRM tools to manage sales efficiently.

  • Work with external contacts, adding them as guests.
  • Create channels for different topics.
  • Engage with team members to share vital messages quickly.
  • Set reminders to complete tasks on-time.

 

2. LinkedIn – lead development

While technically LinkedIn is a social platform, our clients still rank it as one of the top tools for lead development. LinkedIn is an excellent place to find leads and nurture sales prospects – especially when selling to companies. You can search profiles of key decision-makers and even contact them through LinkedIn messages.

Knowing the key players saves sales reps from navigating multiple gatekeepers before reaching decision-makers.

 

3. MailChimp – email marketing automation

MailChimp is a cost-effective way to manage your email subscribers. With over nine million users, MailChimp is one of the most popular email marketing platforms.

Their tools allow you to send well-designed emails to targeted audiences. MailChimp has advanced analytics to measure the effectiveness of outbound emails. MailChimp integrates with numerous third-party apps to sync customer data and streamline workflows.

 

4. Saleslion – sales proposal creation

With Saleslion, you can create interactive proposals and sales materials online which will help in closing more deals faster. The platform allows you to optimize every step of your sales process – be it clarifying audience motivation or comprehending the sales message.

Ultimately, you can design smarter processes and sales strategies to close deals with prospects. Be prepared for any sales objections and confidently handle sales calls with Saleslion.

 

5. Snov.io – outreach and lead generation

Snov.io is a CRM that saves you time. Snov.io’s toolset is easy to navigate so you can spend more time nurturing and converting leads than searching for them. The app uses personalized automation for email campaigns designed to engage and convert, including follow-up.

Snov.io has over 2000 integrations to boost efficiency. Connect with customer service platforms, multi-channel marketing apps, and productivity tools.

 

6. Hunter – email hunter

Hunter connects you with professionals who matter to your business. Search first and last names or company websites to find the email address of the person you want to reach – provided the company has a verified domain that’s publicly available.

It’s one of the best apps for finding business emails for sales prospecting.

 

7. Badger Maps – route planner for sales

Badger Maps is a multi-stop route planner designed for in-the-field salespeople. With Badger Maps, you can meet the right prospects at the right time, using the fastest route with over 100 stops.

With features like check-ins, lead generation, and follow-up reminders, Badger would streamline every aspect of a field salesperson’s job. Badger Maps is one of the best sales route planners for sales reps and their teams, with the selling capabilities of a CRM and a prospecting tool.

Badger Maps is available for iPhone, Mac, PC, and Android. It also syncs seamlessly with multiple CRMs to keep important customer information in one place.

 

8. Zoom – video conferencing

Cut down the travel expenses and save time by holding conferences, meetings, and webinars online with Zoom. It’s a leader in modern enterprise video communications and a perfect solution to conduct distance meetings.

With this advanced sales productivity tool, you can easily share screens with prospects and give effective sales presentations from anywhere at any time of the day – it’s a perfect solution for today’s global marketplace.

 

9. MakerMove – tools and resources

MakerMove is a special platform for makers and founders to discover useful resources and tools. There are numerous curated lists of resources available, but MakerMove puts them all together in a nice interface. This allows you to quickly discover innovative products to help you succeed.

Get inspired by the best podcasts and books to help you grow. Find journalists to get press coverage or connect with the best investors to fund your startup. Discover anything you need to boost your project – all in one place.

 

10. Track-POD – route planner software

Track-POD is the emerging leader in contactless and paperless delivery solutions. It’s more than proof of delivery.

The app provides route planning and optimization, real-time driver tracking, fleet management, customer portal and notifications, e-sign, and paperless proof of delivery. You can level up and scale your delivery management with Track-POD.

 

11. CircleBack – address book management

Good communication is crucial to building long-lasting relationships. But it isn’t easy to maintain meaningful connections when the contacts are outdated, or worse, scattered on post-its or other places. Avoid clutter and manage contacts with ease using CircleBack.

CircleBack is one of the best sales productivity tools to keep your information up-to-date and organized.

  • Scan business cards to add new contacts instantly.
  • Remove duplicate entries to keep your address book clean.
  • Connect multiple networks in one unified address book.
  • Integrate with CRM tools to ensure your contacts and deals are updated.

 

12. Feedly – news aggregator application

Don’t miss important news related to your industry. Now you can stay updated with the latest trends in the global marketplace with Feedly. Find news, content, and articles you like on a single platform.

Track what you read using Feedly’s history option. As well, receive suggestions for new blogs that may interest you.

 

13. Evernote – note taking app

Take the market research beyond bookmarks and eliminate scrap paper with Evernote. It’s a digital storage facility for vital data. Not only can you maintain a wide range of content but also store images, record notes, and upload PDF files using this smart note-taking application.

  • Tag the notes for quick reference.
  • Manage content from any internet-connected device.
  • Attach pictures and audio directly to notes.
  • Create shortcuts to frequently accessed files.
  • Set reminders for projects and tasks.

 

14. Tripit – itinerary and travel planner

Streamline travel plans in one place to stay organized with Tripit. Everything from flight details to hotel bookings are easily available within this app. Tripit offers a master itinerary for all your trips to ensure seamless and hassle-free traveling.

 

15. Basecamp – project management

Complete sales tasks on-time and collaborate with your team using Basecamp. Basecamp is a project management app and one of the best sales team tools. Eliminate complexity and keep projects and communications centralized. Basecamp organizes the who, what, where, and why for company projects.

  • Receive an email notification when new tasks are assigned or old ones are due.
  • Keep everyone in the loop with real-time project discussions.
  • View each detail related to a project in one place.
  • See deadlines, tasks, and events in one view using Basecamp Calendar.
  • Share large files hassle-free.

 

16. Doodle – meeting scheduling

Simplify the process of setting meetings and finding convenient times to meet with potential prospects using Doodle. Stay away from conflicting bookings and stay on track with this amazing daily sales app.

Whether you’re coordinating with 30 volunteers for a huge event or a small team for a monthly meeting, Doodle keeps everyone on the same page by seamlessly scheduling meetings and events.

 

17. Leadfeeder – website visitor tracking

Keep an eye on website visitors using Leadfeeder. Know who visits your site and what pages they look at with this high-end marketing tool. It is one of the best ways to convert site visitors into leads.

Leadfeeder integrates with numerous marketing tools to capture and manage leads.

 

18. Expensify – expense management

Tracking expenses is a necessity for business travel. Expensify is the easiest way to simplify and streamline expense management. Expensify is one of the best expense management apps, with more than 2.5 million users worldwide.

  • Create expense reports by clicking a photo of trip receipts.
  • Link credit and/or debit cards with your Expensify account to automatically place charges in expense reports.
  • Convert expense reports into customized invoices with just one click.

 

19. Chorus – conversation intelligence platform

Chorus uses artificial intelligence to record and transcribe sales calls into notes in real-time. This enables sales teams to store valuable information from phone conversations quickly and efficiently.

Chorus extracts insights from sales calls, which can help you fine-tune your communication strategies with clients.

  • Analyze sales calls and meeting recordings.
  • Discover top performing sales reps.
  • Create a playlist of great calls for training new sales reps.
  • Track performance and compare it with teammates by viewing the leaderboard.
  • Share recordings with the sales team.

 

20. Lastpass – password manager

This list would not be complete without a password manager. Our customers rely on LastPass as their password management app. LastPass stores your passwords in one location that you can access from anywhere.

LastPass syncs with multiple devices and is easy to use.

 

App integration with Cin7

As a small business owner, part of your job is staying one step ahead of your competitors. One way to do that is to streamline your processes – which is exactly what these sales apps do. Explore the extensive features of all these popular apps and leverage their benefits to improve your business’s bottom line.

Speaking of integrations, Cin7 integrates with 700+ business tools that your sales team can use to boost your business. Cin7 integrates with sales and marketing apps, 3PL providers, payment gateways, EDI suppliers, and a lot more. You can access the full list of our integrations from here. 

Use integrations to increase sales and reorders and win new customers.

Contact us to book your demo now. We’ll take the time to understand how we can help your business.

5 essential elements of a great B2B digital marketing campaign

If you’re running a B2B business, you already know that B2B digital marketing is an essential component of a strong marketing plan.  But what makes a strong digital marketing plan?

Here are the five key elements of a great digital marketing campaign.

 

1. Company website

Your company website is the first impression your business makes. Your website is the digital extension of your brand, your business, and your values. Any campaign you run online will only be as good as your website and the sales funnels created on your website.

To create an impactful website, be clear on your objectives. Are you using your site to close more sales? Are you creating a website that serves as a valuable resource for your industry?  Once you know your objectives, you can begin the design process.

Every part of your website must be carefully designed, keeping in mind the choices and tastes of your target audience. If you’re targeting people between the ages of 18 and 35, your language cannot be outdated.

The bottom line: Create content that your audience can relate to.

Here are some of the things to keep in mind while creating a top performing website include:

  • It needs to load quickly even on slow networks.
  • It should be mobile responsive.
  • The navigation should be clear and clutter-free to help visitors reach their desired web page without much effort.
  • Links within the text should draw the visitor into the site.
  • The content should be fresh, plagiarism-free, and engaging.
  • Your social media links should be easy to find.
  • New content should be added regularly and older content should be updated.

Moreover, if you feel your product(s) can be sold online, or perhaps you already sell via any of the major ecommerce sites like Amazon or ebay- you should consider integrating an online store right into your website. One of the core benefits of doing this is that your customers will be able to shop for your products without having to leave your website.

There are many platforms that can help you build an ecommerce website in minutes, without any technical knowledge. Once you’re done creating a stunning website, simply integrate it with Cin7 for seamless, multi-channel order management.

 

2. Search engine optimization and content marketing

Search engine optimization (SEO) is one of the most important parts of any digital marketing effort. SEO can help determine how high your website – or social content – appears in search results whenever someone searches for the keywords you’re targeting. Organic search results appear when someone is looking for relevant content that your site offers. Non-organic results come from paid advertising. The stronger your SEO, the more organic reach you will have.

So how does SEO help your business exactly? Let’s say you’ve built a beautiful brick-and-mortar store. You’ve applied shiny paint and decorated the shelves with your products. You’re ready to welcome your customers into the store you’ve built.

However, you forgot to put any signs on the road. Without the signs, nobody will know that your store exists, where it exists, and what it sells. Your store might be amazing, but it still won’t attract customers because they simply don’t know it exists. Now imagine you go to the road and put a big, shiny sign that says: “Welcome to your dream store.” Now people know your store exists and you will at least have set the groundwork to gain new business.

This is what SEO does for your website. When you create content with SEO in mind, it improves your search rank, so when someone does an Internet search for the products or services you sell, your website rises to the top.

 

3. Pay per click campaigns

No matter how great your SEO efforts are, all businesses see a drop in their reach from time to time. When you need an artificial boost, consider pay per click (PPC) campaigns. Originally offered by Google, now PPC campaigns are offered by several online companies. You are charged every time a user clicks on your ad.

Many social media offer pay per click advertising.  For example, Facebook offers PPC campaign opportunities for its users. Businesses can get access to millions of views if they set the right price for the right audience.

PPC campaigns are a great way to attract eyeballs towards your business. Of course, you cannot rely solely on a PPC campaign, but they can become an integral part of your overall digital marketing plan.

 

4. Social media marketing

Most B2B brands have realized the immense power of social media and have leveraged it to their advantage.

According to a study by Sproutsocial, 83% of B2B marketers use social media to enhance their digital footprint and reach new audiences. This is because social media sites have evolved to be platforms for everyone. People from all walks of life are actively engaged with each other through a variety of platforms like Facebook, Twitter, Instagram, LinkedIn, and Pinterest.

Use social media to promote a specific blog, ebook, or other form of digital collateral you think your audience would find helpful. Once you get them engaged with your content, they’re already in your sales funnel.

However, the tricky part about leveraging social media is that you cannot become complacent. Just because something worked for you in the past, doesn’t guarantee that it will keep working. The traffic is always shifting from one platform to another, thereby creating newer, better avenues for marketing. Your goal should be to closely monitor where your target audience is moving, and focus on how to reach them there.

 

5. Automation

Your digital marketing doesn’t have to be an all-manual affair. Automating repetitive tasks can free up a lot of your time.

Start with something as small as sending out email newsletters to your subscribers every week. You can create a six-month newsletter plan and every time subscribers sign up for your newsletter, they start receiving those pre-planned, pre-scheduled newsletters. Add a welcome email as well as emails asking for feedback and reviews every time someone makes a purchase.

Use analytics to track how those emails are doing. Monitor open rates and conversion rates and adapt accordingly. This is just one example of how you can use automation in your business.

 

Final words

Developing a B2B marketing campaign is very important. The hardest part is being consistent. Automation really helps with consistency. Also, reusing content on your blog or website for social posts also helps with consistency.

It’s also important that your marketing strategy takes its cues from your overall inventory strategy. To achieve this, make sure that different departments across the company work in close coordination with each other, and can be tracked via a robust inventory management system.

To know more about how Cin7 can revolutionize your B2B inventory management, book a free demo today.

Posted in B2B

4 Inventory accounting methods for inventory valuation

What do manufacturers, distributors, wholesalers, and retailers have in common? They all deal with inventory. Whether you’re a manufacturer or a reseller, you need to account for your inventory accurately. With proper inventory accounting, you can better understand your expenses and identify ways to cut costs and maximize your profits.

 

What is inventory accounting?

Inventory accounting determines how an organization shows inventory in its balance sheet and profit and loss statements. Your inventory is treated as an asset because it can be used to generate revenue. The valuation of your inventory assets depends on how you assign costs to your inventory. It’s extremely important to correctly value your inventory because its value affects your business’s overall profitability.

 

Understanding cost of goods sold (COGS)

The cost of goods sold is the cost that a business incurs to make or acquire the products that it sells. COGS includes everything from materials used to labor cost. However, it only includes costs that are directly related to the production process. Thus, shipping and marketing costs aren’t included in COGS. Knowing your COGS helps you understand how much you are spending to produce your product, and it directly impacts your profitability.

The formula you use for COGS depends on whether you are a manufacturer or reseller. For a reseller, the formula is

Beginning inventory + Purchases – Ending Inventory = Cost of Goods Sold

For example, at the beginning of the financial year, your inventory is valued at $4,000. Throughout the year, you purchase inventory valued at $3,500, and at the end of the year, your inventory value is $2000.

The cost of goods sold is $4,000 + $3,500 – $2,000 = $5,500.

COGS can be calculated weekly, monthly, quarterly, or annually. The value of COGS is partially determined by how you determine your ending inventory.

 

Understanding ending inventory valuation

It’s unlikely that you’ll be able to sell all your inventory by the end of the accounting period. However, unsold inventory isn’t a liability because it can be sold next year. Therefore, remaining inventory, or “ending inventory” is treated as an asset in your financial statements. In fact, ending inventory becomes “beginning inventory” for the next accounting period.

There are four commonly used inventory valuation methods:

  1. First in, first out (FIFO),
  2. Last in, first out (LIFO),
  3. Weighted average cost method, and
  4. Specific identification method.

Method #1: First in, first out (FIFO)

The premise of the FIFO method is you value your inventory as if the stock you acquired first were sold first. For example, imagine you purchase 100 bottles of product in January for $10 per bottle. Then in February, you purchase 200 bottles of product for $20 per bottle. You would have 300 bottles of product in your inventory, and the value would be $1,000 + $4,000 = $5,000.

Then imagine you sold 50 bottles of product in March. What would the value of your inventory be? Using FIFO, you would say that the 50 bottles you sold were part of the 100 bottles you purchased in January. Thus, you would value the inventory sold at $500, meaning the value of your ending inventory would be $4,500.

Method #2: Last in, first out (LIFO)

In contrast to the FIFO method, the LIFO method means you assume the most recently acquired products are sold first.

Using the same example of the bottles, let’s say that in March, you still sold 50 bottles. However, with LIFO, you assume that those 50 bottles were part of the 200 bottles you purchased in February for $20 each. Thus, the 50 bottles you sold would be valued at $1,000, and your ending inventory would be $4,000.

Method #3: Weighted average cost

The weighted average cost method is best to use when your product units are indistinguishable from each other or challenging to track individually – for example, gasoline. Using the weighted average cost method, businesses assign a value to inventory based on the average cost of production of the product.

Here’s the way to calculate it:

Weighted Average Cost = Total Cost of Inventory / Total Inventory Units.

For example, you purchase 10 bottles at $20 each, and an additional 10 bottles at $30 each.

  • Ten bottles at $20 each = $200.
  • Ten bottles at $30 each = $300.
  • Total bottle units = 20 bottles (10 + 10).
  • Total cost of bottles = $500 ($200 + $300).

The weighted average cost is $500 / 20 = $25. When you sell 10 bottles you will value the sale at $250 ($10 x $25). Your ending inventory of 10 bottles will also be valued  at $250 (10 bottles x $25).

Method #4: Specific identification

The specific identification method is primarily used for large items that can be easily identified because they are unique. In this method, each unit and its cost is tracked individually. Each item is assigned a specific identifier, such as can be done using radio frequency identification (RFID) tags. The advantage of this system is that you have a highly accurate accounting of your inventory. The disadvantage is that the method has limited uses because few businesses sell highly unique products that can be easily tracked.

Inventory accounting is crucial for businesses

Inventory accounting is vital for both manufacturers and retailers. Businesses should carefully consider their inventory valuation method and identify the best option up front, as it can be challenging to change in the future.

Inventory management software makes a huge difference and helps track and value your inventory. With real-time insights about inventory movement, orders received, and revenue generated, your business will be able to make smarter, more data-driven decisions. You’ll also be able to generate inventory performance reports and analyze your business in real time.

If you’re looking for software to track and manage your inventory, book a call with Cin7 today. We’ll assess your inventory needs and partner with you to find a perfect solution.

Heritage Building Centre

Heritage and SMB Consultants unlock incredible growth — thanks to Cin7

After a long trial with other, less able inventory management apps, Bill Rendell and Heritage Building found a happy home in Cin7

Heritage Building has a long, storied history. When former accountant Bill Rendell first bought the business, it was simply a supplier of recycled timber, and it was doing pretty well on that basis. 

But Bill had the foresight to start selling other building materials, like doors, windows, light fittings, bathroomware — “You name it,” says Bill. “We set ourselves up to be the one-stop-shop for the heritage building industry, and started selling equivalent-new reproductions as well.”

This transformation happened fairly early in the business’s story, and at first Bill used MYOB and spreadsheets to manage the complex inventory requirements of a second-hand goods business, where nearly every item sold was in some way unique. Unfortunately, it didn’t work very well. “With MYOB, there was no accountability for stock. It was just like a big box that you chucked all the information in — but I didn’t think there was anything better around at the time.” 

After struggling with MYOB for almost nine years, Bill turned to what was then a new business in the very new industry of cloud software implementation and coaching — SMB Consultants. 

SMB founder Jeff Atizado and his team helped set Heritage Building up with his first inventory management solution: Lightspeed. At the time, it was best-of-breed software, and the new fully-digital way of operating was revelatory for Bill’s business. But times change. The second-hand market was becoming less and less viable, and growth was stymied by the need to keep on top of manual tasks and fixing errors. “We were doing nothing but fixing stuff-ups,” Bill says. 

The problem, Bill says, was that Lightspeed hadn’t moved fast enough to keep up with the rest of the rapidly-changing world of online business. 

“It’s very difficult to get Lightspeed to work with Shopify,” says Bill. “We couldn’t get the shipping set up the way we wanted it. It just wasn’t possible with that program.

He turned to his trusted advisors to help turn things around.  “I started speaking with Jeff about using Cin7. The more I heard about it, the more I was impressed with what it could do.” 

SMB lends a hand for the second time

“It was interesting for us, because even though Bill had been a customer for eight years, the second time around is an excellent opportunity to re-evaluate their requirements and build a solution that incorporates what is important to them today. It simply isn’t just a process of replacing old with new. Businesses grow and change and you need to take the time to understand what are the new objectives,” says Jeff Atizado. 

Since their first engagement with Heritage Buildings, SMB Consultants have developed a process to deeply understand the business they’re working with. How is the business changing? How has it evolved? And where does it want to go? 

Together, Bill and the SMB team found that a new software solution could help him exit the secondhand goods market altogether, while growing his business in entirely new directions. 

“That process at the beginning of the project, to understand how we were working, was critical,” Bill says. “Back when we first started with SMB and Lightspeed, that process didn’t exist! Doing the scoping showed me an entirely different SMB, and following the process all the way through to implement Cin7 has proved it out. They understood what we needed, and made sure it happened.” 

After the initial consultation, SMB Consultants used Cin7 to create a working proof-of-concept, to introduce Heritage Buildings to new workflows and opportunities offered by the software. Once the proof-of-concept was finalized, SMB worked with Bill and his team to implement the full project. 

Building back better on a strong foundation

Today, Bill has transformed his business from one that physically stored and moved a lot of second-hand goods to a modern, just-in-time purchasing model that doesn’t require carrying a lot of stock. This shift, SMB says, simply wouldn’t have been possible without Cin7. 

“Some big wins from Cin7 have been being able to give Bill a tool that allows him to track which items need to be ordered, and that allows him to keep track of online sales, to order quickly, and get them shipped in time,” Jeff says. “One one side, the purchasing, on the other, fulfillment.” 

Under the old system, it took up to two or three weeks for Heritage Building to get goods to their customers. But now they can get goods into customer hands in less than a week. Cin7’s ability to support a dropshipping model has enabled Heritage Building to reduce its total stock holding by a factor of more than four, with a huge accompanying reduction in administration requirements while improving shipping times.  

“Our stock holding at present is about 200,000. Our stock holding was 1.5 million with half the turnover we’re doing now , and we’re doing it better. We’ve basically reinvented ourselves from the ground up, and we’re now a very viable online shop as well,” Bill says. 

“With shipping, what we’ve achieved now was beyond anything we could conceive. We’ve reduced our turnaround time for orders from about two weeks per item, down to three to five days.”

Soon, with new shipping workflows they’re looking to create with SMB in Cin7, he reckons they’ll be able to use Cin7 to make shipping even faster. 

“One of the things we’re doing now is looking to integrate with his dropship fulfillment provider, so we can streamline how quickly we can get orders from them, which will again cut down the amount of time it takes to get the product into a customer’s hands,”  Jeff says. 

As well as pivoting from second-hand goods to a thriving multichannel business selling new materials, Cin7 has allowed Bill to branch out with a hot new sideline — selling fireplaces. 

“It’s going gangbusters,” Bill says. “Again, that’s because of the website, and the website is because of Cin7.” Having a modern inventory app like Cin7 as their foundation means that it’s easy to sync with best-of-breed ecommerce apps like Shopify. 

“We’ve basically got a direct connection between Cin7 and Shopify,” Bill says. “We can move the products back and forwards, we can adjust counts. No drama. No chance of an error. That’s brilliant.” 

“We can plug a lot of apps into Cin7. Lightspeed couldn’t do that.” 

“A winning combination” 

Heritage Building, SMB Consultants, and Cin7 have been a winning combination. Anytime he’s needed help, SMB has been there for support. Bill has his own specialist implementation partner at SMB, Jess, who’s helped all through the scoping and setup, and can now lend a hand whenever Bill needs it. “I’ve still got Jessica there, when I need her, whether it’s a big or a little thing. You can’t hire for that — well, I don’t think you can,” Bill says. 

Likewise, Jeff says that their work with Heritage Buildings is a great showcase of how beneficial it can be for businesses to have a long-time software and coaching partner – for both parties. 

“It’s been a pleasure working with Bill,” Jeff says. “It’s great being able to look back and see the changes that we’ve made. I think Bill is being a bit humble, knowing how much change he’s actually made, but when you look at how much inventory and overhead he’s reduced, while increasing sales — that’s a winning recipe. It’s been great to be able to grow together.” 

Heritage Buildings had great results the first time they worked with SMB, but the second time around, with the transformation powered by Cin7, things are better by an order of magnitude. 

“The difference between two years ago and now — it’s almost unrecognizable,” Bill says. “I can work anywhere I need to be. For me, that’s a lot of help.” 

The new efficiencies offered by an inventory solution that connects seamlessly with other business-critical apps have paid enormous dividends for the business. After 17 years in business, growth has been unlocked. 

“In the past two years, we’ve doubled our business,” Bill says. “We’ve gone from an average of about 250,000 per month to about half a million per month. And about half of that growth is our online shop. We’ve been increasing turnover every month for the last two years, and we’re now the number three distributor in our category in Australia.” 

None of it would have been possible without Cin7 — and the help they’ve received from SMB Consultants. 

“Without Cin7, it would have been impossible to do what we’ve achieved,” Bill says. “It’s that simple. We are who we are today because of Cin7 and SMB Consultants. Our website is going exceptionally well, and I don’t think it would have been possible before Cin7. It’s worked very well for us.”