7 Ways to Optimize Inventory Management and Improve Fulfillment

Eric Pong
optimize inventory improve fulfillment - Floship

This is a guest post written by Skubana. Skubana is an all-in-one solution that unifies operations after the checkout for omnichannel merchants.

It’s every online retailer’s worst nightmare.
You’ve re-ordered in time. The manufacturer has assured you everything’s OK. The delivery company is ready to go. Your own warehouse is prepped.
But then there’s a problem.
At the last second, a fault has been found with the batch. The delay will be at least a week.
This is just one example of a whole host of issues faced by eCommerce sellers, right across the inventory chain. Problems like these are a source of lost revenue, frustrating paperwork and potential damage to your brand.
In this post, we’ll look at seven key ways you can optimize your inventory management and fulfillment processes. The upshot will be lower costs, fewer issues and happier customers.
Let’s dive in.

1. Use a management solution with real-time data

Use a management solution with real-time data
One of the easiest ways for eCommerce sellers to quickly improve inventory management is by utilizing omni-channel software that will provide an accurate overview of inventory at all stages of the supply chain.
Feature-rich apps like Skubana, for example, will allow you to process the large volumes of data required for vital activities like forecasting, safety stock replenishment, planning for peak buying times and more.
Working from a central platform will also create a unity of data and communication across the entire company. By storing information in a central database, sales and marketing teams will be aligned on any important changes to inventory, like increased orders due to promotions and other one-off events.

2. Implement third-party and automation solutions

Implement third-party and automation solutions
There are two dimensions to this point. On the one hand, automation tools can provide real-time feedback and insights for streamlining inventory management.
Do stock reports automatically register in your database, for example? Are orders automatically generated based on diminishing stock levels? Will suppliers update you on late shipments immediately?
On the other hand, third-party services can also help you pick between competing players to improve the overall efficiency of the supply chain. A tool like Floship, for example, will allow you to select from a range of couriers to find the quickest, most inexpensive shipping option on a per-order basis.

3. Track the whole supply chain

Track the whole supply chain
In the past, the various separate elements of the supply chain would work more or less independently, with updates few and far between.
Nowadays, the opposite is true. Manufacturers will often deliver real-time updates, logistics companies will provide the exact location of stock, and customer delivery services will tell you exactly when your goods have been delivered.
The use of new technology, like mobile devices, barcode scanners and tracking devices, contribute to this mix in a big way. The end benefit is that you can pinpoint problems as soon as they arise and implement contingencies quickly.
Having a precise overview of the supply chain will also enable you to make informed decisions about cost-cutting options like cross-docking and joint ordering from a supplier (with other retailers).

4. Build contingencies for pipeline inventory

Build contingencies for pipeline inventory
Pipeline inventory represents an area where a lot of money is lost for eCommerce sellers.
At this stage, stock is not under the retailer’s control, and any issues that arise will often have to be dealt with by third parties. This is especially the case with imported stock that’s moving across borders.
For this reason, it’s important to develop tight contingency plans that limit the fallout from missed orders, slow-moving inventory, late deliveries, manufacturer errors and more. Having safety stock, agreements with other couriers and ways to mitigate customer dissatisfaction (like discounts) are all examples of contingencies.
Most eCommerce sellers hate the term “liquidation”. But it’s important to be clear about the circumstances in which it’s desirable for you to either sell stock at a reduced price or get rid of it entirely.

5. Regularly reevaluate supply-chain components like manufacturers and logistics

Regularly reevaluate supply-chain components like manufacturers and logistics
By taking a structured, consistent approach to reviewing your internal processes along with the performance of suppliers and logistics, you will be able to maintain costs at an ideal level over the long-term.
Evaluation should always be in the context of industry KPIs, competitor research and your own company performance measurements.
Regularly reviewing the performance of your couriers and delivery service, for example, can directly reduce acquisition times and thus the overall cost of maintaining cycle stock.
Because of the lack of human input, automatic benchmarks, such as low stock alerts, also need to be the subject of constant and consistent reevaluation based on sales feedback.

6. Shore up inefficiencies in your warehouse

Shore up inefficiencies in your warehouse with improved inventory management
There are a number of ways to improve inventory holding costs, whether stock is stored in your own warehouse or with a third-party (3PL).
Tighter storage methods, more efficient layouts, up-to-date handling equipment and transfers of stock between low-demand and high-demand warehouses, are all areas for experimentation that might lead to improvements.
Effectively utilizing space will also mean that you can take advantage of supplier discounts by ordering larger quantities of stock at appropriate times.
It’s also worth exploring when your warehouse storage might be less desirable than other methods of fulfillment, such as cross-docking, 3PL or even vendor-managed solutions.

7. Develop sophisticated forecast models

Develop sophisticated forecast models
Effective forecast models are key to knowing when to increase or reduce stock levels based on changing buying activity.
What on-site feedback mechanisms do you have in place to gauge shifts in customer demand, for example? Do you have a clear understanding of the impact of seasonality and major purchasing holidays?
And, most importantly, are there clear communication channels between those responsible for interpreting data and those making decisions on-the-ground?
Software tools, especially those that process data from a variety of sources, can usually help with accurate forecasting. It’s also worth gathering information from different parts of the supply chain, like manufacturers and suppliers, to supplement your own data.


Effective inventory management represents one of the easiest ways for eCommerce retailers to cut costs.
Relatively simple processes, like tracking, forecasting and contingency planning, can lead to a significant reduction in the cost of acquiring, holding and shipping stock. Being open to untried fulfillment methods, like cross-docking and alternative courier selection, can further diminish costs.
It’s also worth remembering that all of these methods require a unified approach to gathering and interpreting data, which can be made dramatically easier by utilizing software.
In either case, it’s time to start crunching those numbers.

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