[MUSIC PLAYING] - If you were to estimate how accurate your inventory is right now, what would you say? 100% accurate, 50%? When asked this same question, other business owners said their inventory is only accurate about 66% of the time. And that's a massive problem, considering that inventory is one of the biggest investments you make in your business.
But managing inventory isn't an easy task. There's a fine balance between having enough stock to meet sales, and then having way too much inventory, where you end up wasting a ton of time and money. That's where inventory management can really help.
When you manage your inventory right, you have complete control and visibility. Which means your orders will be way more accurate, and you're likely to see clear ways you can cut costs. In this video, I'm going to share four tips about inventory management that you can implement right now. Let's get into it.
There's a saying that goes, for every minute spent organizing an hour's earned. And that can't be any more true, than when it comes to inventory. Shelving is a sweet and simple way to maximize your storage space. You can keep your inventory in tidy piles or storage bins.
Here, labels are your best friend. Add product names, SKUs and a storage location. You can even add a barcode to the label, to make scanning easier. Which we'll talk about a bit later.
For easy access, keep your best selling products at eye level, and close to your picking and packing station. That way, you're never wasting any time. The most important thing is to make sure your storage space works for you and your business. The more organized you are, the more efficient you'll be.
Now that we have your inventory physically organized, the next step is to set up a SKU and barcode system to help you keep track of all your products. Let's start with barcodes. We've all seen a barcode before. But they're more than just a bunch of numbers and lines. It's where we can store and locate product information.
Barcodes will often come with your products from a manufacturer supplier. But if you make your own products, you can use a barcode label app to easily create custom barcodes. Barcodes are useful because they help you save time, and increase your product tracking when you count and reconcile products.
Now let's talk about a stock keeping unit or SKU. A SKU is a unique code that's used to identify a product or variant based on things like a product's model, size, or color. If you sell products that come in different sizes or colors, you want to create unique SKUs for each of the variants.
For example, if you have a t-shirt in white that's a size small, you can easily use the SKU, TEE-W-SM. This represents the product, the color, and the size. So then if you have a medium size white t-shirt, you could use the SKU, TEE-W-M.
If you don't create custom SKUs, Shopify can automatically create SKUs as you add variants to a product. You can also use the Shopify Bulk Editor to add SKUs quickly, import an existing product SKU lists with a CSV, or download an app like SKUGen to help automate the process for you.
The key here is to keep it simple, and use a SKU system that makes sense for your business. Ultimately a SKU system will help you find products faster, and make your fulfillment process more efficient.
If you don't have enough inventory to meet your orders, you'll likely end up with some pretty unhappy customers. To ensure accuracy, it's a best practice to count your inventory regularly during less busy times. This is known as a stocktake.
This is where having a barcode tracking system comes in really handy. Barcodes can be scanned with a Shopify mobile app, making it fast and easy to count and make quantity adjustments to your inventory. And it syncs everything up with your Admin. You can also check a product's inventory history to see any adjustments that were made in the last 90 days.
Once you have an accurate view of your inventory quantities, how do you know which products are selling best or which ones to reorder? Inventory reports can help you surface these kinds of insights. If your store's on the basic Shopify plan or higher, you'll have access to inventory reports. These will help you track and understand the movement of your products. This way, you can make informed decisions based on data.
There were five inventory-specific reports in the analytics section of your Shopify Admin. The Inventory Sold report gives you a snapshot of the percentage of each variance inventory sold during a selected period. This is useful in comparing which products sell best, which can help uncover sales trends.
The Average Inventory Sold Per Day report will break down your daily average sales by variant. And this is a great way to spot your worst selling variants, that you likely don't need to reorder.
The Month-end Inventory report, will give you a clean and simple snapshot showing how much of each product variant you have at the end of each month. Whereas the Month-end Inventory Value report, will show you the total inventory value for each product variant that you have on hand. This gives you a view into how much money you currently have tied up in your inventory, and any potential profits you can make from it.
And finally an ABC Analysis uses the 80-20 rule or Pareto Principle, to categorize your products into three different tiers A, B, and C. And this helps you prioritize your best selling products, and strategize ways to clear out the slower moving products.
Using these reports to get a pulse on your inventory is an easy way to prioritize and consolidate your stock. And ultimately, make better decisions when it comes to investing your time and dollars into inventory strategy.
With these four tips, you'll be able to improve your inventory management the right way. Remember, when you have a strong handle on your inventory, you have a strong handle on your business.