As an entrepreneur, you are always looking for ways to generate more revenue or increase your ROI. Traditionally, most businesses try to increase their sales and generate more revenue. But inventory management plays an important role in boosting ROI as well. Why? We explain this in this blog.
Inventory Management
It all starts with managing the inventory. You shouldn’t treat inventory management as a secondary task, as this can lead to errors. If you sell products, the warehouse and inventory are the heart of the business. To manage your inventory, you need to invest in a good inventory management system. At Webship, we developed our own system called Webship Online. Webship Online is user-friendly and dynamic. Want to test the inventory system for free? Request your trial period here!
With an inventory management system, you can prevent errors in inventory or detect them more quickly. A system like Webship Online also helps you with picking products and shipping the packages. Of course, an inventory system is not free, but the cost of such a system doesn’t compare to the time saved and the costs reduced by minimizing the error margin.
Returns
Every business hopes to minimize the number of returns. The costs associated with returns are significant and negatively impact ROI. Let’s go over the costs:
- Picking the products (labor time)
- Packaging materials
- Shipping costs
- Return costs
- Return inspection (labor time)
- Potentially: the cost of the product if it’s no longer in perfect condition
In short, the return policy is important, but preventing returns is even more crucial! You must ensure that as few errors as possible are made during the picking process. By optimizing inventory management and using modern systems, the chance of mistakes in the warehouse decreases. The lower the error margin, the fewer returns there will be. This means fewer costs, which in turn increases ROI.
Efficiency
When you optimize inventory management, efficiency will increase. It all starts with developing a plan for warehouse locations. We assume you’re optimizing with an intelligent inventory management system. In such a system, you can link products to product locations. When you need to search for a product in the warehouse, you simply check the inventory management system and immediately know where the product is located. You no longer need to search through the warehouse! Order picking can also be much more efficient. If you’re picking multiple orders at the same time, the system will chart the most logical route through the warehouse. This way, you’ll save time and energy, as you won’t be running back and forth unnecessarily.
As an entrepreneur, reports and statistics are probably your thing. But did you know that these reports and statistics can influence the efficiency of the warehouse? Here’s an example: some products sell better than others. Through the statistics, you can identify these products. If you don’t analyze these statistics, chances are that popular products will be stored at locations that are far apart. The warehouse worker would then need to travel too far during picking, losing valuable time. Thanks to a report with popular products, you can identify fast-moving products and store them close to the packing tables. An efficient picking route is essential for a well-organized warehouse.
Dormant Stock is Harmful to ROI
Dormant stock consists of products that are rarely or never sold. Without active inventory management, you risk placing dormant stock in a corner somewhere. However, you shouldn’t forget about this stock, as it’s a real killer for your profits. Dormant stock not only takes up warehouse space but also resources. This means you have less money available to invest in new stock or marketing. Therefore, regularly organize promotions or stock sales to get rid of dormant stock.
A Fulfillment Partner Increases ROI
You’ve noticed that there are many aspects to consider before inventory management can help increase ROI. On top of that, inventory management and logistics are not your areas of expertise. For this reason, few entrepreneurs focus on optimizing their warehouse. But this mindset is incorrect and causes you to miss out on profits. A fulfillment partner can provide the solution. A fulfillment partner specializes in logistics and will manage your inventory, pick and pack orders, and ship the packages. You can also benefit from economies of scale on packaging materials, and you only rent the warehouse space you actually use. You don’t need to invest in renting a warehouse that is only half full!
Need Help?
Managing inventory is not easy, let alone optimizing it. Still, you need to invest the necessary time to increase your ROI. If you lack the time or knowledge to take your inventory management to the next level, contact Webship at hallo@webship.be. We can provide your warehouse with an efficient inventory management system or take over the entire inventory management for you! As a fulfillment partner, we can become an extension of your business. Interested? Calculate your all-in fulfillment price using our cost price calculator.
