Restocking inventory on time is important to keep customers happy. To avoid running out or ordering too much, you need to always know what's in stock and what customers want.
Managing inventory and restocking inventory is challenging, so using automated methods can help. By getting the right amount of items at the right moment, businesses can control expenses, improve stock management, and make shoppers happy.
In this article, we will see how inventory restocking works and tips and tricks to speed up this process.
Define Inventory Restocking
Restocking inventory means the process of restocking and adding new stock of raw materials, components, or finished products to the inventory. It's an important task for manufacturers. It involves purchasing the necessary items to maintain a continuous and uninterrupted production flow. It helps manufacturers maintain ideal inventory levels, prevent stockouts that could interrupt production, and meet customer demand efficiently.
Inventory Restocking: What Does it Involve?
Inventory restocking can be tricky. Let's break down the steps involved in it:
1. When to Restock
Getting the timing right means knowing when and how often to fill up your stock. To do this well, you need tools to keep an eye on what you have in stock.
Restocking apps can help predict what people will buy next based on how things have sold before.
2. What to Restock
If you sell many different things, you might need to dig deeper. Knowing what's popular helps you get the right amount of products back in.
It's best not to have too much of one thing. It is smart to stop selling things that nobody wants. See when people purchase your products the most and restock accordingly.
3. How to Restock
Getting things back in stock requires a team and technical assistance. It's not just about buying more. You need to think about where you'll keep the goods and how quickly you can get them ready to sell.
Also, handling returns timely is important. A returned product must be checked quickly, so you can sell it again.
What Happens When Your Inventory Restocking Method Is Weak?
A messy way of restocking can cause inventory to restock price increases, from not making enough sales to spending too much on shipping. The following are some challenges you may face:
1. Running Out of Stock
You might have nothing to sell if you don't restock products on time. It can cause you to lose customers, their orders get canceled, and they might even complain online.
To stop this, you can keep extra stock as a backup. So, if lots of people suddenly want something, you're ready.
Here's how you can figure out how much extra stock you need:
- How much do you use in a busy day?
- How much do you use on a regular day?
- How long does it take, on average, to get new products?
2. Overstocking
Having extra stock is good, but having too much can be bad. Even if you can sell a lot, overstocking goods can cost more than it's worth.
You'll pay more to store it; some things might even go bad. You'll also invest a lot of money in items that just sit there, which can stop your business from growing.
3. Paying Too Much on Shipping
If you're not careful, bad inventory control can also mean higher shipping costs. It happens when you have to send items from different warehouses because you didn't restock right.
For example, if a customer buys a few things and one is missing, you might send two packages instead of one. That costs more, and customers don't like it.
What Is the Importance of Inventory Restocking?
Having a proper inventory restocking cycle is important for manufacturing businesses. It makes sure that raw materials and parts needed for making products are always available. It prevents production from stopping unexpectedly and keeps customers happy by delivering timely orders.
Manufacturers plan restocking to keep their production process smooth. It helps balance the cost of holding inventory with the risk of running out of materials. In short, inventory restocking is a key strategy that keeps the manufacturing process moving and customers satisfied.
What Is the Process of Restocking Inventory?
Restocking inventory involves a systematic process.
- First, the production team assesses which raw materials or components are running low.
- They create a list of what's needed.
- Next, the purchasing department checks with suppliers for the required items, considering factors like price and delivery time.
- Once the best deal is found, a purchase order is created and sent to the supplier.
- When the materials arrive, the receiving team inspects them for quality and quantity.
- Finally, the inventory is updated to reflect the stock level.
This whole process ensures that the manufacturing company has the right materials at the right time to keep production running smoothly.
Methods for Restocking Inventory
Here are the most common methods of restocking inventory:
1. Periodic Restocking
Periodic restocking method is handy for small businesses. Here, the records aren't updated every time with the cost of goods sold or bought.
Instead, small businesses restock their inventory regularly after a fixed time, like every month or quarter. The problem is that even if they run low on inventory, they wait until the set time passes to order more.
2. Top-Off Method
If you sell things quickly, the top-off method is a winner. This strategy helps make sure you're selling goods fast and not storing them for too long.
When things get low in storage, you quickly fill them up. Plus, during low sales, the employees who usually pack up orders can help refill the shelves.
3. Profit-Based Method
Ever heard of making decisions based on money? The profit-based method is all about that. If something makes you more money, you make sure you always have enough of it.
To do this, you must always know how much money each SKU (stock-keeping unit) brings in. If it's a winner, keep it in stock.
4. Demand Method
Imagine knowing what customers want before they even ask for it. The demand restocking method is like that. You stock up based on what customers will likely want in the future.
It's smart to keep a little extra in case many people suddenly want something. This way, you will always satisfy your customers.
Restocking Inventory: What Does It Include?
Here is what restocking inventory involves:
1. Assessment
Identify which raw materials or components are running low and needed for production.
2. Inventory List
Create a list of items that need to be restocked, along with the quantities required.
3. Supplier Selection
Check with suppliers to find the best deals considering factors like price, quality, and delivery time.
4. Purchase Order
Generate a purchase order listing the items, quantities, and agreed-upon terms and send it to the chosen supplier.
5. Order Confirmation
Await confirmation from the supplier and make sure they can fulfill the order as requested.
6. Receiving and Inspection
Inspect materials for quality and quantity accuracy against the purchase order when they arrive.
7. Updating Inventory
Once materials pass inspection, update inventory records to reflect the newly received stock.
8. Production Management and Integration
Move the restocked items into production to make sure they are available for manufacturing.
Tips for Restocking Inventory
Here are some tips to make sure you don't run out of products and keep your customers happy:
1. Use Restocking Tools
When your business gets bigger, it's hard to keep track of everything. That's when smart tools come in handy. The restocking tool helps you know what items are stored in which warehouse and when to get more products.
2. Listen to the Numbers
Numbers are very important. They tell you what customers like and how much they will want. If you had trouble keeping up with holiday shopping before, numbers from last year can help you know how much you need to have this time.
3. Audits
Inventory audits are important before restocking. It makes sure what you have matches with what you will order in the future. It helps you know if something's wrong or if you need more goods than you predicted.
What Are the Drawbacks of Poor Inventory Restocking?
Here are the drawbacks of poor inventory restocking:
- When businesses don't manage their inventory well, they might run out of products that customers want to buy. This isn't just about losing a sale - it can also make customers unhappy.
- While ordering many items might seem like a good idea, it can cause problems too. Storing too much inventory ties up money that could be used elsewhere.
- Making mistakes when restocking can lead to more expenses. Imagine a customer ordering two things, but one of them is unavailable, or they are in different places. It can force the business to send two separate shipments, which costs more shipping fees.
Automate Your Inventory Restocking
Make your life easier by using automation to handle your inventory restocking. Use the restock inventory tool instead of manually tracking low stock.
Automated systems help you order products when needed, preventing shortages and excess. Moreover, you can make smart decisions using real sales data and improve customer satisfaction by avoiding stockouts.
Simplify Inventory Tracking With TranZact
Experience the ease of inventory restocking through TranZact. TranZact’s inventory management tool lets you easily stay on top of your inventory game. Keep track of stock levels and restocking needs, and simplify your operations in real-time.
FAQs on Inventory Restocking
1. Why is inventory restocking important?
Inventory restocking is important because it makes sure you have enough products to meet customer demand and prevent stockouts.
2. How often should I restock my inventory?
Restocking inventory depends on your sales rate and lead times. Monitor stocks regularly to avoid running low.
3. What's the risk of overstocking?
The main risk of overstocking is that it ties up funds and storage space for products that might not sell quickly.
4. Can I automate inventory restocking?
Yes, automation uses real-time data to reorder items when they're low. It saves time and reduces errors.
5. How do I determine reorder quantities?
Here is how you can determine reorder quantities:
- Consider sales history
- Look for demand trends
- Track lead times
- Set optimal reorder levels.
6. What if a product becomes obsolete?
If a product becomes outdated, plan and review your inventory and quickly remove items with low demand.
7. How does inventory restocking affect customer satisfaction?
Restocking affects customer satisfaction as proper restocking avoids stockouts and helps keep customers happy with available products.
