For any business, it is vital that you have an inventory management plan in place. Learning how much inventory you need, how much you should budget and preparing for manufacturing delays are all things that you need to prepare for. To decide how much inventory you need, you should take your monthly revenue, calculate your monthly cost of goods, determine how long it takes between placing an order and receiving it, then multiply these together. It is also important that you have contingency plans in place in case there are any delays with suppliers (such as we have seen this year with Covid.) 

When trying to decide how much inventory you have, you need to remember that the actual number and your calculations will differ and this is due to a few factors. Causes such as wrongly shipped items or lost, stolen and damaged items could all impact the final numbers. This is why a monthly stock take is a good idea to keep a regular note of how much inventory you have. You want to be sure you don’t overstock and are left with lots of surplus that people don’t want, or understocking which is a sure fire way to disappoint your customers.

If inventory management is something you are interested in learning more about for your company, it is a good idea to look at the following infographic. It explains all you need to know about ecommerce inventory management and how you can retain the profitability of your online store.

Infographic designed by: profitableecommerce.com How Much Inventory do you need