Ecommerce inventory management

What it covers

Ecommerce inventory management is knowing what you have, where it is and what is coming, then using it to decide what to buy and what to promise customers. A brand selling in one store with one stock room can run on a spreadsheet. The work gets harder with every channel, warehouse and kit you add.

One number per product

Most inventory problems start when the same stock is counted in two places. Decide where the master number lives and make every channel read from it.

The number to share is available stock: units on hand, minus units reserved for open orders, in locations that can ship. Don’t push on-hand units to a channel when some are already promised.

Multi-channel stock and overselling

Selling the same product on a webstore, a marketplace and wholesale means one pool of stock with several sales points. Overselling happens when:

• a channel shows a number that is out of date,
• an order comes in on one channel before another has caught up, or
• stock sits somewhere that cannot ship (damaged, in transit, held for another order).

To reduce it:

1. Sync available stock to every channel on a short schedule.
2. Subtract reserved units before you sync.
3. Keep a small buffer on fast sellers, or lower the quantity shown on the slowest channel.
4. Turn off selling at zero where the channel allows it.

3PL and Amazon FBA stock

Stock held at a third-party logistics (3PL) warehouse or in Amazon fulfillment centers is still your stock, but another party holds it and reports it. Treat each as its own location and keep these apart:

• What the provider reports as on hand and available.
• What you have sent and not yet seen received. That is inbound stock, not available.
• What you can promise on each channel from that location.

Count transfers to a 3PL or FBA as moves between locations, not as sales. Reconcile the provider’s report with your own records on a schedule, because differences are normal and are easier to fix when they are small.

Kits and bundles

A kit is a product made of other products, such as a starter set of three items. Its availability is set by the component that runs out first. If a kit uses 2 of component A and you hold 15, you can build at most 7. Two rules prevent surprises:

• Track stock on the components and calculate kit availability from them.
• Count what leaves inside kits as demand for the components when you forecast and reorder.

Reordering

Give every product a rule for when to reorder and how much. The usual building blocks are sales speed, supplier lead time, safety stock and stock already on order. The inventory replenishment guide walks through reorder point, periodic review, min/max and forecast-based methods, and the reorder point calculator does the sum for one product.

Seasonal products need a forecast, because a fixed rule lags demand. See inventory forecasting.

Raise a purchase order for every order so you can see stock on order and measure real lead times: purchase order template.

Counting stock

Records drift from the shelf through damage, miscounts, returns and mis-picks. Count to catch it.

• Cycle counting. Count a few products every week instead of closing the warehouse once a year. Count the products that matter most more often (the A group in an ABC ranking).
• Count after an event. Recount a product after a stockout, a large return or a receiving error.
• Record the reason. When a count differs from the record, log why. Patterns show where the process leaks.

Improving step by step

1. Pick the master stock number and remove duplicate sources.
2. Measure real lead times from your last purchase orders.
3. Set a reorder rule for each product, starting with the top sellers.
4. Start cycle counts.
5. Add forecasting for seasonal products and kits.
6. Review stock turnover and slow-moving products regularly. Use the inventory turnover calculator.

Where Kerno fits

Kerno Forecast is in early access. It reads stock across warehouses, 3PLs and Amazon, subtracts what is promised to open orders, counts what is already on order, counts component demand inside bundles and kits, and works out what to reorder with the reasons shown.