For emerging brands, inventory management can be both an opportunity and a challenge. The ability to manage stock effectively can mean the difference between delighting customers and losing sales. To help SKU brands navigate this critical piece of the business, we spoke with partner Cin7 to provide an overview of inventory management — why it matters, the common challenges, and the steps to do it well.
Inventory management is the process of sourcing, storing, and selling goods at the right cost and price. It includes raw materials, components, and finished goods, tracked from purchase all the way to the customer.
It’s not just operational housekeeping. Poor inventory management contributes to a staggering $1.1 trillion in losses worldwide every year. Despite this staggering statistic, inaccurate supply chain and inventory levels and inadequate inventory tracking are near-universal problems for small and large businesses alike.
For brands of any size, failing to organize and track inventory can result in lost revenue, damaged customer relationships, and blocked growth.When done well, however, inventory management strengthens forecasting, improves delivery times, controls costs, and builds trust with customers and partners.
Common Inventory Challenges
With so many moving parts, even the most organized brands face challenges. The most common include:
- Inventory shrinkage – Stock lost to theft, vendor error, or damage.
- Deadstock – Inventory that doesn’t sell, tying up space and cash flow.
- Out-of-stock inventory – Running out of high-demand products, leading to lost sales and credibility.
- Demand changes – Shifts in consumer preferences that leave brands scrambling.
- Poor warehouse use – Inefficient layouts that slow down operations and fulfillment.
Many startups begin with spreadsheets, but manual tracking quickly becomes inefficient and error-prone as brands scale. Investing in an inventory management system provides real-time visibility, streamlines back-end processes, and helps brands plan ahead with confidence.
Inventory Management Methods
There’s no one-size-fits-all solution. Brands often use a mix of these approaches:
- ABC analysis – Focuses on the 20% of products that drive 80% of sales.
- Demand forecasting – Uses data to predict customer needs.
- FIFO (First-In, First-Out) – Ensures older stock sells before newer stock.
- JIT (Just-In-Time) – Keeps stock lean, replenishing only when needed.
- Vendor-managed inventory – Lets suppliers manage agreed-upon stock levels.
Having the right products available at the right time in the right quantities to meet customer needs is the key to achieving a company’s objectives. Inventory management and control help do just that, which also curbs profit loss and helps businesses thrive. Additionally, inventory management for small businesses and large businesses produce other benefits, including:
- Enhanced planning and forecasting: Inventory management tools can help you analyze and distinguish products as well-performers and shelf-eaters, in addition to improving revenue generation and freeing up cash flow.
- Improved delivery time: Properly arranged and tracked inventory helps protect you from mismanagement, and expedited delivery can increase customer satisfaction.
- Reduced inventory costs: Inventory management allows you to accurately order and reorder products and materials, which decreases costs associated with backstock and storage.
- Increased efficiency: Effective systems prioritize systemic management so you can track the products and their quantities efficiently.
- Strengthened trust: Updated stock and inventory numbers can increase internal and external trust by providing dependable information to manufacturers, employees, and customers during the sourcing, storing, selling, purchasing, and acquiring stages.
Cin7 is an industry leading Inventory Management and ERP Lite Software designed for SMBs. From sourcing to production and sales, Cin7’s inventory management software provides real time inventory data and insights across your business. With integrations to ecommerce channels and EDI connections to Big Box retailers, Cin7 doesn’t just help you reduce your inventory cost, it helps you expand to new sales channels and boost profits.
Check out Cin7’s new ROI calculator. It is a great tool for prospects to estimate the cost savings they can get by implementing Cin7’s inventory management software. Input some basic operations data and see what ROI is possible.