Before we delve into the core aspects of what exactly constitutes inventory management, it is important to understand its need; efficient inventory management is simply about understanding fully well what is in hand and further how much and how far it could go.

The main aspect of inventory management is to keep a track the inflow and outflow of units. In effect, one controls the quantum of units, since regulation will ensure that the inventory does not become too high, or too low, which intrinsically and inseparably causes loss to the Company. While inventory is to be managed in various industries from library to a simple shop, but it relevance becomes more important in case of e-commerce Company.

Benefits of Managing Inventory

1)      Time: For e-commerce Company which depends upon various suppliers for products, maintaining an inventory will help them to understand the time taken by the supplier to execute delivery including time taken to process the orders.

2)      Uncertain Demands: Buffer stock helps to meet high demands for a new or popular product.

3)      Cost Advantage: Keeping large stocks of the products will definitely get the buyers some bulk discounts, which isn’t possible in the case of buying one product at a time.

Ways of Managing Inventory

1)      Buffer Stock: Also called Safety stock is a simplistic method of inventory management. According to it, the company should always have a level of extra stock to alleviate uncertainties in supply and demand.

2)      Reorder level: This method suggests that company must define a predetermined level, beyond which new inventory must be ordered.

3)      Cycle Stock: Available inventory for the normal demand during any period, excluding buffer stock.

4)      Anticipation Stock: According to this method, companies can build up extra stocks for the periods of increased demand. For example: During festive season, or launch of a new product which is already popular before its market release.

Tips to Manage Inventory

Using Inventory Management software

Organize and check inventory through software. This will reduce the chances of error and thus will prove useful to manage inventory. Also, make sure that the software is customizable according to the specific needs and can be scaled when the inventory is grown.

Inventory Control Personnel

The company should hire workers skilled enough to take on the role of control specialist. These people must be trained to manage merchandise, both incoming and in transit too.

Lead Time

Lead time relates to the quantum of time taken to re-order inventory. Whilst the supplier delivers products at different times, knowing about the lead time will help the company to know how much time will be taken for replenishing the inventory.

Monitor Inventory Levels

Inventory levels must be monitored at all times to prevent excessive and unwanted levels of inventory which do nothing positive for the company, and eventually increase costs. There should be a proportional assessment of demand to units.

Customer Delivery

Delivery time is important, which means the company needs to measure time taken to deliver inventory to the customers.


Inventory management is one of the crucial part of an e-commerce business as it ensured that the customers demand can be met and in what time. It also helps in long term planning for the most demanded products and product.


Please share how small technique have helped you to improve your inventory management.