What Inventory Optimization Means For Your Business

What Inventory Optimization Means For Your Business

Purchasing too many products, or purchasing the wrong product types, can be a disaster for businesses. With these mistakes, it is difficult to predict how well inventory will sell. Purchasing in bulk may benefit the bottom line in the first few months of an inventory cycle if a business only requires a small quantity of product to fulfill customer orders. However, over-buying and under-buying can go beyond costing money – it can cost business reputation and future sales.

What Is Inventory Optimization?

Businesses need to establish clear guidelines when it comes to optimizing their inventory levels. Inventory optimization is one way companies can make informed decisions about what they buy from suppliers and how much they retain in stock as part of their inventory management strategy.

In most cases, inventory needs to be purchased way ahead of time. For example, consider a school lunch program.  They need to order food and supplies for a two-week period on the previous Monday.  To do so, they need to know what meals sell well and which don’t, how many school days during that period, and how much will be received in commodities to offset their inventory.

Still, inventory can only be based on predictable patterns. So how could grocery stories optimize their inventory during COVID?  How could schools plan for food inventory with students remotely accessing their education yet still having the ability to get meals?  Who would go out of their way to drive and get the meals? Again, nothing about COVID was predictable.

How To Optimize Inventory

How do you optimize inventory and not run out of items?  This is a really tough strategy with online stores or any retail store or even restaurants. There is no easy solution, but some methods make it easier to manage your inventory than others.

The first thing you should do is create an order-fulfillment plan to know what needs to be done for handling orders, like how many sales reps will need to be hired and what types of products they should handle each day. This helps with the ease of use in order processing and aligns users with their specific roles in the process.

Automated Processes

Developing automated processes for tracking and tracing all supplies and inventory are critical. However, you don’t need to recreate the wheel—instead, partner with a company on inventory optimization software.

How will your inventory needs change?  This list includes some situations that impact inventory and sales:

  • Is the inventory seasonal?
  • What is the competition doing?
  • How is your reputation holding up?
  • Are there technological advancements or failures in your niche?
  • Are you experiencing any labor issues?
  • Is your supply chain experiencing any struggles?
  • What are the economic impacts such as inflation and recession?
  • What is the cost of living adjustments?


Inventory optimization is all about optimizing the balance of supply and demand for a product. It’s helpful in both identifying and removing points of pain in an organization’s operations.  The best way to get started with inventory optimization is to start with small changes without too much effort or cost.

A change like determining what type of program your company should offer, or who knows what else!
Small changes are easier than big ones because they allow the company to test out different marketing strategies and figure out what works best while considering risk factors such as a new product might not sell well enough.

One thought on “What Inventory Optimization Means For Your Business

  1. Emma says:

    Analytics will tell you how to turn them into valuable customers, and also allow you to align the work of the entire organization, created with the application of AI. As a result, you will be able to attract the most valuable visitors, potential customers and suppliers to your business

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