What Is Inventory Optimization?

    At the center of every product-based eCommerce site is a high-functioning inventory management system. How well you’ve optimized your inventory of products for sale and delivery can determine your business’s success and make a big difference to your profits. In this article, we take you through the concept of inventory optimization, its many benefits, and how you can best make it work for your company.

    What is inventory optimization?


    Inventory optimization refers to the fixed set of practices an organization uses to maintain a salable inventory. The concept of optimization itself is an integral part of inventory management since it helps keep your supply chain and warehouses in business for the long term. With inventory optimization, an ecommerce business knows the right amount of products to order at a time, which prevents excess inventory that can lead to loss of resources.

    To maximize the potential of inventory optimization that gives you the best results, you’ll need to include certain essential components and tasks:

    • All inventory policies should be standardized.

    • Employ digital systems to help with demand forecasting.

    • Track the purchase changes of your customers.

    • Manage the product life cycles of all your SKU’s

    • Keep consistent tabs on supplier lead times, schedules, and delivery patterns.

    • Consider seasonality as well as factoring in promotional campaigns.

    Using automation for your inventory management or optimization comes with many rewards for your business. Keep reading to learn some its advantages.

    Inventory optimization speeds up processes via automation.


    An automated system that caters to all your inventory processes is one major benefit of optimization and management systems. With automation comes a huge reduction of human errors, less time waiting for your staff, and enough valuable time to cater to other pressing needs of the business.

    Automating your inventory management ensures that software bots perform repetitive and mundane tasks requiring no higher thinking with little to no manual help. With every sale made, your stock count is automatically updated, and this means you have real-time visibility of all your inventory levels. Besides accurate forecasting of sales, automation of your inventory system also improves your customer experience by preventing the occurrence of overselling.

    It helps improve supply chain operations.

    Inventory optimization eliminates the supply chain variability, which leads to better visibility of your production costs, procurement, and service requirements. With this comes an increase in the efficiency of your operations. When your inventory is well managed or optimized, it helps your business get products to the market faster, which improves your customer service. It also reduces the expedition of production and transportation while maintaining the flow for other products.

    Optimization helps reduce your overall business costs.

    When your inventory optimization system implements automation, you receive advanced reports on the products you have in stock at certain points in time. This prevents employees from having to spend a chunk of their work hours finding inventory that has been sold out for weeks. With advanced inventory management comes an easier picking, packing, and shipping process, where orders are catered more efficiently within a short time.

    Another aspect of reduced business costs presented by an inventory optimization solution is that it provides you with data that tells you the products with low sales volumes. With such information, you know not to order too much of that product, which helps you save money.

    Every growing eCommerce business moves into different markets, opening new sales channels as their order volumes increase. It’s an inevitable occurrence that you need to be prepared for if you see your company succeeding in the long term. Inventory management is the best way to keep track of your products and sales for better business growth.

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