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Fulfillment Inventory Management: What You Need to Know in 2021

Choosing the right partner can make or break your company’s logistics, customer service, and repeat purchases. Using a fulfillment inventory management center like Shipfusion frees you from navigating the fulfillment landscape with zero stress. Below are some insights on how Shipfusion can take your business to the next level.

Fulfillment Inventory management is also known as inventory control. It is a company’s process of controlling its stock, and making orders for items, organizing stock, handling logistics, and making sure your company has the right products at the right time.

The purpose is to help business managers control stock by identifying when to restock materials or manufacture them. Using a centralized inventory management system makes this easier.

Importance of Fulfillment Inventory Management

Improper handling of inventory loses the business money either on losing potential sales or tying up cash by having too much stock.

Inventory management is essential to eCommerce by;

1. Avoiding Spoilage

Sensitive products such as food, medication, and make-up have an expiry date. Managing inventory averts unnecessary spoilage.

2. Preventing Having Deadstock

Deadstock refers to products that are no longer up for sale.

It’s due to factors like going out of season and style or becoming obsolete as a result of newer versions and models.

Proper inventory management prevents this expensive inventory mistake.

3. Saving on Storage Costs

The cost of warehousing often varies depending on how much product is in store. Storing excessive quantities of products in the fulfillment center that is difficult to sell increases the storage cost.

4. Improves Cash Flow

Inventory directly affects sales by determining how much product sells and expenses by determining how much the company needs to buy.  Since the inventory is usually paid for, having it in the warehouse affects cash flow and reduces the cash at hand.

Having an inventory system tracks real-time quantities of products and makes it possible to project sales and plan.

Fulfillment Inventory Management Techniques

There are different inventory control methods to use, and companies customize them depending on the company. To avoid human error, using inventory management software for eCommerce is a good move.

Some examples to improve cash flow include;

·  Set Par Levels

Par levels refer to the minimum amount of product that is always at hand. When the inventory goes below this predetermined level, it’s time to add more. Ideally, the order amount in the fulfillment center should be enough to get back above the par level.

Set different par levels for every product, based on how fast they sell and how long it takes to have them back in stock.

Setting par levels needs adequate research and a decision-making process to start, and it’s essential to update par levels a few times a year to keep up with the changes in the market.

Par levels systemize the ordering process and make decision-making easy for staff members.

·  Use the First-In, First-Out (FIFO) Strategy and Modify the Floor Plan

The First-in, First-Out (FIFO) principle dictates that the oldest stock (first in) gets sold first (first out).

When dealing with perishable products, this prevents unnecessary spoilage. In non-perishable goods, it helps prevent wear and tear that occurs over time and helps keep up with dynamic packaging design and features.

Modifying the floor plan in the fulfillment warehouse increases efficiency and helps keep up with changes in demand and supply.

·  Manage Relationships

The ability to adapt quickly is key to successful inventory management.

Having a good relationship with suppliers is vital to avoiding logistics nightmares. It facilitates faster restock, quick returns, and troubleshooting any manufacturing issues.

Maintaining a good relationship with suppliers minimizes order quantities and thus minimal inventory.

·  Contingency Planning

Unforeseen issues related to inventory management crop up often, which cripples the business.

Common problems are for example;

· Sales spikes that lead to overselling stock

· Shortage of cash flow to buy products

· Lack of warehouse storage to handle sale spikes

· Slow-moving products

· Manufacturers running out of the product or discontinuing it unexpectedly

It’s important to have a contingency plan that addresses the risks the business will face, steps to take, and how they will affect other parts of the company.

·  Regular Auditing

Inventory management software and reports make it easy to track how much product is in stock at all times. Regular updates are essential to have correct records in the fulfillment warehouse.

·  Physical Inventory Count

At year-end, most businesses have a physical stock take that counts all the inventory at once. It’s done at the end of the year because it’s disruptive, tedious, and ties to accounting and filing income taxes.

·  Spot Checking

To avoid many problems at the annual stocktaking, spot-checking through regular intervals within the year helps. Randomly select a product, count it and compare the numbers with current records.

·  Cycle Counting

Cycle counting is an option for some businesses instead of the full physical inventory count at the end of the year. The reconciliation spreads throughout the year, with a different product checked every day, week, or month on a rotating basis.

·  Use Movable and Fixed Tracking Options

Movable tracking options allow products to be easily seen and accessed for shipment.

Fixed tracking also works for many businesses, as it’s possible to manage and assign destinations precisely. Combining both movable and fixed tracking leads to efficient inventory management processes.

·  Prioritize With ABC

Some products drive more revenue than others. An ABC analysis report grades the value of your stock based on a percentage of your income:

A = % of the stock that represents 80% of your revenue

B = % of the stock that represents 15% of your revenue

C = % of stock that represents 5% of your revenue

The A stock generates the most profit and has the highest value so these products should always be in stock. Stock C represents slow-moving products or dead stock that can sell at a discount to free up storage space and cash.

·  Forecast Accurately

Predicting demand is difficult but an important part of good inventory management. Some things to check when projecting future sales include;

· Current market trends and last year’s sales at the same week

· Current year’s growth rate, seasonality, and the overall economy

· Guaranteed contract sales, subscriptions, and upcoming promotions

Include anything else that will help create a more accurate forecast.

·  Have Safety Stock

Safety stock refers to the inventory set aside for emergency use. It represents the threshold for when to reorder products before dipping into the emergency stock. The formula to calculate safety stock is:

Safety Stock = (Maximum Daily Usage x Maximum Lead Time) – (Average Daily Usage x Average Lead Time)

The safety stock strategy cushions supply chain disruptions, product damage, and unpredictable circumstance that prevent regular product management.

·  Determine Reorder Points

A reorder point indicates the point in time to restock. With the safety stock level in place, it’s easy to determine the ideal point to place an order, considering the lead time with the supply chain.

The formula to calculate the reorder point is: 

Reorder Point = Lead Time Demand + Safety Stock


Warehouse Inventory Management is a growing space in eCommerce. These services allow outfitters to sell more effectively by giving them the tools needed to create an efficient system of items being shipped to customers. The system increases operational efficiency by streamlining your manufacturing and distribution operations.

Shipfusion sets your business on autopilot and combines flexible, reliable fulfillment with powerful, real-time technology. Shipfusion has multiple fulfillment centers across the US and Canada– making it easy to manage your eCommerce business. For more information on how to set your business on autopilot, contact one of our fulfillment specialists today.