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The Benefits of Outsourcing Inventory Management

Jake Rheude

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Tracking and managing inventory can be time-consuming and challenging, but it’s also vital to your eCommerce success. Improved inventory planning can help you run your business more efficiently and profitably. Outsourcing inventory management is an excellent way to boost your operations quickly.

The primary method for outsourcing inventory management in eCommerce is to work with an eCommerce fulfillment company. Your fulfillment warehouse can handle many of your essential inventory management functions. Here’s your guide to outsourcing your inventory management and which inventory functions you should keep in-house. 

outsourcing Inventory Management

What is outsourced inventory management?

Outsourcing inventory management is both physical and digital. On a physical level, you outsource the handling and storage of your merchandise to your 3PL. At the same time, your fulfillment company will collect and store data on your inventory, including inbound stock and orders going out.

What does your business gain from outsourcing inventory management?

Because your fulfillment center works with many eCommerce companies, they often have broad experience in inventory best practices that they can share with you. 

Some warehouses have 3PL services that include detailed inventory management for their clients. Others will log your stock in and out of the warehouse management system and maintain your physical inventory but leave most inventory management tasks to you. 

When you outsource your inventory management, you need to confirm that your 3PL offers the services you want. You also need highly accurate fulfillment. Outsourced but inaccurate inventory will not benefit your business.

Here are some ways that outsourcing inventory management to the right 3PL can help you grow and scale your business.

inventory management

Flexible inventory storage and handling

One of the most significant benefits of outsourcing inventory is flexible storage space. You don’t have to lease warehouse space and run the risk of your stock not fitting or paying for empty floor space. A 3PL can offer flexible warehousing, allowing you to use more space during peak periods and less during your off-season. You’ll pay only for the space needed to store your products. At Red Stag Fulfillment, we use a cubic storage model, so you pay only for the space you need each month.

Less inventory shrinkage

In addition to professional order fulfillment, your 3PL can bring skills to your inventory handling. That means fewer broken, bent, or missing items and less inventory shrinkage. Shrinkage can throw off your inventory counts and increase the cost of goods sold. If your products require special handling because they are fragile, heavy, or bulky, make sure you find a warehouse that understands how to work with merchandise like yours. At Red Stag Fulfillment, we believe professional fulfillment means that your items should remain in perfect condition while they’re in our care. That’s why we pay the wholesale cost for anything damaged or lost while it’s in one of our warehouses. And we specialize in handling heavy and bulky products, so we can handle oversized fulfillment while taking good care of your stock.

outsourcing inventory management

Advanced inventory management software

Fulfillment warehouses use warehouse management systems that include state-of-the-art inventory management software, and you get the benefit of that. You may be able to view your stock on hand in real-time and get reporting to help you set reorder points and safety stock levels. At Red Stag Fulfillment, our client dashboard puts all the information you need to manage your orders and inventory at your fingertips.

Returns management

Returns are unavoidable in eCommerce. So, improving your reverse logistics operations can be a big benefit to your business. Your 3PL can speed the process to help you process refunds quickly. And with outsourced fulfillment and inventory management, you can rely on your 3PL to assess each return and put items back in stock if they are in new condition. At Red Stag Fulfillment, we can even take a photo of a return and send it to you so that you can assess the next step with the customer and your inventory. We’ll take it from there.

returns warehouse services

Help to set optimal stock levels

The optimal stock level for each SKU is when the inventory turns over in weeks or months, not years. Ask your 3PL for expert guidance on setting ideal inventory levels to maximize your profits and avoid excess inventory or backorders. At Red Stag Fulfillment, we are happy to work with clients to help them optimize the stock they keep on hand.

Reduced inventory costs 

Outsourced inventory management will cost you money for warehousing and storage fees. However, you may find the expense is more than offset by lower inventory costs. Here are just some of the ways you can save money when you use a 3PL for inventory management:

  • Flexible storage reduces your overhead
  • Reducing or eliminating shrinkage will increase your profitability
  • Inventory management software can give you the data you need to improve your supply chain management and reduce costs
  • When you set optimal stock levels, you avoid having too much inventory and too much money tied up in stock, so you have more resources to focus on business growth

We’ve seen Red Stag Fulfillment clients increase their profits and expand their businesses. That’s thanks to the money they saved due to reduced shrinkage and professional inventory handling, in additional to accurate order fulfillment. We are always ready to extend a helping hand with inventory management—or anything else you need to improve your fulfillment.

outsourcing inventory management

Which inventory management tasks do you need to keep in-house?

Giving up the daily tasks of managing and logging inventory can give you time to spend on other aspects of your business. However, while your fulfillment company can lift much of the burden of inventory management from your shoulders, you need to remain the master of your business planning. 

Accurate inventory data from your 3PL is an excellent starting point for inventory forecasting and demand planning. Taking the time to create inventory forecasts lets you think ahead and plan for supply chain issues well in advance of when you need the merchandise. During times of supply disruption and uncertainty, savvy forecasting can help your online store stay competitive.

Inventory planning can include:

  • Assessing historical sales data to determine trends and seasonality
  • Considering economic and market trends to predict future demand
  • Incorporating customer demands and feedback to guide product development

You need to stay involved in inventory forecasting, but you don’t have to do it alone. The Delphi method of demand planning incorporates insights from outside experts. And, through the process, you can lean on your 3PL for guidance and support.

superior 3rd party logistics

The benefits of working with a top-tier fulfillment company

Not every 3PL has the core competencies or customer service focus to support outsourced inventory management. If you want support to help your eCommerce business flourish, it pays to work with a top-tier fulfillment company, like Red Stag Fulfillment.

We provide warehousing and pick and pack fulfillment services, but Red Stag is so much more than that. Our mission is to treat your products and your customers with the same care we would if they were our own. We set up SOPs to ensure that your orders arrive in perfect condition and are packed the way you want. We monitor our warehouses with 24/7 security and cameras. That lets us can pinpoint errors and institute processes to prevent them in the future, on the rare occasion when something goes wrong. When you have questions, our customer service team won’t stop until they get the answers you need.

When you outsource your inventory management to Red Stag Fulfillment, you gain a partner that will help grow your business. Are you ready to partner with us?

More about inventory management:

Watch your profits soar  with inventory management help from Red Stag Fulfillment.

Red Stag Fulfillment is a 3PL founded by ecommerce operators, and built for scaling businesses.

A team of fulfillment fanatics who care about our clients’ businesses like their own. We see things from our customers’ perspective, and have the guarantees to prove it.

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