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15 Inventory Management Techniques You Need to Use Today

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Ever heard of a successful business that became successful while mismanaging its inventory?

We haven’t either. They don’t exist.

Sure, there are plenty of mammoth companies that mismanaged their inventories and lost billions after becoming successful. Walmart losing $3 billion because of out of stocks is a prime example of inventory mismanagement.

But if they want to continue being successful, they’d have to implement better inventory management techniques.

The same is true for you.

If you want to remain profitable and competitive (or get to this point in your business), then you need to know and use as many cost-saving and profit-boosting inventory management techniques and tools as possible.

You can’t afford not to.

To help you out, we’ve listed a variety of different techniques of inventory management. By the end of this post, you’ll be able to use at least a few of them to improve your business operations.

But before we get to the inventory management techniques, let’s quickly define inventory management itself.

 

What is Inventory Management?

Inventory management is a collection of tools, techniques, and strategies for storing, tracking, delivering, and ordering inventory or stock.

A large amount of capital, if not the majority of a company’s capital is wrapped up in their inventory.

For that reason, it’s incredibly important to control the coming and going of inventory as best you can to minimize losses and maximize profits – which is where inventory management techniques come into play.

 

Inventory Management Techniques

Below is a list of some of the most popular and effective inventory management techniques you can use to improve your business.

Economic Order Quantity

Economic order quantity is the lowest amount of inventory you must order to meet peak customer demand without going out of stock and without producing obsolete inventory.

Its purpose is to reduce inventory as much as possible to keep the cost of inventory as low as possible.

To help you calculate EOQ, here is the formula from Kenneth Boyd, author of Cost Accounting for Dummies:

Economic order quantity uses three variables: demand, relevant ordering cost, and relevant carrying cost. Use them to set up an EOQ formula:

– Demand: The demand, in units, for the product for a specific time period.

– Relevant ordering cost: Ordering cost per purchase order.

– Relevant carrying cost: Carrying costs for one unit. Assume the unit is in stock for the time period used for demand.

Note that the ordering cost is calculated per order. The carrying costs are calculated per unit. Here’s the formula for economic order quantity:

Economic order quantity = square root of [(2 x demand x ordering costs) ÷ carrying costs]

That’s easier to visualize as a regular formula:

381676.image0

Q is the economic order quantity (units). D is demand (units, often annual), S is ordering cost (per purchase order), and H is carrying cost per unit.

 

Minimum Order Quantity

Minimum order quantity (MOQ) is the lowest set amount of stock that a supplier is willing to sell. If you can’t purchase the MOQ of a specific product, then the supplier won’t sell it to you.

The purpose of minimum order quantities is to allow suppliers to increase their profits while getting rid of more inventory more quickly and weeding out the “bargain shoppers” simultaneously.

A minimum order quantity is set based on your total cost of inventory and any other expenses you have to pay before reaping any profit – which means MOQs help wholesalers stay profitable and maintain a healthy cash flow.

 

ABC Analysis

ABC analysis of inventory is a method of sorting your inventory into 3 categories according to how well they sell and how much they cost to hold:

– A-Items – Best-selling items that don’t take up all your warehouse space or cost

– B-Items – Mid-range items that sell regularly but may cost more than A-items to hold

– C-Items – The rest of your inventory that makes up the bulk of your inventory costs while contributing the least to your bottom line

ABC analysis of inventory helps you keep working capital costs low because it identifies which items you should reorder more frequently and which items don’t need to be stocked often – reducing obsolete inventory and optimizing the rate of inventory turnover.

 

Just In Time Inventory Management

Just-in-Time Inventory Management is simply making what is needed, when it’s needed, in the amount needed.

Many companies operate on a “just-in-case” basis – holding a small amount of stock in case of an unexpected peak in demand.

JIT attempts to establish a “zero inventory” system by manufacturing goods to order; it operates on a “pull” system whereby an order comes through and initiates a cascade response throughout the entire supply chain – signaling to the staff they need to order inventory or begin producing the required item.

Here are some of the benefits of just-in-time inventory:

– Minimize costs such as rent and insurance by reducing your inventory

– Less obsolete, outdated, and spoiled inventory

– Reduce waste and increase efficiency by minimizing or eliminating warehousing and stockpiling, while maximizing inventory turnover

– Maintain healthy cashflow by ordering stock only when necessary

– Production errors can be identified and fixed faster since production happens on a smaller, more focused level, allowing easier adjustments or maintenance on capital equipment

 

Safety Stock Inventory

Safety stock inventory is a small, surplus amount of inventory you keep on hand to guard against variability in market demand and lead times.

Safety stock plays an integral role in the smooth operations of your supply chain in various ways.

Here are just a few:

– Protection against unexpected spikes in demand

– Prevention of stockouts

– Compensation for inaccurate market forecasts

– And a buffer for longer-than-expected lead times

You probably noticed that the benefits of safety stock are all tied to mitigating problems that could seriously harm your business.

That’s because without safety stock inventory you could experience:

– Loss of revenue

– Lost customers

– And a loss in market share

A safety stock formula is relatively straightforward and requires only a few inputs for calculation.

Here’s the formula we recommend using if you’re just starting out:

(Max Daily Sales x Max Lead Time in Days) – (Average Daily Sales x Average Lead Time in Days) = Safety Stock Inventory

 

FIFO and LIFO

FIFO and LIFO are accounting methods used to value your inventory and report your profitability.

FIFO (first in, first out) is an inventory accounting method that says the first items in your inventory are the first ones that leave – meaning you get rid of your oldest inventory first.

LIFO (last in, first out) is an inventory accounting method that says the last items in your inventory are the first ones that leave – meaning you get rid of the newest inventory first.

If you handle food inventory management or operate any business with perishable items, then you pretty much have to use FIFO. Otherwise, you’ll end up with obsolete inventory that you’ll have to write-off as a loss.

With that said, LIFO is a great method for non-perishable homogeneous goods like stone or brick. So, if you get a fresh batch of items like these, you don’t need to rearrange your warehouse or rotate batches since they’ll be the first ones out anyway.

 

Reorder Point Formula

A reorder point formula tells you approximately when you should order more stock – that is, when you’ve reached the lowest amount of inventory you can sustain before you need more.

Here’s the reorder point formula you can use today:

(Average Daily Unit Sales x Average Lead Time in Days) + Safety Stock = Reorder Point

This equation can help you stop being a victim to market spikes and slumps and instead, consistently order the right amount of stock each month.

 

Batch Tracking

Batch tracking is sometimes referred to as lot tracking, and it’s a process for efficiently tracing goods along the distribution chain using batch numbers.

From raw materials to finished goods, batch tracking allows you to see where your goods came from, where they went, how much was shipped, and when they expire if they have an expiration date.

What are the benefits of batch tracking?

– Easy and Fast Recall

Streamlined Expiry Tracking

– Improved Relationships with Suppliers

– Fewer Accounting Errors from Manual Tracking

 

Consignment Inventory

Consignment Inventory is a business arrangement where the consignor (a vendor or wholesaler) agrees to give their goods to a consignee (usually a retailer) without the consignee paying for the goods up front – the consignor still owns the goods, and the consignee pays for the goods only when they actually sell.

This inventory management technique creates a win-win partnership between suppliers and retailers as long as they’re both willing to share the risks – and rewards.

Pros for Vendors:

– New Markets

– Low Inventory Carrying Costs

– Direct-to-Retailer Shipping

Pros for Retailers:

– Lower Cost of Ownership

– Minimal Risk

– Improved Cashflow

 

Perpetual Inventory Management

A perpetual inventory management system is also known as a continuous inventory system.

Here’s how it works:

Perpetual inventory systems track sold and stocked inventory in real-time; they update your accounting system whenever a sale is made, inventory is used, or new inventory has arrived.

All of this data is sent to one central hub that any authorized employee can access.

These are the advantages of perpetual inventory:

– Proactive monitoring of inventory turnover

– Manage multiple locations with ease

– More informed forecasting

 

Dropshipping

Dropshipping is a business model that allows you to sell and ship products you don’t own and don’t stock.

Your suppliers – wholesalers or manufacturers – produce the goods, warehouse them, and ship them to your customers for you.

The process is simple:

– You receive an order

– You forward the order to your supplier

– Your supplier fulfills the order

Here are the benefits of dropshipping:

– Low startup costs

– Low cost of inventory

– Low order fulfillment costs

– Sell and test more products with less risk

 

Lean Manufacturing System

The Lean Manufacturing System, often referred to as lean manufacturing, lean production, or simply “Lean” is a system for maximizing product value for the customer while minimizing waste without sacrificing productivity.

This system originated in the Toyota Production System (TPS). There were 3 things TPS attempted to prevent:

– Muda –  Everything in your manufacturing process that creates waste or causes constraints on creating a valuable product.

– Mura – Everything that creates inconsistent and inefficient work flows.

– Muri – All tasks or loads that put too much stress on your employees or machines.

There were also 5 principles that every Lean manufacturing system adhered to:

1. Value – A company delivers the most valuable product to the customer.

2. Value Stream – Map out the steps and processes required to manufacture those valuable products.

3. Flow – Undergo the process of ensuring all of your value-adding steps flow smoothly without interruptions, delays, or bottlenecks.

4. Pull – Products are built on a “just-in-time” basis so that materials aren’t stockpiled and customers receive their orders within weeks, instead of months.

5. Perfection – Make Lean thinking and process improvement a core part of your company culture.

By minimizing or eliminating Muda, Mura, and Muri while adhering to the 5 principles, the proponents of Lean Manufacturing believe this inventory management technique can produce the highest-quality products while increasing your revenue and productivity.

 

6 Sigma

6 sigma, or Six Sigma is a data-driven process that seeks to reduce product defects down to 3.4 defective parts per million, or 99.99966{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} defect-free products over the long-term.

In other words, the goal is to produce nearly perfect products for your customers.

By using statistical models, 6 Sigma practitioners will methodically improve and enhance a company’s manufacturing process until they reach the level of 6 Sigma.

The first and most-used method in Six Sigma is a 5-step process called DMAIC:

– Define

– Measure

– Analyze

– Improve

 – Control

The DMAIC process uses data and measured objectives to create a cycle of continuous improvement in your manufacturing methods.

While DMAIC is useful for improving your current processes, DMADV is used to develop a new process, product, or service.

DMADV stands for:

– Define

Measure

– Analyze

– Design

– Verify

The DMADV process uses data and thorough analyses to help you create an efficient process or develop a high-quality product or service.

Through intensive training, focused projects, and effective statistical analyses, 6 Sigma could save your business a lot of money.

Fortune 500 companies have saved an estimated $427 billion after implementing the 6 Sigma methodology, according to iSixSigma magazine.

 

Lean Six Sigma

Lean Six Sigma is the fusion of Lean Manufacturing with Six Sigma to create a complete system that removes waste and reduces process variation for streamlined manufacturing and optimal product output.

Lean Six Sigma primarily uses Six Sigma processes and methods as the backbone of the system – such as DMAIC and the belt system – to drive focused improvements in manufacturing while incorporating many techniques and tools from Lean to reduce wasteful steps and processes

 

Demand Forecasting

Demand forecasting is a process of predicting what your customers will buy, how much they’ll buy, and when they’ll buy it.

You can use informal methods such as guessing, or quantitative methods such as analyzing past sales data.

From production planning to inventory management to entering a new market, demand forecasting will help you make better decisions for managing and growing your business.

Here are some demand forecasting best practices:

– Create a repeatable monthly process

– Determine what to measure and how often

– Integrate data from all of your sales channels

– Measure forecast accuracy at the SKU, location, and customer planning level

– Maintain real-time, up-to-date data

 

The Inventory Management Tool That Puts These Techniques into Action

We’ve given you many inventory management techniques and tools but to make most of them work, and work well, you need cloud-based inventory management.

Software like DEAR Inventory can track, forecast, analyze, calculate, and control your stock in real-time, from anywhere in the world, regardless of how big or small your business is.

If you’re serious about upgrading, enhancing, and optimizing your inventory management, then DEAR Inventory is the tool for you.

Start your free 14-day trial today

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FIFO vs LIFO: What You Need to Know to Choose the Right Method

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FIFO vs LIFO? We help you decide which accounting method is best for your business.

FIFO vs LIFO? We help you decide which accounting method is best for your business.

FIFO vs LIFO: the great business accounting debate.

At the end of your fiscal year, you’ll probably use one of these two accounting methods to value your inventory and report your profitability.

But they’re distinctly different and will produce very different results on your balance sheet.

To help you understand their differences, we’ll look at the advantages and disadvantages of LIFO and FIFO and give you our opinion on which one you should use in your business.

But before we do that, let’s define FIFO and LIFO.

What are FIFO and LIFO?

To determine your cost of goods sold at the end of the fiscal year, you need to determine the cost of all the products in your inventory.

That’s where FIFO and LIFO come in. Here’s what they stand for:

What is FIFO?

FIFO (first in, first out) is an inventory accounting method that says the first items in your inventory are the first ones that leave – meaning you get rid of your oldest inventory first.

What is LIFO?

LIFO (last in, first out) is an inventory accounting method that says the last items in your inventory are the first ones that leave – meaning you get rid of the newest inventory first.

FIFO vs LIFO: Advantages and Disadvantages

FIFO and LIFO are exact opposite accounting methods that deliver dramatically different results. Before you implement either of them, you should know the primary benefits and drawbacks of each method, which we detail below.

Primary Benefits of FIFO

  • FIFO is the most common accounting method.
  • There are no GAAP or IFRS restrictions on the use of FIFO.
  • FIFO increases the value of your inventory during inflation because your older items with a lower cost of goods are now a smaller percentage of your sales.
  • There’s less record-keeping since the oldest items in your inventory are continually used up.
  • If costs are decreasing, you pay fewer income taxes in the near-term since the first items sold are the most expensive.

Primary Drawback of FIFO

  • If costs are increasing, you pay a larger amount of income taxes in the near-term since the first items sold are the least expensive.

Primary Benefit of LIFO

  • If costs are increasing, you pay fewer income taxes in the near-term since the last items sold are the most expensive and you report the fewest profits.

Primary Drawbacks of LIFO

  • If costs are decreasing, you pay a larger amount of income taxes in the near-term because the last items sold are the least expensive which lowers your cost of goods sold leading to a report of higher profits.
  • The IFRS doesn’t allow the use of the LIFO method.
  • LIFO increases your layers of record-keeping since the oldest layers could remain in your system for years.

FIFO vs LIFO: Which Should You Use?

Well, there are obviously more benefits to using FIFO than LIFO, especially in the food industry.

If you handle food inventory management or operate any business with perishable items, then you pretty much have to use FIFO. Otherwise, you’ll end up with obsolete inventory that you’ll have to write-off as a loss.

With that said, LIFO is a great method for non-perishable homogeneous goods like stone or brick. So, if you get a fresh batch of items like these, you don’t need to rearrange your warehouse or rotate batches since they’ll be the first ones out anyway.

The bottom line:

Most businesses will benefit from FIFO while a select few businesses in specific industries will be better off using LIFO.

Regardless of which method you choose, you’ll need a powerful inventory management software that can automatically calculate your cost of goods sold in real-time.

And you probably want a software that automatically tracks fluctuations in prices for POs and suppliers, and helps you get the best deal on your goods.

Where can you find an inventory management software that delivers accurate reporting and so much more?

Right here at DEAR Inventory.

Use DEAR to Make Accounting Easier with FIFO

DEAR seamlessly Integrates with top-of-the-line accounting apps like Xero and Quickbooks, it syncs all of your invoices, bills, and payments to an app that can be accessed anywhere, and is built for true cost calculations and the FIFO method of accounting. We’ll give you financial data in real-time for smarter decision-making and higher profits.

Start your free 14-day trial of DEAR Inventory today!

Try DEAR for Free

No Credit Card Required

What is 6 Sigma: Two Methodologies You Must Know

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We’ll define 6 Sigma and show you the 2 methodologies of every 6 Sigma project.

We’ll define 6 Sigma and show you the 2 methodologies of every 6 Sigma project.

Do you want your products to have fewer defects and your manufacturing process to have less variability?

Then you need 6 Sigma.

Through intensive training, focused projects, and effective statistical analyses, 6 Sigma could save your business a lot of money.

Fortune 500 companies have saved an estimated $427 billion after implementing the 6 Sigma methodology, according to iSixSigma magazine.

There’s plenty of information about 6 Sigma along with training courses to get certified and start using the process.

Instead of going over everything about 6 Sigma here, we’ll give you a brief overview of the two main methodologies used in the process so you’ll know what to expect if you decide to implement 6 Sigma.

But first, let’s define 6 Sigma.

What is 6 Sigma?

6 Sigma, or Six Sigma is a data-driven process that seeks to reduce product defects down to 3.4 defective parts per million, or 99.99966{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} defect-free products over the long-term.

In other words, the goal is to produce nearly perfect products for your customers.

By using statistical models, 6 Sigma practitioners will methodically improve and enhance a company’s manufacturing process until they reach the level of 6 Sigma.

6 Sigma originated at Motorola in the mid-80’s when engineer Bill Smith approached CEO Bob Galvin with ideas for improving product performance by optimizing the manufacturing process.

Bob was inspired by these ideas and created the “Six Sigma Quality Program.”

In 1996, the CEO of General Electric, Jack Welch, launched his own 6 Sigma program and became a global evangelist for the process.

In all 6 Sigma projects, there are 2 main methods of achieving the same defect-free goals. Below, we detail these 2 methods.

6 Sigma Methodology: DMAIC

The first and most-used method in 6 Sigma is a 5-step process called DMAIC:

  • Define
  • Measure
  • Analyze
  • Improve
  • Control

The DMAIC process uses data and measured objectives to create a cycle of continuous improvement in your manufacturing methods.

Here’s a breakdown of each step:

Define

The first step in DMAIC is define. The purpose of this step is to identify the main problem in your business, your goal for improvement, any resources you may need to reach your goal, the scope of the project, and the timeline for completing the project.

Businesses typically use a project charter to organize the details of this step in the process.

Here are a few things you should do in the define stage:

  • Write down everything you know about your customer
  • Write down what they expect from your product, including features and specifications
  • Write down the current problem you’re having with your products
  • Write down the problems with your manufacturing process that cause problems in your products
  • Write down your objectives for the project as a whole

Measure

The second step in DMAIC is measure. The purpose of this step is to decide what you’ll be measuring throughout your project to compare it to the final results to know if you’ve made progress at all.

First, you should assess your baseline performance by answering the question “How good is your manufacturing process and quality of product output right now?” and then, get your team involved in deciding what will be measured to assess your final performance.

Analyze

The third step in DMAIC is analyze. The purpose of this step is to identify the root causes of the problems in your manufacturing process. Create a long list of potential root causes for product defects and then narrow the list down to the top 3-5 causes.

Now, start collecting and measuring data on those causes to validate them as actual root causes or not.

Here is a variety of tools to use in the analyze stage.

Improve

The fourth step in DMAIC is improve. The purpose of this step is to find and implement a solution to the problems you identified in the analyze step.

Brainstorm and apply both standard and creative solutions to the key root causes in order to permanently improve your processes.

You should also test each solution to determine its effectiveness, and once an effective solution is found, you should detail an implementation plan and deploy the solution.

Control

The fifth and final step in DMAIC is control. The purpose of this step is to maintain the progress you’ve made thus far and prevent your manufacturing processes to slip back into previous inefficiencies.

To keep control, you should monitor the improvements you’ve made, regularly analyze them to ensure they’re working properly, and create a response plan in case one of your processes becomes unstable.

6 Sigma Methodology: DMADV

While DMAIC is useful for improving your current processes, DMADV is used to develop a new process, product, or service.

DMADV stands for:

  • Define
  • Measure
  • Analyze
  • Design
  • Verify

The DMADV process uses data and thorough analyses to help you create an efficient process or develop a high-quality product or service.

Here’s a breakdown of each step in the process:

Define

The first step in DMADV is define. The purpose of the step is similar to the “define” step in DMAIC: identify the reasons why you’re developing a new process, product, or service.

Write down those reasons, and then set measurable goals and milestones that align with your budget and objectives.

Make sure to include the customers perspective when establishing your purpose for the project to ensure that what you create is customer-centered.

Measurement

The second step in DMADV is measurement. The purpose of this step is to identify the factors that are critical to quality.

Define the requirements and features for your project, the target market for the project, and the design components and parameters to measure the quality of the final product.

Once you’ve identified all the critical quality factors, translate them into clear project goals.

Analysis

The third phase in DMADV is analysis. The purpose of this step is to establish the metrics by which you’ll analyze the final product.

Construct simulations of the process, product, or service, develop conceptual designs, and evaluate and select the best components.

Design

The fourth step in DMADV is design. The purpose of this step is to produce the final, detailed design of the process, product, or service.

After you’ve developed the final product, you should release it for customer or user feedback.

Verify

The fifth and final phase of DMADV is verify. The purpose of this step is to gather the feedback you received in the design phase and use it to make necessary changes and modifications to your process, product, or service to remove any and all defects and errors.

This is an ongoing step that ends once you’ve successfully reached your goals you set forth in the define step.

Putting 6 Sigma into Practice

Now that you know what 6 Sigma looks like in practice, you’re better prepared to decide if 6 Sigma is right for your business or not.

Here’s a long list of resources to help you get started.

If 6 Sigma isn’t right for you at this time, but you’re still interested in improving your manufacturing process, then check out a similar process for streamlining your business called lean manufacturing.

And if you’re interested in improving other areas of your business, then find out how DEAR can upgrade and automate your inventory management.

Optimize the Rest of Your Business with DEAR Inventory

From real-time inventory tracking to accurate customer demand forecasts, DEAR Inventory provides the tools you need to grow your business without worrying about day-to-day administrative tasks. If you’re ready to swap headache-causing spreadsheets for productivity-boosting software, then DEAR Inventory is right for you.

Start your free 14-day trial of DEAR Inventory today!

Try DEAR for Free

No Credit Card Required

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A Simple Guide to the Lean Manufacturing System

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The Lean manufacturing system is an effective way to reduce waste and boost profits.

The Lean manufacturing system is an effective way to reduce waste and boost profits.

Do you want to decrease waste and increase the quality of your products?

How about decreasing your cost of inventory and increasing your profit margins?

You’d probably like to boost your productivity too, right?

These improvements are usually hard to come by in manufacturing.

But companies around the world are reaping these benefits by implementing one proven manufacturing method…

The Lean manufacturing system.

We’ll show you what this system is, the key principles behind it, the major waste reductions you can expect from it, and the essential tools you’ll need to implement it.

By the end, you’ll have a firm understanding of Lean manufacturing and how it can transform your factory into an efficient powerhouse.

What is the Lean Manufacturing System?

The Lean manufacturing system, often referred to as Lean manufacturing, Lean production, or simply “Lean” is a system for maximizing product value for the customer while minimizing waste without sacrificing productivity.

One of the first major pioneers of “Lean thinking” (although he didn’t know it) was Henry Ford who was a major sponsor and promoter of the assembly line.

But Lean manufacturing as we know it today has its roots in the Toyota Production System (TPS), which was created by Taiichi Ohno and Eiji Toyoda in Japan between 1948 and 1975.

Before it was known as TPS, they simply called it just-in-time manufacturing.

There were 3 things the Toyota Production System attempted to prevent:

1. Muda

Muda is the Japanese term for “waste.” Muda is everything in your manufacturing process that creates waste or causes constraints on creating a valuable product.

According to the Lean Enterprise Research Centre (LERC), 60{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of all activities in manufacturing production add no value at all.

According to TPS, there are 8 wastes you should work to eliminate:

  1. Defects – The mistakes that require additional time, resources, and money to fix.
  2. Overproduction – When those who receive the output aren’t ready for it or don’t need it because workers continue to produce more unnecessarily.
  3. Waiting – When work has to stop because someone is overwhelmed, something broke down, you’re waiting for approval or materials, or because you’ve run out of something.
  4. Not utilizing talent – Under-utilizing peoples’ talents, skills, and knowledge (not part of the original TPS wastes, but is increasingly sighted as a waste by current Lean manufacturers).
  5. Transportation – Too much transportation, leading to increased costs, wasted time, and the increased likelihood of product damage and deterioration.
  6. Inventory excess – When there is supply in excess of real customer demand, which masks real production.
  7. Motion waste – Any excess movement, whether by employees or machines, that doesn’t add value to the product, service or process.
  8. Excess processing – Any task that is processed more than required

These 8 wastes can be remembered using the acronym DOWNTIME.

2. Mura

Mura is the Japanese term for “unevenness in operations.” Mura is everything that creates inconsistent and inefficient work flows.

An example of Mura would be if you stocked a truck with fewer pallets than it can hold for one trip and then stocked it with more pallets than it could adequately hold for a second trip – resulting in longer lead times.

3. Muri

Muri is the Japanese term for the “overburdening of people and equipment.” Muri is all tasks or loads that put too much stress on your employees or machines.

Muri can cause employee burnout – as in the case of having too much work to do and not delegating a portion of it to someone else.

Or, Muri can cause the total breakdown of a factory machine – as in the case of running production for too long or with too many products than is allowed by the standards of that machine.

By minimizing or eliminating Muda, Mura, and Muri the proponents of TPS and the Lean manufacturing system believe you can produce the highest-quality products while increasing your revenue and productivity.

We’ll take a look at the tools that help you prevent “unevenness in your operations” and stop “overburdening your people and equipment” in a moment, but first, let’s take a look at how the philosophy of TPS gave way to the 5 cornerstone principles of Lean manufacturing.

What Are the 5 Key Lean Manufacturing Principles?

In 1996, the book Lean thinking was published, forever solidifying a whole new way of manufacturing.

The authors – James P. Womack and Daniel T. Jones – distilled the lessons they learned from observing TPS down to 5 Lean manufacturing principles.

These 5 principles are still at the core of any Lean manufacturing system.

The 5 principles are:

1. Value

The first principle of Lean manufacturing is value, which says a company should deliver the most valuable product to the customer. Value is therefore determined by the customer, not the company or its managers.

2. Value Stream

The second principle of Lean manufacturing is value stream, which says that after you’ve determined the value you’re going to provide your customers, you should map out the steps and processes required to manufacture those valuable products.

In a Lean manufacturing system, you should actually draw out every step of your process, from raw materials to finished product.

The goal is to identify every step that doesn’t create value and find ways to eliminate those steps.

3. Flow

The third principle of Lean manufacturing is flow, which says that after you’ve eliminated most or all of the waste from your system you undergo the process of ensuring all of your value-adding steps flow smoothly without interruptions, delays, or bottlenecks.

4. Pull

The fourth principle of Lean manufacturing is pull, which says that products should be built on a “just-in-time” basis so that materials aren’t stockpiled and customers receive their orders in weeks, instead of months.

5. Perfection

The fifth principle of Lean manufacturing is perfection, which says that you should make Lean thinking and process improvement a core part of your company culture.

Lean is not a static system, it doesn’t work the same for all companies, and managers aren’t the only ones who implement Lean – employees play an active role in making companies Lean, too.

To make the Lean manufacturing system more concrete and less abstract, let’s look at a few tools you’ll need to implement Lean in your business.

What Are the Most Useful and Actionable Lean Manufacturing Tools?

To get rid of Muda, Mura, and Muri there are a variety of tools you’ll need to implement and learn how to use.

Here’s a short list of some of the most important tools in the Lean manufacturing system:

The 5S System

The 5S system is a method of organizing your workplace materials for quicker access and better maintenance. This system is essential for eliminating waste that is produced by poor workstations and tools in poor condition.

The 5 S’s are:

  1. Seiri (Sort) – Remove all unnecessary items for your current production, leaving only what is necessary.
  2. Seiton (Set In Order) – Organize remaining items and label them accordingly.
  3. Seiso (Shine) – Clean and inspect your work area and everything in it every day.
  4. Seiketsu (Standardize) – Write out your standards for the Sort, Set In Order, and Shine steps above.
  5. Shitsuke (Sustain) – Apply the standards you’ve set for your company and make them habits for everyone in your organization.

Plan, Do, Check, Act (PDCA)

PDCA is a 4-step method of continual improvement in your process and products. It applies the scientific method to manufacturing so that you can iterate the best results over the life of your business.

Here is each step:

  1. Plan – Determine the goals for a process and needed changes to achieve them.
  2. Do – Implement the changes.
  3. Check – Evaluate the results in terms of performance.
  4. Act – Standardize and stabilize the change or begin the cycle again, depending on the results.

Heijunka (Production and Demand Leveling)

Heijunka (production and demand leveling) is a technique specifically designed to reduce Mura (unevenness) by producing goods in smaller batches at a constant rate.

This helps reduce lead times and reduce inventory since each product or its variant is manufactured more frequently at a predictable rate.

Kaizen (Continuous Improvement)

Kaizen is the practice of continually observing, identifying, and implementing incremental improvements in the manufacturing process.

It encourages all managers and employees to be involved in the process of manufacturing improvements.

Kaizen ensures that waste will be gradually reduced through the collective talents and knowledge of everyone in the company working together to change the smallest inefficiencies daily.

Kanban (Pull System)

The Kanban (pull system) allows employees to “pull” work into their work station when they’re ready. This prevents Muri (overburdening employees) and allows managers and employees to focus on the right tasks at the right times without wasted effort or time.

How Do You Track Inventory in a Lean Manufacturing System?

Holding inventory is typically seen as a problem in Lean manufacturing. The closer you can get your inventory to zero, the better.

But you still need a way to manage the inventory coming into your warehouse, along with your purchase orders, customer orders, etc.

Since Lean manufacturing requires you to be flexible and fast when orders come through, it’s necessary to have an inventory management system that can respond quickly and fulfill orders as fast as you need them.

You won’t get that from manual spreadsheet inventory management.

But you can get it from cloud-based inventory management.

Find out how below…

Make Lean Manufacturing Easier with DEAR Inventory

DEAR will automate purchase orders to get goods quickly when you need them, track essential KPIs for continual improvement in your processes and workflow, and give you in-depth insight into your production costs for reduced waste and increased productivity. If you’re serious about going Lean, DEAR will make the process that much smoother.

Start your free 14-day trial of DEAR Inventory today!

Try DEAR for Free

No Credit Card Required

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6 Ecommerce KPIs You Need to Start Measuring Today

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These Ecommerce KPIs are crucial to understanding and managing your business.

These Ecommerce KPIs are crucial to understanding and managing your business.

“If you can’t measure it, you can’t manage it.”

We don’t know who said it first, but we do know this quote rings true in the world of ecommerce.

If you don’t have specific objectives or clear goals, how do you know if you’ve reached a desirable outcome or milestone?

You don’t.

A lack of clear targets is especially harmful in your ecommerce business where tactics and strategies change fast, and if you’re not keeping up with trends or data, you’ll quickly lose to your competition.

That’s where ecommerce KPIs come in.

They help you make sense of the data you’re (hopefully) collecting, and give you insights into changes you need to make, strategies you need to implement, or tools you need to use.

But ecommerce KPIs are not created equally.

There are a few essential KPIs you absolutely should measure, and there’s a whole lot of KPIs that would be a waste of your time to measure.

We’ll give you a thorough list of the ecommerce KPIs every business should consider measuring, what to do before you start measuring KPIs, and how to make the most out of the data.

But first, let’s define ecommerce KPIs and metrics.

What are Ecommerce KPIs and Metrics?

A metric is any data you want to measure.

A key performance indicator (KPI) is a metric that measures data relative to a goal.

You can measure whatever you want, but if it isn’t tied to a goal, and if it doesn’t move you closer to that goal, it’s not a KPI.

Which means ecommerce KPIs are metrics that visibly influence your conversions, sales, and growth online.

With that in mind, there’s one question you’re probably asking yourself:

How Should You Construct and Measure Your Ecommerce KPIs?

You create ecommerce KPIs by first creating ecommerce business goals.

Here’s an example of clear ecommerce goals paired with specific KPIs from Shopify:

  • GOAL 1 — Boost sales 10{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} in the next quarter. KPIs include daily sales, conversion rate, and site traffic.
  • GOAL 2 — Increase conversion rate 2{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} in the next year. KPIs include conversion rate, shopping cart abandonment rate, associated shipping rate trends, and competitive price trends.
  • GOAL 3 — Grow site traffic 20 percent in the next year. KPIs include site traffic, traffic sources, promotional click-through rates, social shares, and bounce rates.
  • GOAL 4 — Reduce customer service calls by half in the next 6 months. KPIs include service call classification, identify which pages were visited immediately before the call, and identify what event lead to the call.

Once you have clear goals in mind, you can begin measuring the appropriate KPIs.

Since the KPIs you’ll measure will be specific to your business goals, we’ll give you a few ecommerce KPIs that every business should measure to get you started on the right foot.

Essential Ecommerce KPIs to Measure

If you’re just starting out, consider measuring only 4-10 KPIs to avoid overwhelm and to be as efficient as possible.

Here’s a list of 7 high-value ecommerce KPIs that will give you plenty of meaningful data you can use to reach your desired outcomes.

Brand Name Search

If your goal is to increase your brand awareness, your audience engagement, or your site traffic, then tracking how often people search for your brand name is essential.

If people are increasingly aware of your brand name, they’re more likely to seek out and discover the products and services you offer and are more likely to buy from you.

When your prospect considers buying a solution to their problem, they’ll immediately search their own minds in an attempt to recall a seller that they know of who can provide the solution they’re looking for.

If you’ve successfully implanted your brand name into their mind, they’re likely to go to your website and revisit your offer before looking at your competition.

Here are a few tools for monitoring your brand online.

Bounce Rate

If you want to increase your conversion rate, then you should focus on decreasing your bounce rate – the percentage of people who visit and immediately leave your site.

According to the Wolfgang 2017 E-commerce KPI Benchmarks Study, by increasing time spent on a site by 16{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}, conversion rates went up by a full 10{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}.

In the world of online conversions, 10{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} is a huge increase.

So, how do you decrease bounce rate and keep people on your website?

Here are a few suggestions:

Applying these tips will help you quickly achieve your ecommerce KPI of a low bounce rate.

Conversion Rate

Conversion rate is one of the most important ecommerce KPIs to measure across every part of your site.

A conversion rate is simply the rate at which visitors to your site perform the action you want them to (opt-in to your email list, share your post, buy your product, etc.).

Here’s the basic calculation:

(Number of conversions) / (number of site visitors) = conversion rate

If 1,000 people visit your ecommerce store, but only 50 people buy, your conversion rate is 50 divided by 1,000 which equals a 5{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} conversion rate.

You can increase your conversion rate by:

By testing the methods above, you’ll be able to measure incremental improvements in this particular ecommerce KPI, and over time, you’ll reach a higher and higher conversion rate.

Cart Abandonment

Shopping cart abandonment is unfortunately widespread.

Baymard Institute studied buyer behavior on ecommerce sites and found that 69{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of all ecommerce visitors abandon their carts.

There could be several reasons why online shoppers abandon their carts:

  • Shipping fees were too high
  • The site asked them to create an account in order to checkout
  • Too many form fields to fill out to complete the checkout process
  • Website errors
  • Not enough payment methods
  • Etc.

It’s frustrating knowing there are so many factors that contribute to such a high rate of shopping cart abandonment.

Where should you begin if you want to influence your customers to complete their checkout?

You can start with these 5 proven tips to stop shopping cart abandonment:

  1. Include images of the shopping cart items throughout the checkout process
  2. Use trust badges on your checkout page
  3. Reduce checkout form elements
  4. Ask users to register for an account AFTER the sale, not before
  5. Reduce or eliminate shipping costs

If you implement these 5 tips, you’ll see a measurable reduction in your shopping cart abandonment KPI.

Average Order Value

Your average order value (AOV) is a fundamental ecommerce KPI metric to track if you’re struggling to make a profit.

AOV is simply the average amount that people buy in your store.

The higher, the better.

To increase your AOV, try these tactics:

  • Product bundling
  • Free shipping for customers who spend a lot of money (over $100, for example)
  • Limited time offers and coupons
  • Upsells to higher-priced items than the ones in their cart
  • Cross-sells to items related to the ones they already have in their cart (like a laptop bag to accompany their new laptop)
  • Points for purchases that customers can use to buy other items from you in the future

Customer Retention

Repeat customers are the holy grail of good business, online or offline.

It’s also an essential ecommerce KPI if you value long-term business growth.

A 5{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} increase in customer retention rate will result in a 25{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} to 95{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} increase in profits according to Bain & Company.

Here are 3 metrics you should focus on:

  1. Rate of repeat purchases
  2. Frequency of purchases
  3. Order gap analysis

So, how can you increase customer retention? By following these tips:

  • Deliver products in customer packages that make your customers say “wow”
  • Offer fast delivery options
  • Under-promise and over-deliver (e.g., your policy says you ship within 5 business days, but you usually ship overnight)
  • Make it easy to repeat purchases
  • Make it fast and easy to create an account
  • Offer free and easy returns

How to Make the Most out of Ecommerce KPIs

We have to stress the importance of the old idiom “less is more.”

The first thing you’ll be doing when first measuring ecommerce KPIs is establishing a baseline for all of your KPIs and then testing strategies to improve those KPIs.

This is a long process, so be patient and never stop testing new strategies and tactics.

In that same vein, you should always be testing new technologies that make it easier for you to track, measure, and understand specific ecommerce KPIs.

One such technology is a cloud-based inventory management system that allows you to track all of your sales, offline and online, in one central hub.

This system would give you the advantage of knowing exactly how much inventory you have in stock in real-time, without needing to take a physical inventory.

You can also update all of your ecommerce stores when you start carrying new seasonal items or when you stop selling unprofitable items.

You’ll even be able to automate reorders and backorders so you’ll never have to run out of stock.

This system will help you reach many of your ecommerce KPIs such as your average order rate, shopping cart abandonment rate, and customer retention rate, among many others.

Where can you get this system?

Right here.

Achieve Your Ecommerce KPIs With A Cloud-Based Inventory Management System

From integration with your ecommerce stores and apps to seamless inventory tracking through your POS, DEAR Inventory will track, measure, and generate reports that make it possible for you to grow your business using sound, accurate data.

Start your free 14-day trial of DEAR Inventory today!

Try DEAR for Free

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What is Working Capital and Why Does it Matter?

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Find the right level of working capital to grow a healthy business

Find the right level of working capital to grow a healthy business

Working Capital is an important financial metric for understanding your company’s operating liquidity (the ability to convert your assets into cash for the purpose of paying the bills). Knowing your amount of working capital can also guide your inventory strategies, leading to smarter buying decisions.

By the book, the definition of working capital is:

Working Capital = Current Assets – Current Liabilities 

In other words, it’s the cash you have left over once all payments due to you are collected and your bills are paid.

If your company maintains an inventory of goods that you sell to your customers, the formula can be expanded to:

Inventory Value (value of items for sale and items used to make goods for sale)

+ Receivables from Customers (cash owed to company for sales)

+ Rebates from Suppliers (Discounts for buying a certain value, quantity, or within a certain timeframe)

– Payables to Suppliers (cost of inventory)

= Working Capital.

What’s considered a healthy working capital varies from industry to industry – but in theory it should be as low as possible.

A low working capital is a strong indicator that your company is finding the right balance between what you have on your shelves, the revenue you are generating, the investments you are making in your future, and the debts you owe.

A high working capital can be a sign your business is booming, but it can also mean you’re missing investment and growth opportunities.

Another Insightful Approach

In the business world, working capital is usually measured not by the cash figure of assets minus liabilaties, but by what’s known as your current ratio, which is:

Current Ratio = Current Assets / Current Liabilities 

According to Investopedia, your business should aim for a current ratio between 2.0 to 1.2, but this varies by industry; here are some average current ratios for industries you’re likely in, according to CSIMarket:

  • Internet, Mail Order, & Online Shops: 1.12
  • Wholesale: 1.29
  • Food Processing: 1.26
  • Miscellaneous Manufacturing: 1.55

A ratio higher than 2 is a sign that you’re not properly using your funds – either in the form of carrying too much inventory or not capitalizing on extra cash by investing in growing your business, while a ratio lower than 2 may make it difficult to find the cash you’ll need to pay your suppliers and other debts.

The metric changes as quickly as you make sales, pay suppliers, or increase your inventory – but by understanding how the decisions you make affect it, you can take control of your working capital instead of letting it control you.

Here are some aspects of your operations to consider as you create your working capital management strategy:

Turn Down Supplier Discounts

Just say no (sometimes)! Avoid the temptation to take advantage of supplier discounts when they mean ordering more inventory than you need right now.

Sure, you could buy three times the materials to reduce your per item cost by 75{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}. But unless you can actually sell that inventory, you risk filling your shelves with stuff that can quickly become obsolete, broken, or buried.

By collecting data to understand your what your customers want and when, you can better decide when it’s the right time to take advantage of these discounts.

Achieve Negative Working Capital

There are two ways to look at negative working capital – one way is a signal of financial distress for a company indicating you have spent more money than you have.

A more positive definition involves a strategy that requires careful thought and planning.

By setting terms of payment with your suppliers that give you enough time to collect from your customers before you pay for the raw materials of the items you sold – you are in essence borrowing cash from your suppliers to free up more money for your day to day operations.

This strategy requires an in-depth understanding of your customer demand cycles to ensure its possible to sell all your inventory and collect from your customers prior to your invoice due dates.

Negotiate your payment terms with your own billing cycle in mind. Be sure to give yourself an overlap period where you have cash payments in the bank, but no invoices due for the products and materials you just sold.

For example, let’s say you made $100 in sales for product X and have collected all payments due from your customers.

You owe your suppliers $50 for the raw goods you used to make product X, but the invoice isn’t due for another two weeks.

Because working capital only factors in supplier payments that are currently due, your working capital is a $100 ahead instead of only $50 – which is what it would be if you had to pay your supplier at the same time you collected payment.

Maintaining a negative working capital balance frees up cash to take advantage of opportunities to spend money on growing your business and reducing debts.

Control Inventory Levels

Inventory reduction plays a major role in achieving an ideal working capital – the less inventory on hand, the less you owe to suppliers, tipping your working capital in your favor.

Take control of your inventory levels by putting your sales and purchasing history data to work helping you predict the optimal levels of inventory necessary to operate.

The goal is to use that data to find the right balance between demand, production, and ordering raw materials or stock.

Order too much and you’ve tied up cash resources in product or materials that aren’t making you money. Purchase too little and now you run the risk of losing sales to your competitors who do have the product available for sale.

If this all seems like an elaborate guessing game, you’re not alone. Learn more about inventory reduction in our earlier post. From “lead times” to “just-in-time,” it covers the basics you need to know to get started.

Find the Balance, Achieve Results

Businesses of any size can find a healthy balance of inventory, taking advantage of supplier discounts, and payment cycles by leveraging inventory management software thanks to cloud-based tools like DEAR Inventory.

 

Want Better Data to Make Better Decisions?

Experience the tracking and reporting power of modern cloud-based inventory management software by starting your free 14-day trial of DEAR Inventory today!

Try DEAR for Free

No Credit Card Required

 

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B2B SEO: Grow Your Traffic with These 10 Tips for Ecommerce Sites

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B2B SEO Tips Ecommerce Sites

Drive More Traffic To Your B2B Ecommerce Site with Better SEO

Are you a driven business owner looking to take over your market through an automated sales funnel?

If so, Search Engine Optimization is critical.

Like SEO in general, B2B SEO is essentially it’s a combination of best practices, good habits, and compound growth.

And while search engine marketing has long been a go-to tool for smart B2B ecommerce businesses, it’s no longer the cherry on top many owners once thought it was.

But how do you optimize your B2B ecommerce website to climb in the search engine rankings, drive more traffic, and grow your sales?

At the highest level, SEO essentially consists of 3 parts:

  • Keyword research and selection,
  • On-site or technical SEO,
  • And link building.

Keep reading for a few tips on each.

B2B Keyword Research

The first step in optimizing your ecommerce site for search engines is to do keyword research – the process of finding words and phrases people are typing into search engines like Google and Bing to find products like yours.

While it might be easier to come up with product names, descriptions, and other website content without thinking about using certain words and phrases, choosing the right keywords and using them in the right places is key (pun intended) to having any chance of appearing in the top results when people search the web.

That being said, our tips for B2B keyword research are:

Create an Intentional Keyword Strategy

It’s not enough to use generic words and phrases that might relate to your business like “bulk t-shirts” or “soy protein powder.”

These are good starts, but they’ll also be highly competitive and crowded with companies spending a fortune on maintaining top rankings.

Finding the right keywords takes a little bit of digging but pays off in the long run – check out Shopify’s Beginner’s Guide To Keyword Research For Ecommerce to learn more!

Use Tools like Google Keyword Planner and Google Trends to Find Great Keywords

To get started with your research, use free tools like Google’s Keyword Planner and Google Trends to get new ideas.

You’ll start by thinking of a few words and phrases that are relevant to your business (“bulk t-shirts”) and plug them into the Keyword Planner (side note: you’ll need to create an Adwords account using your existing Google account – but you don’t need to buy ads to use the tool).

From there, Google will offer hundreds of suggestions and tell you how much traffic, competition, and what the suggested bid is for each.

The rule of thumb is the more traffic the better and you want at least some competition (which proves it’s a valuable keyword).

From there you can compare suggested bids and use Google Trends to identify which keywords are most popular when it’s a close call.

Focus on 1 Keyword Per Page to Start

Moz has an excellent piece on How Many Terms/Phrases you should target on a single page, but as you’re getting started just focus on targeting one word per page to keep things simple.

On-Site SEO for B2B Ecommerce

On-site or technical SEO gets into all sorts of (technical) details, tricks, and hacks that you can spend hours learning about and implementing.

However, with the right website software and a little bit of work on your part, you can cover the essentials without spending a ton of time.

Use Your Keywords in All the Right Places

The SEO experts at Moz have created an excellent Beginner’s Guide to SEO that covers the theory and basic practices of getting your ecommerce website search engine optimized.

One of the critical parts of this when it comes to on-site SEO is placing your keywords in locations where search engines look to figure out what your page is about.

Definitely check out that guide if you have the time, but when it comes to keyword placement you’ll want to use your target words and phrases:

1. In the title tag at least once; try to keep them as close to the beginning as possible.

2. Once in a prominent location near the top of your page.

3. At least two or three times, including variations, in the main copy on your page, maybe more if you have a lot of content.

4. At least once in the alt tag of an image on your page – which helps with both web and image searches.

5. Once in the URL.  Also, as a general rule be sure your URLs are readable by humans rather than something generic generated by your content management system, and use a consistent URL structure across your pages.

6. At least once in the meta description tag, which doesn’t help with ranking in search engines but draws attention to your page when people are scanning their search results.

Based on this info, can you tell what keyword we’re targeting in this article?!

Include High-Quality, Long-Form Copy on Every Product Page

While it can be tempting to try to target lots of keywords by creating lots of pages, it’s a lot of work both to create those pages and to increase your rankings for each and every one.

Also, a key factor in search engine rankings is the time visitors stay on your website – so the more valuable content they find, the longer they’ll stay and contribute to your rankings.

For more check out this post on Search Engine Land about the SEO and user science behind long-form content.

Make Sure Search Engines can Understand Your Website

It’s important to note that search engines don’t see web pages the same way we do – all they can “see” is text, and if that text isn’t structured in a way they understand, they won’t be able to accurately rank your pages.

To prevent this, it’s essential that your website has a few key documents – including an XML Sitemap and robots.txt file.

While it’s a technical thing to implement manually, with the right content management system these will be automatically created and formatted without you having to do any extra work.

If your website runs on WordPress (which we highly recommend), check out the Genesis Framework by Studiopress – it has all sorts of security, performance, and SEO improvements baked in to make things easy.

Ecommerce Link Building

Once you’ve discovered a great list of keywords and made sure your website is optimized, the last essential element of B2B SEO for your ecommerce website is link building.

For Google and the like, ranking is all about connecting users looking to find a piece of information or solve a problem with high-quality content and products that meet their needs.

And since high-quality content and products usually attract links from social media and other websites, the number of links pointing to your website is key to boosting your rankings.

Once again this is a complex topic and there are marketing agencies entirely dedicated to ecommerce SEO (including link building), but here are a couple actionable tips you to get you started:

Get Active on Social Media

Just like not having a website in 2002 meant your business didn’t exist, today that’s true of social media.

And not only is a social media presence great for helping potential customers find you, it can contribute to your search engine rankings!

So be sure to actively share and create content for at least one social media platform (for instance, making video product descriptions and adding them to Youtube can be good for this and selling customers who visit your website).

And include “follow” and “share” buttons on your website to make it easy for people interested in your products to stay in touch and spread the word about your company.

To get a better idea of social media’s possibilities, check out this Practical Ecommerce article covering 9 B2B business that do it well.

Be Sure to Blog

Another must-have when it comes to B2B SEO is fresh content.

Like social media this provides multiple benefits: it not only improves your website’s rankings as a whole but also allows you to target more keywords and helps you build trust and likeability with potential customers by helping them solve problems and better understand your business.

For more on why blogging is so important, and get a few ideas to start, check out Shopify’s post on ecommerce blogging.

Sell Your Products through Online Marketplaces

Keeping with the theme of this link building section, selling your products through online marketplaces is not only a great way to grow additional revenue streams (obviously) and get discovered by new customers, but it can also be a great way to drive more traffic to your website and improve your SEO with more links.

But you’re probably thinking – can I really sell my B2B products on websites like Etsy and Amazon?

Well, it might be a stretch – but don’t forget about eBay wholesale and Alibaba, both of which are great places to sell wholesale products on top of the hundreds of other wholesale specialty marketplaces (ever heard of Joor?).

The Final Tip: SEO is About People, Not Algorithms

While it’s perhaps less actionable than the others, this last tip is the most important to keep in mind when working on your B2B SEO.

While it’s important to find the right keywords, put them in all the right places, and get more links to your website, ultimately ranking highly in search engines is about finding and helping people.

Remember, search engines want to show people results that meet their needs – whether that’s information in the form of a high-quality blog post or the perfect merchandise for their retail business.

And you want to find customers who actually want to buy from you – which means targeting keywords that make sense for your business as well as providing high-quality content and products that satisfy and keep them coming back for more.

That’s what we’ve aimed to do with this article and all our products and services here at Dear.

So get out there and start optimizing your B2B ecommerce website’s SEO today – and if you found this article helpful, be sure to share it on social media using one of the buttons below to help us with ours!

 

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Choosing the Right SCM Software for Your Wholesale Business

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A recent analysis of supply chain professionals in a variety of industries and business sizes, business software consulting firm Software Advice discovered a staggering 34{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of them still rely on manual methods and legacy systems for their supply chain management (SCM) needs.

Software Buyers’ Current Solutions for Supply Chain Management

If your wholesale business only has a handful of suppliers, distribution channels, and team members, you may be able to get away with time-consuming pen and paper or clunky spreadsheet methods.

But as your business continues to grow, the limitations of these manual methods will quickly become a pain, standing in the way of the efficiency you’ll need to expand.

That’s where modern SCM software comes in.

3 Reasons Your Current SCM Solution Needs Replacement

As your customer demand begins to overwhelm your current supply chain systems, it can be incredibly tempting to implement quick-fixes to keep up without investing the time into finding a proper SCM solution – one that’s easy to implement and able to support the continued growth of your business.

Whether you’re stuck using manual systems or outdated SCM software, a few key reasons you’ll want to consider upgrading include:

It’s Too Much

Perhaps your current SCM solution works well for you, with all the bells, whistles and features you need.

But was your company sold on a fancy system overloaded with features you’re never going to use?

If that’s the case, finding new SCM software that more exactly meets your needs presents a great opportunity to streamline your operations and lower your IT and management costs.

It’s Not Enough

Perhaps your current SCM solution isn’t enough – either you’re using manual methods like spreadsheets or relying on outdated software.

You might even have a modern platform that’s worked so far – top business apps like Shopify and Xero usually contain modules to support inventory and warehouse management.

But often these types of systems work well until your business reaches a certain size, after which they continue to cause headaches and inefficiencies as you struggle to keep up with increasing demand.

In this case, switching to modern, specialized SCM software can save plenty of time and money – both now and as you continue to grow.

Its Support is Lacking

The best supply chain management software in the world is useless if it’s constantly breaking or hard to maintain.

And with the ever-expanding number of highly useful business management applications, being able to properly integrate and tailor SCM systems to your business’ needs is crucial to staying competitive.

That’s why highly-skilled, quick-responding customer support is an essential part of the best SCM software.

How the Right SCM Software Can Improve Your Business

Software Advice also found that the key factor driving the switch to a new SCM solution was modernization, meaning two things:

  • Increased automation of business processes
  • Closer integration of business systems

Software Buyers’ Pain Points With Existing Solutions

SCM Software Pain Points

Automation

Automation may be the buzzword of the day in the supply chain management world, but that’s for good reason – being able to quickly and efficiently manage your production from component purchasing to sale fulfillment can make or break a growing wholesale business.

Too often businesses rely on inefficient practices like manually syncing supplier invoices from their ordering system to their accounting system – which not only leads to overspending on labor but also increases the risk of costly errors.

Automating these repetitive tasks to save time and reduce errors is a key benefit of modern supply chain management software.

Integration

With the increasing move to software-based business systems, integrating everything from sales portals to fulfillment systems, production lines to accounting software is key to maintaining your business’ ability to expand.

Because these business systems are often managed by individual applications, the ability to glue them all together and manage everything from one easy-to-use platform is an important feature to look for in new SCM software.

Business Growth

Ultimately, the goal of upgrading to modern, fully automated, completely integrated supply chain management software is to support the growth of your wholesale business – both now and in the future.

A growing business is a great problem to have – but it comes with its share of headaches and challenges.

In many cases, growth means adding more warehouses, vehicles, and production lines to your business, all of which can quickly overwhelm your current solutions which until now have been able to handle a single warehouse or small fleet.

This means more growing businesses are starting to tie their continued expansion to improving their IT infrastructure.

If you’re actively focusing on growth, investing in improving your IT systems (including industry-leading supply chain management software) can add the scalability and flexibility you’ll need to support it.

Which is why cloud-based SCM systems are becoming more and more popular as they’re typically well supported, consistently updated, and offer flexible pricing based on your business size and needs.

3 Questions to Ask When Choosing New SCM Software

So how do you know which SCM software system is right for your wholesale business?

Ask yourself these three questions as you begin your search:

  1. What do we need it for?
  2. How compatible is it with our business?
  3. How reliable is the vendor?

What do we need it for?

The first and most important question to ask yourself when choosing the right supply chain management software is “What will I be using the software for?”

As you’re well aware, supply chain management is a complex process with different factors and needs depending on the particular demands of your business and industry, ranging from planning and strategy to manufacturing and logistics.

As a result, SCM software tends to fall into two categories:

  1. Software applications designed to automate the planning and organizing aspects of SCM, including choosing the best carriers and means of transportation, providing an overview of the supply chain, and mapping out production processes.
  2. Software applications designed to automate the execution of SCM related tasks, like determining product price and availability or alternate product logistics, and ensuring raw materials and components are available when and where they’re needed.

So take some time to consider the unique needs and goals of your business by asking yourself questions such as:

  • What are my business objectives?
  • Do I want an SCM solution that handles a specific task or one that covers all my basic SCM needs?
  • Do I need to choose software that’s compatible with my existing SCM software and those of my suppliers and partners?
  • What are my current bottlenecks and where could my company benefit most from automation?

Once you’ve answered these questions you’ll be able to more accurately evaluate which of the many available SCM applications is best for accomplishing your supply chain management goals.

How compatible is it with our business?

Next, you’ll want to consider how compatible your new SCM software options are with your existing software and business processes – including related activities like sales and accounting.

This can be a huge issue of resistance for many companies as employees are accustomed to doing things a certain way, and choosing software that requires a complete overhaul of your existing systems can be a costly investment.

So you’ll not only want to ensure your new supply chain management software truly makes your employees’ jobs easier, but will also be easy to retrain on and integrate with your business.

To that last point, all new software implementations will have challenges, which is why you’ll also want to ensure the vendor you choose has a highly qualified support staff to help you quickly resolve any issues as they arise.

How reliable is the vendor?

The final question you’ll want to ask when choosing an SCM software solution is “how reliable is the vendor?”

In this case, reliability essentially means two things:

  1. The company has been around for a while and will continue to be around.
  2. They offer the support you’ll need to implement, maintain, and upgrade the software as it improves and your business grows.

When it comes to B2B software as a whole, finding reliable, service-oriented vendors is a must to prevent costly downtime due to malfunctions.

And because supply chain software is such an integral part of your business, it’s especially important that your chosen vendor offers best in class support.

As a general rule, the longer a provider has been around, the more established they are in terms of clientele, and the size of their reach (local/national/global) are all important factors when considering your supply chain software vendor.

And whichever provider you choose, you should always have a “Plan B” backup in the unfortunate event that they close their doors.

When evaluating your top choices, be sure to find reviews from reputable sources and consider a few of the following questions:

  1. Is the company willing to modify the software when needed?
  2. Do they provide source code and documentation?
  3. What kind of personnel and resources are required to operate the software?
  4. Is the software user-friendly? How big is the learning curve?

Grow Your Business with the Right SCM Software

Hopefully now you’re better prepared to choose the right new SCM software for your wholesale business – including a better understanding of why it’s a worthwhile investment and essential questions to consider when choosing an SCM software solution.

Many businesses today are paralyzed by clunky, out-of-date SCM management systems, whether it’s legacy software that hasn’t been updated in years, or a painfully manual pen and paper or spreadsheet-based system.

The latest SCM software solutions can help you keep up with demand and prepare for future growth by streamlining your backend processes through integration and automation.

And when you partner with the right vendor, supply chain software can reduce your headaches and keep you competitive for years to come.

 

According to research from GetApp Lab, 55{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of businesses are saving more than 5 hours a week with SCM software – so now’s the time to make the switch!

Get started with your free 14-day trial of DEAR Inventory today!

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