What is ABC Inventory Management? And How is it Beneficial?

Business owners these days follow various inventory management methods to maintain their business inventory levels and make the most out of them. While there are numerous inventory management techniques, ABC Inventory Management still remains a common one used by many stores, warehouse and business owners.

ABC Inventory Management Technique focuses on the value of the products, their market demand and the relative cost and risk data. The method involves categorising the products into three categories – A, B and C. The categorisation is also based on the product's sales volume and profitability.

The three categories are separated as follows:

Category A — Products with Low quantity but High value

Category B — Products with medium quantity and medium value

Category C — Products with High quantity but low value

or vice versa.

The Pareto Principle

The ABC Inventory Management Technique works on the Pareto Principle, which states that the major part of Results comes from only 20% of the right direction efforts. In comparison, the other 80% contribute less to the final result. ABC Inventory Management applies this 80/20 rule on products in the inventory, categorising into the 20% products that deliver high results, and the rest 80% barely contribute to it.  

Categories in ABC Inventory Management
Category	Dollar Value	Inventory Percentage	Annual Consumption	Accuracy of Records	Control
A	High	10% - 20%	70% - 80%	High	High
B	Medium	30% - 40%	15% - 20%	Moderate	Moderate
C	Low	50%	5%	Minimal	Basic

Observing the above table carefully will help you to understand how the Pareto Principle fits in ABC Management very well. It is evident that most of the company's revenue comes from the 20% stock of high value and greater annual consumption.

Benefits of Using the ABC Analysis Method for your Inventory System

Using the ABC Analysis Method for Inventory control can prove to be very beneficial for some business owners who struggle to keep their inventory costs in check. Some of the major benefits of using this technique are:

1. Increased Optimisation

The ABC Analysis helps business owners to identify high cost and low-cost products and accordingly plan their storage and repurchasing schedules based on their demand and stock availability.

2. Improved Forecasting

When you monitor and analyse category-specific data over a period of time, you can make better predictions related to the dip and surge in demand. This would help you make better financial decisions and avoid risking your budget and warehouse space on the wrong products.

3. Improved Pricing Decisions

A better sense of prediction can help you to set reasonable pricing for products while selling. A surge in demand can be an opportunity for setting high prices leading to higher profits. 

4. Better Business Negotiations

When you have a clear idea about the products that sell better and give you better revenue than the others, you will be more confident while negotiating deals with your suppliers as well as your buyers or clients.

5. Optimised Space Allocation

A clear knowledge of the better selling products will help you to prioritise the space and time for them in your warehouse. This will also help you make better decisions regarding buying new stocks, as you would prefer to save space for most selling products rather than the low selling ones.

6. Controlled Inventory Costs

When you have accurate control of the stocks of high-value products and low-value products, you are better able to keep the inventory costs in check through strategic decisions related to selling and purchasing stock.

7. Lower Inventory Cost Risk

When you identify low selling products, you will make sure you don't buy more stocks until the previous ones are sold out. This analysis will help you to avoid the risks of holding high-cost products with low demand in your inventory.

Automate the ABC Inventory Management Process with Unicommerce

To help business owners get a stronger grip on their inventory, Unicommerce has built a powerful cloud-based Inventory Management Software that assists in accelerating and automating the day-to-day tasks involved in managing an inventory.

Used by several renowned e-commerce brands and business today, the inventory management solution by Unicommerce has statistically demonstrated high ROI, contributing to:

• Increased Sales Growth by 20% to 30%

• Reduced Manpower Costs by 30%

• Reduced Inventory Costs by 25%

• Reduced e-commerce Returns by 20%  

The feature-loaded software automates various inventory control techniques, such as the ABC Analysis, FIFO, LIFO, Batch Tracking, Economic & Minimum Order Quantity, Safety Stock Inventory, and many more.

Unicommerce is the best Inventory Management Software and the ultimate solution for all your inventory woes.

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Why do you need Unicommerce for your business? Unicommerce Growth Hacks

Business Growth is subjective for each person. When and how it needs to be done depends on various factors regarding the business itself. Hence, it is smart to opt for custom and personalized tech solutions when you are planning on going digital with your business processes and day to day activities.

Unicommerce provides custom cloud-based solutions for sellers, retailers, businesses, and brands, that wish to automate their eCommerce processes to improve their productivity and efficiency, hence promoting business growth and giving space for business expansion.

Unicommerce’s technologically advanced supply chain solutions have been providing robust and highly effective assistance in various sectors and industries of eCommerce for years. Here are the major categories for which multiple amazing solutions by Unicommerce are available:

• Multichannel Solutions

For multichannel businesses, whether retail or eCommerce, Unicommerce’s solutions, integrated with the routine processes prove to be a boost to their daily productivity. These solutions are focused on helping the owners to reduce the order fulfillment time, automate as many processes as possible, and enhance customer experience while placing orders with your business or brand.

Unicommerce Solutions available in this sector are:

• Multichannel Order Management

• Multichannel Inventory Management

• Multichannel Return Management

• Accounting Assistance

• Shipping Management

• Dashboard Personalisation

• Reports Management

• Risk Management

• Omnichannel Solutions 

If your business is omnichannel, serving both online as well as offline consumers at the same time, Unicommerce’s solutions are the perfect fit for you to enhance customer experience at your store, or on your website. Whether your business is retail or wholesale, Unicommerce’s complete eCommerce management solutions can help you to streamline your processes across devices and platforms, and focus on important things at hand, such as order fulfillment or manufacturing processes. Our transition processes are smooth and utilize advanced cloud-based solutions to ease the migration. With us, bringing your offline business online or vice versa can be a piece of cake, and trust us, we all love cakes!

• Warehouse Management Solutions

If your business involves maintaining a warehouse for goods and products, Unicommerce Solutions can help you to keep a close eye on your stocks and keep all your processes in line, saving a lot of your time and efforts. Various Unicommerce warehouse management software available for your business include:

• Inventory and Stock Management

• Return Management

• Shipment Management

• Packaging Management

• Employee Record Management

Key Benefits of using Unicommerce Solutions for your warehouse include increased labor productivity, improved space utilization and visibility, enhanced accuracy, and on-time shipment dispatches.

• Drop shipment Solutions 

With amazing Unicommerce Solutions for Drop Shipping businesses, digital marketplace transitions are easier than ever before. Our custom eCommerce solutions will help your drop-shipment business to boost your commercial dynamics seamlessly. With Uniware Vendor Panel Solutions, your vendors can now sell their products and services directly to the end-users.

• ERP Integration and Management

You can now digitize your business with seamless processing, advanced computing, and cloud-based accounting systems that boost your business growth instantly. Unicommerce ERP Solutions are feature-rich and come with an inbuilt ecosystem to incorporate and manage your orders, stocks, returns, shipments, etc. across 40+ marketplaces smoothly. 

You can now make your inventory visible to your customers and salespersons anywhere, anytime with real-time updates. The solution also offers a highly flexible and impeccably centralized inventory across all your sales channels, such as online, offline, warehouse, website, etc.

Conclusion: 

Unicommerce is the go-to solution for all your e-commerce requirements. We strive to simplify your business and help you in taking it to new heights. With a variety of services including Multichannel Order Management, Multichannel Inventory  Management, Warehouse Management, Omnichannel Solutions, Dropship Solutions, ERP Integration, and much more, we are a trusted global brand supporting over 10,000 businesses that grow multi-folds. Our solutions are also delivered through our mobile application. 

Uniware Mobile App is a standardized mobile app used by hundreds of clients to manage their online and offline operations in one place on their mobile screens. Pre-integrated with 100+ world’s leading marketplaces, ERP Systems, Cart Solutions as well as Logistics Providers,  Uniware Mobile App provides a seamless user experience and flawless multi-channel operations for your business.

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The Ultimate 5 Reasons Why You Need Inventory Management

How to know when you need the support of inventory management software? When is the perfect time to upgrade your physical inventory management system into a virtual one? 

The answer to this question is not as complicated as it appears.

Let us learn about these 5 ultimate signs which hint that this is the perfect moment to get an inventory management software for your business and leverage it for your business growth. 

1. You need more Flexibility

When you need to access your data from various platforms or devices, or if you feel that you need your data in hand whenever you’re making a decision, or buying new stocks, it is time to realize that you should upgrade to a new cloud-based management system for your inventory.

2. You need more Accuracy

Physical records might not be very reliable sometimes. No matter how much you try to be accurate, manual errors are unavoidable. Automation can help you here. It is time to upgrade your inventory management game when you find yourself looking for more accuracy in terms of stocks, orders, shipments, employee records, or data related to your product.

3. Your Inventory Costs are Growing

It is always important to keep your inventory costs low or you risk running a loss, especially if your business is one where the prices of your products keep fluctuating based on the market prices. If you find your inventory costs higher than your expectations, or if you find that you are completely unsure about your inventory costs as it keeps fluctuating too often, it is time to use advanced technology to support your sales growth.

4. Your Business Growth is Slowing Down

If your customers are having trouble finding your products and goods, or if your salespeople are having trouble selling goods due to insecurity of your stocks, this could make your business run slower than usual. A sure way to boost your sales is to make your stocks accessible and viewable to your salespeople and your end-users. This is one of the major signs that you need to upgrade your inventory management skills.

5. You want to Improve the Customer Experience and/or Reduce Order Fulfillment Time

Customer experience plays a major role in building a loyal customer base or reaching new customers by mouth to mouth publicity. Providing a seamless buying experience through a multichannel stock management system can result in increased sales. Automation of order placement and delivery tracking can allow you to reduce your order fulfillment time as well as customer satisfaction significantly.

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Scope of Inventory Management System

An inventory management system is a software platform that helps business and brand owners or inventory managers to keep a track of their products or stocks and manage their production, shipment, delivery, and restocking from time to time or on a perpetual basis. Such inventory management systems are usually very personalized based on specific requirements of businesses and brands, as a lot of people might find it difficult to adjust to generalized versions of inventory management systems.

Using an inventory management system for any business, irrespective of how small or large goes a long way in leading to the growth of your business.

An inventory management system can help you to manage the following sections:

1. Economic Stock Management and Inventory Costs

An accurate record of your stocks and average orders will help you to determine the amount of new sales stocks that you need in your inventory and also give you an idea of the time estimate for which the purchased stock will last. A thorough control over the inventory will help you to manage and reduce the overall costs required for your inventory gone into storage, handling, shipment, and deliveries.

2. Operational: Policy Formulation

An up to date inventory management software can form the basic pointers for which you need to frame your company policies regarding stock management, storage, handling, production, processing, shipment, accounting, restocking, etc.

3. Sales: Sales Leads and Time Management

Unicommerce Inventory Management System or stock maintaining software can help you to determine the time consumed in selling a certain percentage of your stock from the date of purchasing to that of selling. You can also analyze your data and determine the amount of time consumed in selling each product produced or manufactured in your business and the time required to fulfill each order, with stronger control over all these time duration and the ability to reduce them through a thorough evaluation.

4. Organizational: Store Management

More control over your inventory and stocks through an inventory software, as well as on the processes involved from production or procurement until final product delivery to your end-users will not just enable you to manage your store more effectively but it will also give you the power to enhance and improve the customer experience in your store.

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