In ecommerce, margins are razor-thin, competition is fierce, and every dollar counts.
Yet, poor inventory management is one common obstacle that haunts many businesses and erodes their profits.
The impact of inefficient inventory practices goes beyond mere inconvenience – it can result in significant financial losses that eat away at the bottom line.
In this blog, we'll delve into inventory management fundamentals, exploring key principles and revealing eye-opening inventory management statistics.
Are you ready to discover how proper inventory management can propel your business to new heights?
Let's dive in and unlock the secrets of this vital business practice.
Inventory management refers to overseeing, controlling, and organizing a company's inventory or stock of goods.
It involves tracking the quantity, location, and status of various items within a business, including raw materials, work-in-progress products, and finished goods.
Inventory management ensures that the correct quantity of items is available at the right time, minimizing excess inventory or stockouts.
Businesses need inventory management for several reasons:
Effective inventory management allows you to maintain optimal inventory levels.
It means having enough stock to meet customer demand without overstocking, which ties up capital and incurs storage costs.
You can optimize procurement, production, and distribution processes by maintaining accurate inventory level records, reducing lead times, avoiding production bottlenecks, and minimizing stock holding costs.
Excessive inventory ties up capital and increases storage and carrying costs. On the other hand, stockouts can lead to missed sales opportunities and dissatisfied customers.
Inventory management ensures that you can fulfill customer orders promptly and accurately, which enhances customer satisfaction, improves retention rates, and fosters a positive reputation.
You can use historical inventory data to identify trends, seasonality, and demand patterns. As a result, you can optimize production schedules, reduce waste, and improve overall operational efficiency.
Effective inventory management reduces the likelihood of obsolete or expired stock, prevents stock shrinkage, and minimizes the impact of disruptions in the supply chain.
You can respond quickly to market changes, reduce risks, and maintain business continuity by proactively managing inventory.
Let's delve into compelling inventory management statistics that shed light on warehouse operations, the supply chain industry, inventory accuracy, and the impact of inventory management software.
According to available data, the average level of inventory accuracy in US retail operations is a modest 63 percent.
Maintaining consistently inaccurate inventory levels makes it highly challenging to manage replenishment schedules effectively.
As a result, this often leads to stockouts and an overall negative customer experience. Customers may experience longer wait times for their orders or even encounter order cancellations once the error in inventory accuracy is discovered.
Approximately 34% of businesses have encountered situations where they have unintentionally sold a product that was unavailable in their inventory, resulting in delayed order shipments.
This statistic emphasizes the operational challenge that many businesses face in effectively managing their inventory and order fulfillment processes.
By addressing the issues of overstocking and understocking, businesses can achieve a significant 10% reduction in inventory costs.
This limitation may lead to missed opportunities for growth and expansion.
By holding excessive stock levels, you risk hindering your ability to allocate resources toward strategic initiatives that can drive innovation, expand product offerings, and attract new customers.
💡 Disproportionate overstocks consume valuable cash resources and occupy storage space that you could use for new products and potential opportunities.
A considerable 43% of small businesses do not actively monitor their inventory, while 21% claim they have no stock at all. However, among those who engage in inventory tracking, the general approach is to utilize accounting software as the primary method.
One of the primary motivations driving analytics initiatives for 36% of supply chain professionals is optimizing inventory management to achieve a harmonious balance between supply and demand.
With the ever-increasing complexity of global supply chains and the need for efficient operations, supply chain professionals recognize the importance of leveraging analytics to gain:
A significant majority of retailers, comprising 72%, intend to transform their supply chain operations by incorporating real-time visibility through automation, sensors, and analytics.
Sensors play a crucial role in providing real-time data on product location, condition, and movement, enabling retailers to have better visibility into their inventory throughout the supply chain.
Combined with analytics capabilities, it empowers retailers to make data-driven decisions, optimize demand forecasting, minimize stockouts, and improve order fulfillment.
By embracing these transformative technologies, retailers are poised to create a more agile and responsive supply chain that leads to:
The global warehouse management systems (WMS) market has grown substantially recently.
In 2021, the market value stood at USD 2.5 billion, and it was projected to increase to USD 3.1 billion by 2022.
Industry experts anticipate significant growth in the WMS market, with a projected market size of around USD 10.5 billion by 2030.
The global market for warehouse management systems is experiencing robust growth, with an estimated compound annual growth rate (CAGR) of around 16% from 2022 to 2030.
According to ValuTrack, approximately 73% of warehouses have plans to implement mobile inventory management solutions.
In the United States, warehousing and storage businesses have witnessed a continuous and escalating growth trend since 2010.
The number of these businesses has increased each year, eventually reaching a total of 20,002 in 2021.
According to a 2017 report by Westernacher Consulting, there has been a notable increase in the average size of warehouses over time.
In 2000, the average warehouse size was approximately 65,000 square feet.
By 2017, it had significantly expanded to around 181,370 square feet.
This data reflects a substantial growth in the physical footprint of warehouses, highlighting the industry's need to accommodate larger storage capacities and meet the demands of evolving supply chains and increased inventory volumes.
According to the analysis, 79% of companies with high-performing supply chains can achieve revenue growth surpassing the average performance within their respective industries.
You shouldn’t overlook the impact of distribution costs on profitability.
According to the Logistics Bureau, the inclusion of distribution costs can have a significant effect on a company's financial performance.
In fact, up to 12% of companies become unprofitable once distribution costs are factored in.
The sales of physical goods through ecommerce channels are experiencing a remarkable surge.
According to Statista, in 2018, online sales of physical goods reached a staggering $504.6 billion.
Furthermore, projections indicate that these sales are expected to surpass $735 billion by 2023.
It is projected to continue its growth trajectory with a compound annual growth rate (CAGR) of 11.2% until 2027.
By the end of that year, the industry's value is estimated to more than double, reaching approximately $37.41 billion.
International trade and the global economy rely heavily on maritime transport, the foundation for transportation networks. Sea transport accounts for more than 80% of the total volume of international trade in goods, with an even higher proportion observed in many developing nations.
From 2019 to 2020, there was a notable 14% increase in supply chain disruptions.
In 2019, an average of 3,700 disruptors were recorded, but this figure rose to 4,200 in 2020. This data highlights the growing frequency and impact of disruptions faced by supply chains during this period.
Supply chain disruptions are anticipated to persist in 2023, encompassing pre-existing challenges and new factors such as:
By implementing digital transformation initiatives, it is projected that between 10% to 12% of emissions resulting from logistics activities could be reduced by 2025.
This statistic highlights the potential environmental benefits of adopting digital technologies in logistics.
Implementing quality inventory management systems brings numerous benefits to businesses of any size. Here are some key advantages:
If you want to make your inventory management strategy more effective, using a dynamic and adaptable approach is a good idea.
And these inventory management statistics can surely help you along the way.
But even experienced managers may need help creating a system that consistently achieves the highest level of productivity.
To elevate your business to new heights, consider partnering with Myos for inventory financing.
With Myos, you can meet high product demand and maintain strong customer relationships.
Our financing solutions empower you to:
When you decide on your focus, you can choose between the two options:
1. Purchase financing allows you to finance your future orders with your manufacturer, where we take care of the deposit and balance payments for you.
2. Stock financing uses your existing inventory as collateral to fuel your store growth. Take the extra capital and invest in any expansion strategy, such as marketing or new product launches.
✔️ No guarantee is required. We only use goods as collateral.
✔️ There is no credit check, business plan, or extensive paperwork.
✔️ You have complete control over repayment terms, without hidden fees or penalties.
✔️ Your supplier remains uninvolved, and your company's information remains confidential.
So, sign up today and propel your business forward with Myos as your trusted partner in growth.
Inventory management statistics provide valuable insights into the performance, trends, and challenges within the industry. They help businesses understand the impact of inventory management on various aspects, such as costs, customer satisfaction, and overall business growth.
By analyzing inventory management statistics, you can identify areas for improvement, optimize
stock levels, reduce costs, and enhance operational efficiency. These insights can inform decision-making, aid in forecasting, and enable proactive inventory management strategies.
You can use inventory management statistics to identify inefficiencies in your supply chain, such as excessive stock levels, slow-moving items, or inaccurate demand forecasting.
This data-driven approach can help you streamline processes, improve inventory accuracy, reduce stockouts, and ultimately enhance supply chain performance.