Maintaining correct inventory levels is a constant challenge for eCommerce businesses. Modern automated inventory operations, like artificial intelligence (AI) forecasting and tracking tools, can help ensure you keep up with customer demand without wasting valuable warehouse space on outdated items.
In this guide, you’ll learn how automated inventory management systems work and why they’re so important for eCommerce businesses. You’ll also learn how the right third-party logistics partner can help you implement an effective automation strategy.
Table of Contents
- Why Should eCommerce Businesses Automate Their Inventory?
- Key Features of Automated Inventory Systems for eCommerce
- How Do You Implement Automated Inventory Operations?
- What Role Do 3PL Partners Play in Inventory Automation?
- Building Value With Automated Inventory Management
Why Should eCommerce Businesses Automate Their Inventory?
eCommerce businesses should automate inventory management to streamline workflows and maintain a competitive advantage in the marketplace.
Automated inventory management is an umbrella term that refers to all the automated tools, like robotics and IoT sensors, that increase efficiency in inventory management. These tools reduce costs, slash labor hours, and minimize the need for re-work. They also improve key planning processes.
The most important inventory management software, AI-powered forecasting tools, help companies optimize their stock levels in response to shifting customer demand. Here are the key factors driving companies to automate their inventories.
Reduce Human Error and Stock Discrepancies
Manual data entry and inventory tracking can easily result in errors, especially when employees are overworked or tired. Even seemingly minor data entry mistakes can lead to overselling, potentially forcing your business to cancel customer orders because a manual error created a false report of available stock levels.
Automating your inventory operations protects you from the consequences of human error and ensures far greater accuracy in stock counts. Tools like barcode scanners and RFID tags allow for automated tracking of products and stock levels, so you know exactly how much inventory you have remaining. Automated inventory management software tracks stock levels and orders more products when you start to run low.
If you are managing more than one facility, you can locate items across your worksites and offer the fastest possible delivery. Inventory tracking software enables real-time stock updates across multiple warehouses, while integrations with sales tools mean you can forecast customer demand and plan your inventory accordingly.
Improve Order Fulfillment Speed and Efficiency
Automated inventory systems re-order whenever stock levels get low, so you’re never caught off guard by a sudden demand. A good inventory management system reduces the time from order placement to shipment. That means there’s no more idle time between when the customer places an order and your team gets the request. Plus, you can automate processes like verifying orders and printing shipping labels for a drastic reduction in time. Automated order management streamlines the order processing workflow, reducing manual errors and improving efficiency.
The result is much greater customer satisfaction, thanks to reliable stock availability and faster fulfillment. Automation reduces repetitive tasks, allowing teams to focus on higher-value activities and helping to streamline operations for improved efficiency.
Lower Operating Costs
Automated inventory operations reduce the labor costs associated with manual inventory counts. Instead of keeping your team up all night counting your items, you can use sensors and digital shelving units to track stock levels continuously.
Data-driven inventory tools also drive better forecasting, so you can make better estimates of customer demand. This enables you to reduce the costs associated with overstocking and “dead stock,’ or items you can’t move. It also protects you from many stockout situations, so you minimize your emergency shipping expenses.
Smarter inventory management means better warehouse space utilization, which also reduces your costs. Workflows become more efficient, energy costs stay low, and travel between facilities is minimized.
Scale Your Business Without Scaling Headcount
Automated inventory processes allow you to make the best possible use of your existing workforce, so you can grow your business without needing to hire more staff. Your team will be free to focus on more complex tasks, like customer service and problem-solving, while your automated tools handle the tedious jobs like data entry.
Automation enables managers to oversee multiple warehouses from a single platform and to oversee inventory remotely. Because automated tools scale easily, you can also handle seasonal peaks efficiently.
Key Features of Automated Inventory Systems for eCommerce
The best automated inventory systems offer ease of use, intuitive controls, and customizable analytics to drive continuous improvement. Here’s what that looks like.
Real-Time Inventory Tracking
Look for an inventory system that offers live visibility across all sales channels and warehouse locations.
Automated Reorder Points
Trigger purchase orders when stock reaches predetermined thresholds through automatic reordering, which reduces manual oversight and ensures timely stock replenishment. Data from warehouse sensors and sales platforms provides real-time stock counts, enabling automated inventory management solutions to monitor stock levels with real-time updates and alerts, and optimize ordering processes automatically.
Multi-Channel Synchronization
Integrate with Shopify, Amazon, WooCommerce, eBay, and other platforms for faster order fulfillment and increased data-driven insights.
Barcode and SKU Management
Streamline product identification and tracking with barcodes, RFID tags, and SKU management, so you can always pinpoint your inventory’s exact location.
Demand Forecasting
Use historical data, sales data, and algorithms to analyze seasonal trends and forecast demand, predicting future inventory needs and preventing deadstocking and overstocking.
AI-driven demand forecasting analyzes historical sales and external factors to accurately predict future stock needs, helping prevent both overstocking and stockouts.
Lot and Serial Number Tracking
Certain inventory items require careful monitoring. Products with expiration dates or products under warranty should be tracked individually instead of by shipment. Serial number tracking enables effective quality control and, when necessary, fast product recalls.
Reporting and Analytics
Data-driven tools allow you to keep improving your inventory management processes, with data analytics providing valuable insights for inventory optimization and better decision-making. The best automated inventory programs let you access dashboards showing inventory turnover, stock levels, and performance metrics so you can track demand over time and forecast your upcoming inventory needs. Inventory management software centralizes all inventory data and automates tasks like tracking, reporting, and reordering, ensuring real-time, accurate information across your operations.
Integration Capabilities
Connect with 3PL providers, shipping carriers, and accounting software, with seamless integration to your existing systems, so all the inventory and logistics data you need is available in one central location.
How Do You Implement Automated Inventory Operations?
Implementing an automated inventory operation is a complex process; you’ll need to carefully analyze your existing system to see what is and isn’t working, and then use your new digital automation tools to design a more effective approach. You’ll also need to train your teams and ensure that your infrastructure is scalable.
Step 1: Assess Your Current Inventory Process
Every inventory management process has its own drawbacks. Audit your system, talking to employees at each worksite, to find your most prominent pain points. At this stage, you should also identify bottlenecks in your receiving, storage, picking, and shipping procedures.
During the assessment process, you should establish a baseline to measure future progress. To do this, calculate your current error rates and inventory carrying costs; this can act as a benchmark. At the same time, determine your business requirements and growth projections so you can start to plan ahead and set goals.
Step 2: Choose the Right Inventory Management Software
Determine whether you want a cloud-based inventory management platform or an on-premise solution. Your choice will depend on your existing infrastructure, IT capabilities, financial considerations, and security needs.
Once you’ve decided, look for a platform that offers the degree of scalability you need. If your business is expanding rapidly, you likely need a platform that can grow with you.
It’s also a good idea to look for a platform that offers ease-of-use and intuitive features. Unless your employees all have strong technical backgrounds, you’ll be better off choosing tools that mimic smartphone functionality and offer plain-language interfaces.
Look for tools that integrate seamlessly with the most popular eCommerce platforms, such as Shopify and WooCommerce. You should also select a tool with 3PL integration capabilities.
Step 3: Integrate With Your Sales Channels and Fulfillment Partners
Once you’ve chosen your automated inventory tools, you need to set up integrations with your existing platform.
AMS Fulfillment offers easy API connections to eCommerce platforms and marketplaces, and 3PL integrations for seamless order flow. The integration process is fast and seamless.
Test to make sure that your data synchronizes and updates automatically across your platforms so you have a single source of truth throughout the enterprise. At this stage, you should establish clear protocols for communication between your different systems.
Step 4: Train Your Team and Optimize Workflows
Your employees need to receive proper training in the new technology. After all, even the best automated tools in the world are only as good as the people who use them.
Create a detailed plan for training your teams and ensuring that they understand the relevant workflows. If you encounter resistance, a good training program should help. People are usually willing to get on board with new technology once they understand it.
As part of the training process, create a detailed Standard Operating Procedure (SOP) and educate your staff. Create cycle counting schedules and make a plan for continuous improvement and system refinement, so you can keep improving in the years to come.
What Role Do 3PL Partners Play in Inventory Automation?
A good 3PL partner makes it easy to implement and maintain an inventory automation strategy. 3PL teams already have the right tools and expertise to automate inventory management. A good 3PL partner can help businesses manage inventory effectively by providing an automated inventory management solution that streamlines operations, offers real-time visibility, reduces manual effort, and optimizes supply chain processes. They also have the capability to offer individualized guidance for your organization.
Built-In Automation Technology
Third-party logistics providers like AMS offer their clients built-in automation technology, including artificial intelligence (AI) forecasting tools, robotics, and scanners. Instead of having to create your own infrastructure, you can simply leverage the tools your 3PL partner already has. The result is reduced capital investment in automation infrastructure.
Warehouse Management Systems
The right 3PL partner has an efficient Warehouse Management Systems, or WMS, which drive effective inventory management. WMS provides real-time visibility into stock levels, protecting you from overstocking goods. WMS supports inventory control by tracking inventory movement and optimizing stock levels, using automation technologies.
WMS keeps costs low by optimizing space and making effective use of your workforce. It also reduces manual errors and speeds up order fulfillment, improving customer satisfaction.
Delivering Scalability
Working with an experienced 3PL partner like AMS Fulfillment gives your business access to multiple warehouse locations located across the country, making it easier to serve far-flung customers as you grow. Automation tools also facilitate easy scaling. Easy integrations between your eCommerce platform and 3PL system help your business grow steadily.
In-House Automation vs. 3PL Partnership
Building automation tools in-house can be challenging and resource-intensive. Depending on your organization, this may not be the best use of your workforce’s time. If you don’t already have a large IT department, for example, it could be challenging to find and deploy the right automation tools. Even if you do have a strong IT infrastructure, you may not be able to dedicate the resources and labor hours necessary to build in-house automation.
For most organizations, it makes sense to partner with a 3PL organization. This allows you to leverage their extensive experience and infrastructure, without a major capital investment or an ongoing drain on your labor and resources.
Building Value With Automated Inventory Management
Maintaining the right inventory level is one of the most challenging aspects of running an eCommerce business. Preventing over- and understocking, warehousing goods safely, and streamlining fulfillment workflows all take time and expertise.
Automated tools make a huge difference when it comes to inventory management. Done right, these tools save time, boost efficiency, and ensure that your customers receive their goods on time. Learn how AMS Fulfillment is already helping businesses like yours streamline their inventory management and increase customer satisfaction.
FAQs
How long does it take to implement automated inventory systems?
Building an in-house automation program is a longer process than partnering with a 3PL.
If you construct an in-house automation system, the implementation process typically takes two to eight weeks for basic setups and three to six months for complex, multi-location operations. Working with a 3PL can reduce implementation time to as little as one to two weeks.
Can small eCommerce businesses benefit from inventory automation?
Yes. Even businesses with modest inventory can benefit from reduced errors, time savings, and better decision-making. Many affordable, scalable solutions are designed specifically for small to mid-sized businesses. In fact, small businesses have a lot to gain from automation, since they are often operating with lean workforces. Using automated tools instead of relying on manual labor means that your team is free to focus on more complex tasks, like building relationships with customers or solving thorny problems.
Will automated inventory systems work with my existing eCommerce platform?
Most modern inventory management systems integrate with major platforms like Shopify, WooCommerce, Magento, BigCommerce, and marketplaces like Amazon and eBay. Always verify compatibility before purchasing.
