Marie Kondo went viral a few years ago when she introduced the KonMari concept of organising things and how to not be overloaded with unneccessary items which could lead to unhappiness. At home, we could ask ourselves just like how Marie Kondo taught us, “Does this spark joy?”
The same principle could be applied at your print shop. Unnecessary items will lead to unneccessary burdens that could be extremely costly and will cost your business a lot of money.
That is where inventory management comes to play. In both eCommerce and brick-and-mortar retail environments, inventory management covers the core practices that keep the lights on, and the doors open for business.
What is Inventory Management?
Inventory management is an umbrella term covering all the practices and processes that impact your inventory. Starting from all activities and processes affecting your inventory, initial supplier orders or raw materials for manufacturing to the handling, storage, and utilization of inventory for fulfilling customer orders. It also includes restocking procedures and safeguarding stored goods from damage.
For apparel business owners, mastering this aspect can be the difference between thriving and merely surviving in the industry.
Ameeka’s Print Shop Inventory Study
Let’s take Ameeka’s Print Shop as a hypothetical subject for us to analyse the importance of inventory management in an apparel printing shop.
Ameeka’s Print Shop is a screen printing business, that also provides embroidery services. This print shop often supplies various event wear to the schools nearby.
For example, during summer, Ameeka’s Print Shop will be overwhelmed with orders for marathons, back-to-school occassions, and also field trips.
What would happen should Ameeka and her print shop not take inventory management into serious consideration? It could go one or two ways. Let’s deep dive into this.
Scenario 1: Ameeka’s Print Shop without Proper Inventory Management
On the other hand, now that she knows that orders will be coming in summer, Ameeka’s Print Shop could ensure optimum stock levels during this time and capitalise on peak seasons without overstocking. Even in the event that overstocking happens, Ameeka’s Print Shop is at an advantage, as she could discard excess inventory during school holiday seasons and offer off season sales.
When Ameeka’s Print Shop does effective inventory management, this would lead to quicker inventory turnover, resulting in steady cash flow crucial for the business’ smooth operation.
Scenario 2: Ameeka’s Print Shop with proper inventory management
- When your shop performs and delivers well, this will lead to a potentially 20% increase in repeat customers. This could result in an additional $20,000 in revenue for a shop with an annual revenue of $100,000
- As opposed to a possible 15% flop if there are frequent stockouts which then leads to delayed orders. This could result in a loss of $15,000 based on annual revenue of $100,000.
| Annual costs (/$100k annual revenue) | Good Inventory Management | Bad Inventory Management |
|---|---|---|
| Additional costs and wastage | ~$150/order | ~$2250/order |
| Customer retention | +20% | -15% |
| Annual revenue according to customer retention | +$20,000 | -$15,000 |
| Supplies bulk purchase | Save up to $5,000 | Spend more than needed |
| Emergency purchases | Save up to $3,000 (no rush orders at premium prices) | 25% higher cost, additional $6,250 |
| Labor costs | Optimum staff productivity will not cost your print shop a thing, might even increase revenue annually by 5% = $5,000 gain | 10% decrease in staff productivity = a loss of efficiency = approximately $10,000 loss |
| TOTAL | ~+$37500 | ~-$41,250 |
With good inventory management skills, Ameeka’s Print Shop attracts new customers and also could retain loyal ones, as they know that this print shop is reliable with stock availability, up to date with apparel trends, and due to the cost savings that they are able to pass on to the customers, Ameeka’s Print Shop is able to offer most competitive prices among other print shops.
Of course, these numbers are just estimates on how much inventory management can make or break a business. But these two scenarios showcase how effective inventory management can significantly boost profitability, while poor management can lead to substantial losses in a print shop’s operations.
Common inventory management steps
Each business may have its own unique process to manage inventory, but some common steps can be beneficial to understand. Here are some of the typical steps in the inventory management process:
The steps to inventory management may vary and be different specificied to your print shop, however what remains constant is that it could mostly be centered around data and trends.
Enhance demand forecasting
This goes to show that as a print shop owner, you will need inventory data to predict future product needs better, especially to curate seasonal sales spikes, promotions, and even annual sales events.
- Inventory data helps in identifying what sells well and what does not, facilitating informed decisions about future stock purchases and design directions.
- As a simple example, toys will most likely sell most during Christmas sales, so toy companies will need to manage their inventory accordingly during the holiday season.
Inventory management challenges
Inventory management is not all sunshine and rainbows. There are some significant challenges that you’ll face when it comes to trying to manage and sell these goods. The mix you’ll face will depend on your software and capabilities, team size, and customers.
Back at Ameeka’s Print Shop, when the business was small and only doing regular manual checks, it was sufficient as orders were palpable, but how long could this print shop sustain a manual system as the business grew exponentially?
- Accurate inventory counts can be time-consuming, requiring ongoing manual checks even with automation to ensure software accuracy.
- Consumer habits can shift quickly, impacting forecasting. If the pandemic taught us anything, it’s that the world can change in an instant.
- Space constraints can become an issue as businesses grow, necessitating reinvestment of savings.
Eventually, as the print shop grew, so did their inventory. This is when thinking about proper softwares to streamline their work process came into consideration.
How the right software can help with your inventory
Target, a well loved company that everybody in the US will know, had trouble moving products from its gigantic distribution centers onto shelves when they expanded to Canada in 2013. Target outlets in Canada were poorly stocked. It was not long before Target figured out the underlying cause of the breakdown: The data contained within the company’s supply chain software, which governs the movement of inventory, was riddled with flaws. The checkout system was glitchy and didn’t process transactions properly. Worse, the technology managing inventory and sales were new to the organization; no one seemed to fully understand how it worked.
Inventory management, though largely unseen by customers, is critical. When done right, it ensures timely, accurate deliveries, leading to fewer returns and less transit damage. Accurate inventory tracking improves product availability, enhancing customer satisfaction. Customers won’t even think about all the inventory control processes you’ve got in place. But, they will feel it.
- Upon time, you will need to level up your print shop’s game. No more stockouts! With YoPrint, you could track, record, and update inventory in one consolidated platform, tightly connected to the workflow of your print shop.
- Get rid of spreadsheets, and adjust stocks in real time. You can even monitor your stocks across various locations. Your staff will thank you for having such a handy system that would ease inventory management in a heartbeat.
- Know exactly how much to order, as YoPrint has a handy reorder column that tells you exactly how many items you need to order to make sure customer orders are fulfilled on time.
You could book a demo to try YoPrint for your print shop anytime.
Long story short, inventory management is an essential and crucial part of your print shop’s operational health, big or small. The better you control and manage inventory, the better experience you can create for your staff and customers. Build loyalty and enhance engagement with the two most important stakeholders of your company, and stand out among your competitors.
