Smart moves: key inventory management strategies 

by | Mar 19, 2025 | Inventory Management, Suppliers, Supply Chain

In today’s fast-paced marketplaces, customers expect to get the products they want, when and where they want them.

To successfully meet demand, suppliers need effective strategies to keep and move inventory quickly as well as modern technology that maximizes supply chain efficiency.

Is your inventory management up to speed?

Effective inventory management ensures that the right products are available at the right time and in the right quantities. For suppliers, this reduces carrying costs, minimizes stockouts and improves customer satisfaction.

But if you’re not keeping up with demand, you’re risking both profit and relationships. Consider the following strategies to practice better inventory management.

Decentralize your inventory

A key tactic for strategic inventory warehousing is decentralizing inventory. Instead of storing all inventory in one central warehouse, a decentralized approach spreads it across various locations, often based on geographic distribution of customers.

Decentralization is especially helpful for:

  • Companies with a large geographic footprint: Businesses operating across a wide area with diverse customer bases can have inventory distributed across regions.
  • eCommerce retailers with multiple fulfillment centers: Online retailers can deliver products from warehouses closest to the customer’s location.

The benefits to suppliers include:

  • Reduced lead times and faster delivery: When stock is closer to customers, businesses can fulfill orders quickly and manage high demand in specific areas.
  • Improved service levels: Closer proximity to customers enables suppliers to respond more quickly to demand fluctuations and avoid stockouts.
  • Risk mitigation: Supply chain disruption effects are reduced—if one location is disrupted, other locations can still fulfill orders, minimizing impact on overall sales.
  • Enhanced flexibility: Decentralized inventory allows suppliers to adapt to regional demand variations and customize inventory levels based on local preferences.

Use micro fulfillment centers

Another warehousing strategy to consider is the use of micro fulfillment centers (MFCs).

A MFC is a small, automated warehouse that stores and ships online orders. MFCs are often located near customers to reduce delivery times and costs.

The benefits of MFCs for suppliers include:

  • Proximity to customers: Strategically locating near urban centers reduces delivery distance and time, enabling faster order fulfillment and delivery.
  • Automation: Using technologies such as robotic picking and conveyor belt systems streamlines order processing, reduces labor costs and increases order accuracy.
  • Scalability: MFCs can be scaled up or down based on demand. During peak seasons, additional MFCs can be activated to handle increased order volumes.
  • Cost efficiency: Reducing the need for large, centralized warehouses and long-distance transportation can lower overall supply chain costs.

Maximize inventory delivery

Today’s consumers expect fast and reliable delivery with every product purchase. Key strategies for suppliers to enhance delivery speed include:

  • Efficient warehousing: Ensure warehouses are well-organized and equipped with technology to streamline the picking, packing and shipping processes, including a fulfillment solution that upgrades manual EDI processes.
  • Advanced logistics: Use advanced logistics solutions, such as route optimization software and transportation management systems (TMS), to help optimize delivery routes, reduce fuel consumption and minimize delivery times.
  • 3PL collaboration: Partner with third-party logistics (3PL) provider for expertise, infrastructure and resources that can help suppliers meet delivery expectations.
  • Last-mile delivery innovations: Consider innovations such as drones, autonomous vehicles and crowd-sourced delivery services to improve last-mile delivery efficiency.

Optimize efficiency with technology

Using technology that provides real-time information enables suppliers to make informed inventory decisions. Solutions to consider include:

  • Demand forecasting: An analytics solution enables accurate demand forecasting to allow suppliers to predict future sales and adjust inventory levels accordingly.
  • Real-time inventory tracking: Technologies like RFID and IoT sensors can improve inventory visibility and accuracy and provide up-to-date information on stock levels.
  • Automated replenishment: Replenishment systems trigger orders when inventory levels fall below a set threshold to ensure continuous supply and reduce stockouts.
  • Inventory optimization: Techniques such as ABC analysis and just-in-time (JIT) inventory prioritize high-demand products and reduce excess inventory, while centralized fulfillment operations give better visibility into demand.

Best practices and better technology keep your inventory on the move

When you take stock of your current inventory management strategies, embrace new tactics and integrate key technology, you can improve your supply chain efficiency to meet customer demands and maximize your sales and profits.

SPS Commerce is ready to support you with the tools and expertise needed to simplify your day-to-day operations, unleash the power of data insights and grow your business.

To learn more about how to improve your business processes and drive your business success, contact us to begin the process.

Lindsey Merchant
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