Here’s when you should – and shouldn‘t – increase your distribution center inventory:
-When to Increase Distribution Center Inventory-
There are a few key indicators that it’s time to increase your distribution center inventory:
Your transportation costs are increasing: If your transportation costs are increasing but your sales are staying steady, it could be a sign that you need to increase your inventory in order to keep up with customer demand.
You’re running out of storage space: If you’re running out of room to store your inventory, it’s definitely time to increase your distribution center inventory.
You’re missing out on sales: If you’re losing sales because you don’t have the inventory to meet customer demand, increasing your distribution center inventory is a no-brainer.
-When NOT to Increase Distribution Center Inventory-
There are also a few key times when you should NOT increase your distribution center inventory:
Your sales are decreasing: If your sales are decreasing, there’s no need to increase your inventory. In fact, you may need to decrease your inventory in order to save on storage and transportation costs.
You’re already overstocked: If you have more inventory than you can sell, you’re already overstocked. Increasing your inventory in this case would be a waste of money and could lead to even more storage and transportation costs.
You’re not sure what’s selling: If you’re not sure what products are selling and which ones are just taking up space, it’s best to hold off on increasing your inventory. You don’t want to end up with a bunch of unsold inventory taking up valuable space in your distribution center.
Increasing your distribution center inventory can save you money on transportation and storage costs, but only if it’s done at the right time. Make sure to consider your sales, your storage space, and what’s selling before making the decision to increase your inventory.