My 6 Expert Tips for Managing Pipeline Inventory to Meet Customer Demand

Ali Shah - Writer for Egnition
By Ali Shah
Head and shoulders photo of Michelle Meyer
Edited by Michelle Meyer

Updated July 21, 2023.

A professional standing in a warehouse, holding a tablet, with his other hand placed on his hip.

Inventory management is an essential aspect of any business. What you might not realize is that inventory management isn't limited to managing only the stock currently present in your warehouse; it also extends to pipeline inventory.

Pipeline inventory refers to stocks that are in transit between locations and have not been purchased by a consumer.

Remember, regardless of the lead time and demand rate, once the payment is made to a supplier, the product becomes your inventory.

1. Keep Track of Each Step of the Process

I usually start by tracking where my pipeline inventory is in the supply chain, and I make sure I know how much time the manufacturing and transiting stages will take. This includes considering what aspects of my surroundings can lead to disruptions such as crises, accidents, disasters, or pandemics.

Accuracy is vital, so I like to create a single source of truth across multiple suppliers and freight forwarders. I use a host of different tools, including spreadsheets and real-time scanning technologies via barcodes, stock-keeping units, and smart devices.

2. Ensure Accurate Demand Forecasting

Demand forecasting means I need to know how much a product will be in demand in the future so that I can align my stock according to that demand. Like with the previous step, accuracy is key because I don't want to be overstocked or understocked. I find that going through all the seller reports I get from my e-commerce platform helps with this.

There are a number of factors that can influence customer demand for a product or service. Some of them are:

  • Pricing: High prices tend to decrease demand, whereas low prices lead to high demand.
  • Quality: Customers are more likely to demand a product or service that is highly qualified.
  • Features: Customers tend to demand a product with certain features such as ease of use, durability, and so on.
  • Competition: Lack of competition can lead to high demand.
  • Brand reputation: Consumers are more likely to buy from a brand they trust and perceive as reliable.

» Haven't done inventory forecasting before? Here's how

3. Consider Placing Safety Stock

Safety stock is an essential aspect of a business. It means that I set aside a certain amount of stock so that I can keep meeting customer demand if any mishap occurs at any point in the supply chain.

So, safety stock serves as backup inventory and is invulnerable to the risk of losing customers and production slowdowns, which can happen because of transit or manufacturing issues.

4. Implement Third-Party Integrations

Integrating third-party apps with my pipeline inventory management system helps enhance the functionality and capabilities of my system. Useful apps like Katana (manufacturing) and Ordoro (inventory management) can help a pipeline inventory management system access and utilize additional data, automate certain processes, and improve the overall efficiency and effectiveness of managing pipeline inventory.

5. Establish a Real-Time Inventory Management System

Establishing a real-time inventory management system with the help of software like Cogsy, Zoho, NetSuite, or Fishbowl allows me to improve real-time visibility and control over inventory levels so I can optimize my operations and make better, more informed decisions.

6. Automate Your Inventory Management Process

Finally, my last tip is to automate inventory management processes where you can. Stop performing tasks manually, like drawing up stock reports. The right software will automatically provide these, thereby streamlining your reordering process. In some cases, you'll even be able to auto-replenish your stock and keep a certain amount of inventory on hand at all times.

Automated processes can also help you forecast sales and lead times. This means that pipeline stock can be adjusted on the fly, automatically ensuring you can meet all of your customers' future orders.

» Explore these best inventory management systems

The Verdict

Almost all e-commerce retailers must deal with pipeline inventory and overall inventory issues in the supply chain. I suggest starting by identifying and qualifying pipeline inventory before you move on to balance your cash flow and supply. You don't want to undersell or sit without stock. By effectively managing your pipeline inventory, you'll be more than capable of dealing with changing customer demand and thereby monitoring the impact this has on your profitability.

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