Inventory management affects the whole customer experience in many ways. Since inventory management is the process of purchasing, storing, and selling products, it can have an impact on customers. Thus, bad inventory management, like slow delivery and product unavailability, can lead to customer dissatisfaction. Let’s see what we mean by customer satisfaction and bad inventory management, as well as how one affects the other.
What Is Customer Satisfaction?
Customer satisfaction includes the amount of satisfaction a company and its products can deliver to its customers. Customers are vital for every business. Without them, a company won’t be able to succeed. Also, customers keep your products or services relevant. It’s important to constantly track customer satisfaction in order to improve customer experience as a whole. Ensure that your customers are happy, satisfied, and loyal in order for your business to grow.
What Is Bad Inventory Management?
Businesses that deal with stock need to find several ways to manage it. That’s where inventory management comes in. There are multiple ways to manage your inventory, some more effective than others. Generally, it’s a complicated process, and without proper knowledge and tools you will end up with bad inventory management. This will result later in your customers being dissatisfied.
One thing you might be doing wrong is not using inventory management software. Softwares make the process so much easier and faster and they minimize human mistakes. Additionally, they automate a lot of processes that you wouldn’t be able to do fast enough. Also, they provide you with useful data that will help you expand your business. For example, Megaventory can help you with order fulfillment, manufacturing management, invoicing, and reporting. It also provides features that are ideal for keeping check of stock levels, checking supplier availability, and ensuring the on-time return of inventory
Another thing is understocking and overstocking. Not having enough stock of demanded products as well as having too much stock of items, hurts your business in many ways. You should find and apply methods that work the best for you in order to prevent those two from happening.
Lastly, not having trained employees is another mistake. Just like with other departments, you need people that are trained on this subject. They need to know how to operate the inventory management software, have knowledge about different methods of inventory control, and have all the required skills and capabilities.
How Does It Affect Customers’ Satisfaction?
1. Late Deliveries
One of the biggest consequences of bad inventory management is delivering customers’ orders late. These days, customers expect their orders to arrive within a few days. If sending the orders takes too long, they will get frustrated. The same case applies when customers wait for their delivery on a specific day but they don’t receive it on time.
Late deliveries can happen either because the company doesn’t have enough stock or because it doesn’t fulfill orders quickly enough. In case the company doesn’t have enough stock on hand, then a lot of time will be required in order to receive the stock from the supplier. That means that your customers will have to wait a lot longer than expected which then leads to customer dissatisfaction. As for the time it takes you to fulfill the orders, you need to be quick. With newer technology and faster transportation, it shouldn’t be taking more than a couple of days to fulfill customers’ orders.
2. Incorrect Orders
Receiving orders quickly is not the only important thing. Lack of planning leads to incorrect deliveries. Incorrect deliveries can be deliveries that contain entirely or partially wrong products. In some cases, some products might be left out of the order placement. This is why the company needs to have a strong management team and maintain a planning strategy.
If a customer has been waiting for their order and they don’t receive what they were expecting, they will be disappointed. Make sure when fulfilling orders to double-check that you are sending the correct items. Also, ensure that everything is properly organized. If you have similar items, you need a characteristic to differentiate them. That’s why using SKUs and other identification numbers is very important.
3. Damaged Items
One of the risks of inventory management is having damaged goods. Many times, damages happen due to poor inventory management. The way to deal with damaged items is usually to throw them away. Sometimes though, you might not notice your products aren’t in the condition they are supposed to be. Therefore you might ship it out to a customer. This will result in the customer receiving a broken product, thus also feeling disappointed and most likely frustrated. A way to deal with damages is to do frequent checks. Additionally, you can quickly check out the items before shipping them out.
4. Out-of-Stock Items
Imagine visiting a new online store. You navigate in the store and select one item of your preference and then you notice it’s out of stock. What would you do? Probably you would decide to leave the site because of the unavailability of the item.
Out-of-Stock items scenario happens when you are understocked. Just like overstocking is not good for your business, understocking also causes damage. A mistake you might be doing is not keeping a minimum stock for items. Having minimum stock means that when you reach that number on a specific item, you need to place an order with your supplier. Additionally, not keeping the right track of your inventory will also result in out-of-stock items. It’s very important to check often how much stock you have and if there is a need to order more. If you don’t do those things, your customers won’t be satisfied and you might lose them.
5. Lack of Your Best Selling Items
Along with out-of-stock items, customers don’t want to see only items on your website that are unappealing. Bad inventory management can lead to having the most popular items sold out and the least ones always available. When a customer visits your store for specific items that have high demand, you need to make sure to have those items in stock. Trying to sell products that no one wants will frustrate your customers. Also, it will hurt your business and increase your costs because you are keeping items that you might never sell.
That’s why you need to keep up with the demand and do frequent checks and orders. When you see popular items that are close to selling out, order more. Don’t wait until they are out of stock. Also, if you have products that don’t have any demand at all, get rid of them. Especially when it has been a long time since you had them.
6. Price Increase
As stated above, if you keep items that don’t have any demand, the number of your business costs will increase. That happens because you are storing inventory that might never get sold. Your inventory is stored somewhere, usually a warehouse, and therefore your inventory holding costs increase when you have too much stock. The same case applies to inventory carrying costs when you have unsold stock value lying in the warehouse.
When your costs increase, you also have to raise the price of the products to break even. And if you don’t fix that problem, you will have to continuously increase the price. Therefore, you will lose your existing customers and you won’t be able to attract new ones. That’s why it’s important to keep up with the demand and discard stock that will never sell.
7. Complex Return Process
Another thing customers don’t enjoy is the complex return process. Sometimes customers might not be sure about their purchases or the products just don’t meet their standards. That’s when they decide whether to go through the return process or not. If you offer a complicated process, customers not only might get discouraged from returning but also from buying in the first place.
Returning products is already not an easy process and customers try to avoid it. But sometimes it has to be done and bad inventory management will complicate it even more. This will lead to your customers being even more disappointed. That’s why you need to offer an easy return process that will not frustrate you or your customers
In a nutshell, if you have poor inventory management, your customers will be disappointed. Usually, you might not deliver orders at the right time. You also might deliver the wrong orders or even damaged items. Additionally, you won’t attract customers when you have many out-of-stock items or ones that don’t have a demand. Customers also don’t enjoy it when you raise prices or when the return process is complex. Different tools, methods, and techniques of inventory management will prevent all of the above to happen.
Klaudia Brudnowska is a Digital Marketer at Megaventory, a company that provides cloud-based software for inventory management. She is creative, enjoys creating content, and aspires to learn about new digital marketing techniques.