How Can Inventory Management Improve Customer Experience?

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Inventory management has a pivotal role when it comes to good customer service management.

A person with convenient access to data can match the right order to the right customer, meaning, they can provide customers with precise information about stock levels.

A company holds inventory to deliver the selected items to its customers when they want it and through the platform, they choose to buy from. Therefore, the link between customer satisfaction and great customer experience is more than obvious.

Keep reading if you would like to know the exact role of inventory management and how it can boost customer experience.

And if you want to go into more detail, you can read about how to create a inventory management (guide by Apparelmagic) for your own business.

What is inventory management?

Inventory management refers to the way a business tracks and controls its inventory. This relates to the ways items are bought, manufactured, stored, and used.

It covers the whole flow of goods, from purchasing right through to sale. This is a way to ensure that a business always has the right quantities of the right item in the right location and at the right time.

Inventory types

There are a myriad of different inventory types and they depend on the goods you sell.

Below are some of the types you are more likely to encounter:

  • Finished goods – products sold to customers
  • Raw materials – inventory used to make finished goods
  • Work-in-progress – unfinished goods/inventory that is half-way through the manufacturing process
  • MRO goods (maintenance, repair, and operating) – inventory used to support the manufacturing process
  • Safety stock – additional inventory you keep in store to deal with supplier shortages or increases in demand

Now, let’s move on to the bond between inventory management and customer satisfaction.

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How can inventory management improve customer experience?

Rest assured that there are numerous areas of inventory management that combine to create an outstanding customer experience and even customer service.

Let’s take a look at the most prominent aspects that can help your business boost customer experience.

Order fulfillment

Customers nowadays expect quick order fulfillment times. This means that companies have less time to pick, pack, and ship items.

A fast order fulfillment revolves around effective inventory control and warehouse operations. That is, if the goal is to reduce order fulfillment time.

Therefore, warehouse and storage areas should be well-organized and inventory stock needs to be conveniently located to improve turnaround times, quicken up dispatch, and increase the speed at which customers’ orders are fulfilled.

Installing an automated inventory management system can help streamline the fulfillment process. Additionally, analytic tools help identify fast and slow-moving items.

In turn, your business can always have popular items available to instantly complete orders while reducing levels of slow-moving stock.

Preventing stock-outs

One of the most expensive scenarios a business can go through is when a shopper buys a product and finds out later that it is no longer in stock. Not only does the business have to process a refund, but they usually suffer negative reviews and possible suspension on the marketplace.

That is not only a customer experience killer but a huge blow to your reputation. The constant tension between having too much inventory and carrying too little inventory is a proper headache for many companies out there.

So, when you overstock, you have the risk of paying more in storage fees and you tie up capital that could be better spent on marketing your business. When you have too little stock, you run the risk of stockouts and dissatisfied customers.

And that is why you need a good inventory management system.


Inventory management helps a business maintain customer satisfaction when it comes to product returns.

When a product is returned because it is damaged or dead once it arrives, and it is still under warranty, it is possible to arrange with the manufacturer to do an instant swap of the product to keep the customer satisfied.

But if you are the manufacturer, then you should maintain extra inventory levels that mirror your return rates to help maintain customer satisfaction.

Hence, efficient inventory management can also do wonders for your business when it comes to the returns and how you deal with them.


A business with a well-designed inventory management system that works smoothly is always capable of reducing the amount of time that products sit on the shelves.

When your business does not have extra inventory for extended periods of time, the inventory costs get lowered. This is saved money that can be extended to customers in the form of better (lower) prices.

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Inventory management strategies

Lastly, let’s take a look at some proven strategies that can help you optimize inventory management.

Inventory management tools

Fortunately, there are numerous tools and systems available today that can really help you optimize your inventory management. Various tools automate inventory management processes and minimize the need for manual intervention.

The right tools can bring accuracy into the process and prevent issues that happen due to human error. Also, they help manage inventory across certain channels like physical stores, online stores, and mobile apps.

Product segmentation

It pays off to take a detailed look into your inventory to segment products according to their characteristics like market appeal, profitability, and supply-versus-demand pattern. Based on this segmentation, you can understand the rate at which a depleting inventory is replenished.

This helps in maximizing profits and minimizing operational costs on less profitable products. The more parameters a company uses to classify its products, the more refined and profitable its inventory management becomes.

Data analytics

Data analytics is picking up the pace when it comes to optimizing inventory management. It helps companies to look at inventory from an organizational level instead of a branch level.

Using real-time data to predict market demand can help companies to scale their inventory up or down on time, resulting in profits and cost benefits. Inventory managers can utilize the unique insight gathered from data analytics to move or reallocate inventory and take advantage of market opportunities.

Final thoughts

Remember, inventory management is one of the most critical functions of an eCommerce business. Having an effective inventory management system can help a business react quickly to market demands and also bring in considerable cost reduction through optimal stock holding.

Do not manage the inventory so poorly that it leads to lost sales opportunities or a huge backlog of unsold items that you have no clue what to do with. Instead, do everything to optimize your inventory management system and you can start by implementing the tips listed above.

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