How To Ensure A Balance Between Inventory And Sales?

3 min readUpdated May 23, 2025Aug 1, 20225:18 PM

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With the recession taking place, many businesses that deal with physical products are considering overstocking the items to cut higher costs in the future. However, blindly overstocking the products can expose the businesses to the changes and further mercy of the consumer behaviour. Therefore, inventory management is a crucial part of businesses right now. There is a need to maintain a perfect balance between inventory and sales.

With inventory management, the business can increase and improve customer service, cash flow cycle, resource capacity utilisation and supply chain efficiency. Furthermore, it reduces working capital requirements and inventory loss. Listed below are few tips for proper inventory management.

Anticipating Customer Demand Is Essential

Consumer demand is dynamic; it keeps changing according to the economic condition. Even though it might seem a good idea to overstock the items and ship them through Ninja Van and other prominent shipping services like Shopee Xpress, it is essential first to ensure that there will be consumer demand. Overstocking inventory can put the business at risk as the inventory value has a chance to drop, and the business will be forced to push out the stock at heavy discounts.

Sales forecast plays a vital role in inventory management. It is essential to conduct thorough market research and collect all the necessary data to check whether the sales will be high or low. It is only through this information that it is possible to create the perfect inventory balance.

Identify The Risk Inventory And Get Rid Of It

Even though inventory acts like a shock absorber, it is critical to identify the risk inventory and eliminate it for its proper functioning. Identifying the risk inventory enables the business to reduce the cost of inventory management. Dead and obsolete inventory should be removed to ensure that the businesses have more cash on hand.

Alignment Between Sales And Stock

When you keep the sales and stock levels in alignment, it is possible to ensure that you do not undertake or overstock the inventory. Keep real-time stock level data and adjust it whenever a transaction happens. There are plenty of tools out there that provide good recommendations about the items that need restocking. Further, keep the past trend in check to predict what you can consider in the future by considering the necessary variables.

“It is essential to conduct thorough market research and collect all the necessary data to check whether the sales will be high or low.”

Analyse Supplier Performance

A reliable supplier makes it easy to take care of the stock whenever it is required. On the other hand, an unreliable supplier can create plenty of problems. Keep the supplier’s performance in check and ensure that they are reliable. Further, the businesses should switch if the supplier is unreliable. Not only a reliable supplier is vital, but it is also essential to ensure that it provides the stock at competitive pricing.

Keep 80/20 Inventory Rule In Mind

The items that fetch the most money for a business should always stay in stock. In business, 80% of the company’s profits come from 20% of the stock. A business should identify this 20% of the stock and prioritise them in the inventory. Further, a complete understanding of the sales lifecycle of these items is important. Developing this understanding is possible when these products are closely monitored.

Track Sales And Understand The Pattern

During tough times, like the current recession, tracking sales daily is essential. Further, not only tracking the sales is important, but it is also crucial to understand the underlying pattern of the sales too. Analysing the sales data will shed light on the bestselling products and, further, identify the seasonal trend too. It will give the business the understanding that is required to restock the inventory at the right amount.

Inventory management might look tough, but it is not always tough with the right analysis and understanding. Keeping a tab on the inventory-to-sales ratio is vital to ensure that the inventory management is doing okay. Most of the time, the amount of inventory that needs to be kept is guesswork. However, it is possible to make intelligent guesswork with the right tool.

During the recession, taking inventory management seriously is extremely important. The items should neither be overstock nor understock. With proper planning, analysis and work, it is possible to engage in efficient inventory management that can ensure business profit even during tough times.

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Questions & Answers

What potential risks do businesses face if they decide to overstock items during a recession?

Blindly overstocking products can expose businesses to changing consumer behaviour, risking a drop in inventory value. This might force the business to sell stock at heavy discounts to move it.

How can identifying and removing 'risk inventory' benefit a business?

Identifying and eliminating risk inventory, such as dead or obsolete stock, can help reduce the cost of inventory management. This action ensures businesses have more cash on hand for other operations.

Which inventory items should a business prioritise to keep in stock, according to the article?

Businesses should prioritise the 20% of their stock that generates 80% of their profits. A full understanding of the sales lifecycle for these high-value items is crucial for proper inventory management.

What is the importance of real-time data in effective inventory management?

Keeping real-time stock level data and adjusting it after every transaction is crucial. This helps ensure that stock levels are aligned with sales, preventing both overstocking and understocking of items.

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