Multisite Inventory Management: A Quick Guide to Costs and Benefits

What is multisite inventory management?

Multisite inventory management refers to the process of tracking and managing inventory across multiple locations.

Businesses that operate in multiple warehouses, distribution centers, retail stores, or ecommerce businesses can use a multisite inventory management approach to ensure they always know how much inventory is in stock and where it is.

Multisite inventory management helps ensure efficient inventory utilization, reduce carrying costs, improve customer service, and maintain optimal stock levels at each location.

Managing inventory at different warehouses or retail locations can be daunting. But there are significant benefits to implementing this strategy if you have the right tools and systems in place. 

Benefits of multisite inventory management

Multisite inventory management can help businesses reduce waste, allocate inventory more effectively, and meet demand — leading to more satisfied customers.

With this approach, retailers can clearly view inventory levels across locations. This view empowers your team to make better decisions around inventory allocation and stock replenishment.

In turn, multisite inventory management can help reduce costs. It can also show where to move inventory to prevent stockouts in high-demand locations and reduce excess inventory in low-demand locations. Many tools also offer demand forecasting to anticipate inventory needs at each site.

And multisite inventory management can help you to improve customer service by ensuring that customers can always get the products they need. Reduce wait times and delivery times for your most popular products by always knowing what you have on hand and updating your ecommerce site accordingly. 

Does your business need multisite inventory management?

If your business operates in multiple warehouses, distribution centers, or retail stores, it could be time to adopt a multisite inventory management workflow. In general, most growing sellers will benefit from a multisite approach to inventory management.

Experts suggest those who need to fill cross-warehouse communication gaps or transfer stock need additional oversight or risk disaster.

A dedicated multi-location inventory management system will allow your operations to consolidate all inventory data into a single, streamlined solution, making life easier and helping your business grow its profit.

If you’re not sure your business is ready for multisite inventory management, answer the following questions:

• Do you have a diverse customer base? If your customers are located across regions or countries, their demands may vary, requiring different stocking strategies at different locations to meet their needs.
• Does your demand fluctuate? If your business experiences fluctuating or seasonal demand patterns, multisite inventory management can help you effectively manage inventory levels across locations to handle demand surges.
• Do you deal with frequent stockouts or overstock? Multisite inventory management can improve your inventory levels and reduce costs.
• Is your supply chain becoming more complex? Managing inventory across multiple sites becomes more challenging as your supply chain grows. Storing your inventory in one place increases your risk. But implementing a multisite inventory management system can help streamline operations.
• Is your business expanding? If you are opening locations in new regions or expanding your ecommerce operation, implementing multisite inventory management from the beginning can set you up for efficient growth.

Answering these questions can help determine whether your business is in the right position to implement multisite inventory management. 

The risks of multisite inventory management

Multisite inventory management isn’t an out-of-the-box solution for all your business needs. There’s a lot of complexity in setting up this approach. But with the right system and tools in place, it can help your business run smoothly.

Challenge 1: Communication

Effective communication and coordination between sites is crucial for successful multisite inventory management. Miscommunication or lack of coordination can lead to stockouts, overstocking, and inefficiencies.

First and foremost, growing businesses need a way to share and sync inventory data across locations accurately. Real-time data synchronization is vital for multisite inventory management.

If there are delays or inaccuracies in updating inventory information across locations, it can lead to incorrect decision-making and operational disruptions.

There’s also the potential that your inventory management systems and software across locations aren’t compatible. If you’re just starting, choose technology that integrates easily to ensure your systems work seamlessly.

Challenge 2: Cost

Multisite inventory management can be expensive to implement and maintain. Implementing your new approach could require significant investments in technology, software, training, and infrastructure. Additionally, redistributing inventory between sites can incur transportation costs.

Expect some of these costs to decrease as your system improves over time. For many businesses, striking the right balance of inventory levels across different locations can be challenging.

Uneven demand patterns, supply chain disruptions, or inaccurate demand forecasts may result in stock imbalances. But with the right analytics and reporting, you can mitigate this risk.

Challenge 3: Security

In a multisite environment, the potential for human errors increases, such as incorrect inventory counts or data or mistakes during inventory transfers. And if your team shares or accesses data across various sites, ensuring the security and privacy of sensitive information becomes crucial.

Avoid bottlenecks, errors, and security violations with training and software that automates critical inventory management workflows. 

How to implement multisite inventory management

Implementing a multisite inventory management system will look slightly different for new startups, small businesses, and midmarket growth companies.

Those with multiple locations running on different software may need to sunset their existing technology in favor of integrated systems, for instance.

Here are some strategies to consider — depending on the maturity of your business — when integrating multichannel listing and inventory management.

For new and small businesses

If you are new to multisite inventory management, start small. Implement a system in one location and then gradually expand it to other locations. Gradual adoption can ensure the system works properly before you expand it to your entire business.

Even new businesses may already be managing inventory across more than one location. Start by assessing your current inventory management processes, including stock levels, demand patterns, and distribution costs. Identify the strengths and weaknesses of your existing inventory management system and how a multisite approach that centralizes data can address any limitations.

From there, establish a central inventory control system or software that can integrate data from all channels and provide real-time visibility into inventory levels, movements, and transactions. Look for software that will grow with your business.

Provide lots of support for your staff, too. Effective training will help ensure everyone is on board and using the system to its full potential

For midmarket businesses

More mature businesses may have a tougher challenge in that there are likely to be inventory management systems already in place that you’ll need to decommission.

Start with thoroughly assessing your current inventory management processes and existing software. Identify any issues a new system could solve in your inventory management workflow.

Then choose inventory management software that brings all your locations under a central system. There are many different software solutions available for multisite inventory management. The best solution for your business will depend on your specific needs, number of locations, type of products, and budget.

Before you can implement this tool, you’ll need to gather your inventory data: including product names, quantities, and locations. Use business analytics like demand forecasting to predict future demand accurately at each site. And build a margin of safety stock levels to protect against demand variability and supply chain disruptions.

This information should sync across all of your locations. Ensure everyone has access to the same information and that orders are processed correctly. Training and support can help your team acclimate to the new system.

Finally, monitor your inventory levels regularly to ensure you have enough stock to meet demand. You may have to adjust inventory in different locations as your company grows. The right inventory management tools can help you stay on top of those changes. 

Automation tools that support multisite inventory management

There are dozens of inventory management tools available that offer multichannel listing. Here are just a few to consider.

Fishbowl Inventory

Fishbowl gives you real-time inventory visibility and control across all locations. It provides features for inventory tracking, order management, demand forecasting, and reporting for multiple locations. Plus, it’s designed to adapt as your company grows and your operational requirements change, so you can continually adapt and optimize.

Zoho Inventory

Zoho Inventory is a cloud-based tool that allows businesses to track and manage inventory across various warehouses or retail locations. Built with ecommerce businesses in mind, Zoho Inventory can integrate multiple sales channels and works with tons of add-ons (including Shopify, Amazon, and popular logistics companies).

NetSuite

NetSuite is a comprehensive cloud-based enterprise resource planning (ERP) system with multisite inventory management capabilities. It offers real-time visibility into inventory levels, demand forecasting, and supply chain optimization.