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Optimizing Inventory Flow: A Comprehensive Guide to Understand and Implement Stock Rotation in E-commerce
Order fulfilment

Optimizing Inventory Flow: A Comprehensive Guide to Understand and Implement Stock Rotation in E-commerce

Suraj Verma
February 15, 2024
mins read


Managing a warehouse is crucial for swift ecommerce fulfilment. However, storing products for too long can lead to spoilage and diminished value, especially when they reach their expiration date. To counteract this challenge, the adoption of stock rotation becomes essential.

In this blog, we will shed light on the key role of stock rotation as a proactive solution to this challenge. We will understand its importance and discover practical strategies to ensure product freshness.

Understanding stock rotation

Stock rotation is all about organizing inventory to prevent stock loss due to expiration or obsolescence. The idea is to move products with approaching sell-by dates to the front of the shelf while those with later expiration dates are placed at the back. It's a simple yet effective way to keep things fresh and minimize waste.

This practice is particularly crucial in industries where products have a limited shelf life, such as in the food or pharmaceutical sectors. By adopting stock rotation, businesses can ensure that older items are sold first, reducing the risk of items expiring on the shelves and leading to potential financial losses.

Stock rotation brings various advantages to businesses, including:

1. Preventing Stock Loss due to Expiration

Regularly rotating stock helps prevent financial losses by ensuring that products with approaching expiration dates are sold first. This is crucial for items with limited shelf life, such as perishable goods or medicines.

2. Preventing Overstocking

Efficient stock rotation provides businesses with valuable insights into the movement of their products. This knowledge enables smarter decisions in the replenishment process, avoiding overstocking of slow-selling items and optimizing storage space.

3. Streamlining the Fulfillment Process

In an ecommerce warehouse, stock rotation involves physically organizing products based on their expiration dates. This strategic arrangement makes it easier and quicker for warehouse workers to locate and pick the right items when fulfilling orders.

Instead of spending time searching for products, they can swiftly retrieve them, significantly reducing the time it takes to process and pack orders, which helps in achieving SLAs.

Now that we have a good understanding of stock rotation let us look at the best practices for stock rotation so you can implement it efficiently.

Best stock rotation practices

Stock rotation can be really beneficial for ecommerce businesses, but it's important to implement and manage it correctly. So, here are some best practices that can help you get the most out of your stock rotations.

1. Selecting the appropriate method (FIFO, FEFO, LIFO)

Tracking inventory using FIFO, FEFO and LIFO

Choosing the right stock rotation method is fundamental to ensuring an efficient inventory flow. Each method—FIFO, FEFO, and LIFO—serves different purposes, and the most suitable one depends on your business's nature, products, and objectives.

  • FIFO (First In, First Out)

This stock rotation method prioritizes the sale of the oldest inventory first. In the implementation of FIFO, new products are stored at the back of the shelf, pushing older products forward for picking and selling. Think how a bakery places freshly baked goods behind the existing stock first. This ensures customers get the freshest products while minimizing the chance of expiring inventory or outdated stock, which is especially beneficial for online retailers and businesses dealing with perishables or trendy items.  FIFO keeps your inventory moving smoothly, reducing waste and ensuring customer satisfaction – a win for any business!

  • FEFO (First Expired, First Out)

FEFO (First Expired, First Out) keeps grocery store shelves stocked with fresh products.  This method prioritizes selling items closest to expiry. Workers constantly check expiration dates, ensuring products with shorter shelf lives (like milk or yoghurt) are stored at the back and sold first.  FEFO is crucial in the food and pharmaceutical industries, preventing expired products on shelves and ensuring customer safety. It minimizes waste and financial losses, benefiting both businesses and consumers.

  • LIFO (Last In, First Out)

LIFO (Last In, First Out) prioritizes selling the newest inventory first. Unlike FIFO, the latest items received are placed at the front for quicker picking and sale. This method is ideal for warehouses dealing with fast-moving goods like bottled water or construction materials.  LIFO is also efficient for bulky items like furniture or appliances, as newer stock doesn't get buried behind older inventory.  In industries like construction or car parts, where product freshness or style trends are less of a concern, LIFO can be a practical choice for managing stock rotation.

2. Utilize Technology for Tracking

Tracking batch code using our WMS

Utilize technology solutions to optimize the stock rotation process. By implementing Warehouse Management Systems (WMS) and inventory management software, businesses can gain real-time visibility into product movement, expiration dates, and overall stock status. This not only improves accuracy but also expedites decision-making, enhancing the efficiency of stock rotation.

3. Train Warehouse Staff

Training Warehouse Staff

Achieving efficient stock rotation hinges on having a well-trained warehouse team. It is crucial to ensure that your staff comprehends the chosen stock rotation method and recognizes the significance of executing it promptly. Conducting regular training sessions can reinforce best practices, reduce errors, and enhance the overall efficiency of your inventory management.

4. Measure stock rotation's efficacy

Measuring stock rotation's efficacy

Consistently assessing the impact of stock rotation is paramount to verify the efficacy of your strategy. This allows you to determine whether adjustments are necessary and enables continuous improvement of your stock rotation strategy.

A great method to gauge the efficacy of stock rotation is by monitoring cost savings. By systematically rotating your stock, you can minimize waste and maximize return on investment (ROI) by reducing spoilage and inventory obsolescence. When implemented correctly, stock rotation has the potential to significantly boost your bottom line.

In addition to cost savings, tracking other key performance indicators (KPIs) related to inventory will also help measure the impact of stock rotation. These include:

  1. Inventory turnover ratio: A higher turnover ratio indicates efficient use of inventory and successful stock rotation.
  2. Holding costs: Efficient stock rotation should result in lower holding costs, indicating reduced expenses related to inventory storage.
  3. Stockouts: A well-executed stock rotation strategy minimizes stockouts, ensuring a continuous supply of products for customers.
  4. Stock-to-sales ratio: A balanced stock-to-sales ratio indicates effective inventory management and successful stock rotation.

By diligently evaluating the impact of stock rotation using these metrics, you can optimize your inventory management practices and drive better business outcomes.

Bottom line

Elevate your e-commerce game by mastering strategic stock rotation. It's not just about preventing waste; it's about delivering freshness to your customers and maximizing your profits.

At Eshopbox, you can find fulfilment and inventory management solutions that enable you to rotate stock and minimize dead stock with ease. From enhanced inventory visibility to express shipping, you can get better control over your inventory and how it moves across the supply chain.

Connect with our fulfilment expert today.

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