Shopify Inventory Checklist: 12 Must-Do Tasks

Running a Shopify store? Managing inventory effectively is the key to avoiding stockouts, overselling, and costly errors. Here's a quick breakdown of the 12 essential tasks to keep your inventory on track:

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• Enable Inventory Tracking: Turn on Shopify's tracking features to monitor stock levels and avoid selling unavailable items.
• Create Product Identifiers: Use SKUs and barcodes for precise tracking and faster updates.
• Organize with ABC Analysis: Prioritize products based on their revenue impact.
• Set Reorder Points & Safety Stock: Calculate when to reorder to prevent running out or overstocking.
• Use Alerts & Automation: Automate low-stock alerts and purchase orders for efficiency.
• Forecast Demand: Analyze past sales to predict future trends and plan purchases.
• Conduct Stock Audits: Perform regular cycle counts and full audits to ensure accuracy.
• Track Purchase Orders: Maintain detailed records of orders to avoid errors and delays.
• Monitor KPIs: Keep an eye on metrics like turnover rate, stockout rate, and shrinkage.
• Document SOPs: Standardize procedures for consistency and train your team.

Advanced Shopify Inventory Management Tutorial - not so obvious things about running Shopify

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1. Set Up Inventory Tracking in Shopify

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Keeping track of your inventory in Shopify is crucial for managing stock levels, avoiding overselling, and making informed purchasing decisions.

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Enable inventory tracking for products

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Shopify doesn’t automatically track inventory for all products - you’ll need to turn this feature on manually. Doing so ensures accurate stock counts and prevents the hassle of selling items that aren’t available.

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To get started, log in to your Shopify Admin and go to Products. Select the product you want to track, and if it has variants (like sizes or colors), choose the specific variant. In the Inventory section, check the box labeled Track quantity.

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Once enabled, Shopify will automatically adjust inventory levels. For instance:

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• When a customer places an order, the system deducts the purchased quantity from your stock.
• Returns add items back into your inventory.
• Manual adjustments are recorded for complete transparency.

Pro tip: For products with multiple variants (like a t-shirt available in small, medium, and large), make sure to enable tracking for each variant individually.

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Shopify organizes inventory into the following categories:

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• Available: Items ready for sale.
• Committed: Items included in unshipped orders.
• Unavailable: Items that are damaged or set aside.
• On hand: The total inventory across all categories.

You can also review Shopify’s inventory history to monitor past changes and ensure your records are accurate.

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Understand Shopify's 90-day inventory history

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Shopify keeps a record of inventory changes for up to 180 days ^[1][2].

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To access this history, go to Products in your Shopify Admin, click on the product, and select a variant if necessary. In the Inventory section, click Adjustment history. Keep in mind, you’ll need to check each variant’s history individually, as there’s no option to view all variants at once.

The adjustment history provides details like:

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• Date: When the change occurred.
• Activity type: Examples include Correction, Count, or Damage.
• User: The person who made the change.
• Change amount: Shows the quantity added or removed and the updated total. For example, "(+5) 25" means 5 units were added, bringing the total to 25.

When making manual adjustments, Shopify allows you to select from preset reasons, such as Correction (default), Count (used after physical stock counts), or Damage.

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This historical data is a powerful tool for identifying patterns and resolving discrepancies. If your inventory levels don’t match your physical count, the adjustment history can help pinpoint where the issue started. It’s also helpful for spotting seasonal trends and figuring out which products sell the fastest during specific times of the year.

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2. Create Product Identifiers and Barcodes

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Accurate product identification is a must for smooth inventory management. Without unique identifiers and barcodes, it’s easy to lose track of stock or mishandle orders.

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Create Consistent SKUs for All Products

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Stock Keeping Units (SKUs) are unique codes that make it easier to monitor inventory, analyze sales, and manage product variations. Each product, including its variants, needs its own distinct SKU to avoid confusion and ensure precise tracking.

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Shopify doesn’t automatically generate SKUs, so you’ll need to create them manually or use third-party tools. To do this in Shopify Admin, navigate to the Products section. Find the SKU field under Inventory (or Variants) for each product and input your unique code. For larger inventories, you can speed things up by using the bulk editor or importing SKUs via a CSV file. Shopify supports up to 100,000 SKUs per store, giving you plenty of room to organize.

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When designing your SKU system, follow these tips:

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• Keep it short and simple. Use 4–8 characters for smaller catalogs or up to 16 for larger ones.
• Use numbers or a mix of numbers and letters. Avoid characters like "0" and "1", which can be easily misread.
• Skip special characters and spaces. Stick with dashes (-) or underscores (_) to separate product details.
• Make it team-friendly. Use abbreviations and a structure that’s easy for everyone to understand.
• Ensure uniqueness. Duplicate SKUs can disrupt inventory tracking and integration processes.

Once you’ve set up your SKUs, the next step is to integrate barcode scanning to make inventory updates faster and more accurate.

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Add Barcode Scanning

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With unique SKUs ready, barcode scanning takes inventory management to the next level by automating data entry and improving accuracy. Scanning barcodes allows you to quickly input product details, reducing manual errors.

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Shopify supports barcode functionality, letting you add barcode numbers to your products in the Inventory section of your Shopify admin. If your products already have manufacturer barcodes, like UPC codes, you can use those. If not, you can generate your own internal barcodes for better control. Several Shopify apps are available to help you automatically create and print barcodes for your inventory.

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Using barcode scanning simplifies tasks like receiving shipments, conducting cycle counts, performing audits, and fulfilling orders. Investing in barcode scanners and labels can save time and boost efficiency, making it a smart move for any growing business.

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3. Organize Inventory with ABC Analysis

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Once you’ve established solid tracking and identification systems, ABC analysis can take your inventory management to the next level. This method helps you prioritize by focusing on the products that have the biggest impact on your revenue. After all, not every item in your inventory deserves the same level of attention.

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Sort Inventory into A, B, and C Categories

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ABC analysis divides your inventory into three groups based on their contribution to revenue:

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• Category A: These are your top performers - around 20% of your products that generate 70–80% of your revenue.
• Category B: This group includes roughly 30% of your items, contributing 15–25% of revenue.
• Category C: The remaining 50% of your inventory, which only accounts for about 5–10% of revenue.

To start, export your sales data from Shopify’s Analytics section. Look at the last 12 months of sales to get a clear picture. Calculate each product’s revenue by multiplying units sold by the price, then rank the products from highest to lowest revenue.

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Don’t stop at revenue alone - profit margins matter too. A product priced at $100 with a $10 margin might not be as valuable as a $50 product with a $30 margin. Weigh both profitability and sales volume when categorizing your inventory.

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Another useful metric is the inventory turnover rate, which measures how quickly products sell. You can calculate it by dividing the cost of goods sold (COGS) by the average inventory value for each product. Fast-moving items with consistent sales might warrant a higher priority, even if their price point is lower.

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Once you’ve ranked your products, assign them to categories. Your highest earners go into Category A, mid-tier products into Category B, and the rest into Category C. Feel free to adjust these percentages based on your specific business needs.

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With your products sorted, it’s time to tailor your management strategies to each group.

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Focus Controls on High-Priority SKUs

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The ABC classification system allows you to apply different levels of control to your inventory.

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• A items: These are your most critical products and deserve the tightest oversight. Monitor these items daily or weekly, conduct frequent cycle counts, and set up automated alerts in Shopify to notify you when stock levels hit reorder points. Since stockouts on these products can significantly hurt revenue, consider maintaining multiple suppliers to minimize supply chain risk.
• B items: While not as crucial as A items, these products still play an important role. Check on them weekly or bi-weekly, and maintain moderate safety stock levels to ensure availability without overstocking.
• C items: These products require the least attention. Monthly checks and lower safety stock levels are usually sufficient. To save costs, you might consider bulk purchasing these items, as their lower revenue contribution makes the risk of excess inventory more manageable.

4. Set Reorder Points and Safety Stock

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With your inventory organized using ABC analysis, it's time to set up thresholds that help you avoid running out of stock or overstocking. This is where reorder points and safety stock come into play - they're essential for maintaining the right balance.

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Calculate Reorder Points

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A reorder point is the inventory level at which you need to place a new purchase order. You can calculate it using this formula:

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Reorder Point = Average Daily Sales × Lead Time

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Then, adjust for real-world factors like demand fluctuations.

Start by figuring out your average daily sales for each product. Look at the past 90 days of sales data. For example, if you sold 180 units over 90 days, your average daily sales would be 2 units per day (180 ÷ 90 = 2). Tools like Shopify's analytics make this calculation simple - just export your sales data and do the math.

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Next, determine your supplier lead time - how many days it takes for your order to arrive after placing it. This includes not just shipping time but also processing delays, weekends, and holidays. If your supplier typically takes 14 days to process and ship orders, use that as your lead time.

Now, apply the formula. For example:
2 units/day × 14 days = 28 units.

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When your inventory reaches 28 units, it's time to reorder.

But don’t stop there. Adjust for factors like seasonal demand spikes or supplier delays. In these cases, you’ll need to add safety stock to your reorder point:

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Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock

For high-priority Category A products, dig deeper. Use the standard deviation of daily sales over 90 days to measure demand variability. Products with steady sales need less buffer, while those with unpredictable demand require more.

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Once you’ve nailed down your reorder point, it’s time to focus on safety stock.

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Set Safety Stock Levels

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Safety stock is your backup inventory - your safety net against unexpected demand or delayed shipments. It’s there to keep you covered when things don’t go as planned. The goal is to strike a balance: enough safety stock to avoid stockouts, but not so much that it adds unnecessary costs.

To calculate safety stock, multiply your average daily sales by a buffer period. For example:

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• Category A products: Use a buffer of 7–14 days.
• Category C products: A buffer of 3–5 days is usually sufficient.

Using the earlier example, if you want a 7-day buffer for a Category A product, your safety stock would be:

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2 units/day × 7 days = 14 units.

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For a more precise approach, consider the service level you want to maintain. A 95% service level means you’ll avoid stockouts 95% of the time. High-margin Category A products might justify a higher service level, while less critical items can operate with 90% or even 85%.

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Demand variability is another key factor. Products with consistent sales patterns require less safety stock than those with unpredictable demand. Review your sales history for seasonal trends, promotions, or other factors that might affect demand.

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Don’t forget to account for lead time variability. If your supplier usually delivers in 14 days but sometimes takes 21 days, factor in that extra time. Track supplier performance regularly and adjust your safety stock as needed.

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Tools like Forstock can simplify this process. By analyzing your sales and supplier data, it can recommend reorder points and safety stock levels tailored to each SKU. It even considers demand patterns and supplier reliability, helping you strike the right balance between availability and carrying costs.

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Regularly review your safety stock levels - quarterly at a minimum, or more often if your business experiences rapid growth or seasonal shifts. For businesses with multiple sales channels, consider setting different safety stock levels for each platform. Your Shopify store might have different demand patterns than your Amazon listings, so your inventory strategy should reflect those differences.

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The goal isn’t to eliminate stockouts entirely - doing so would require holding excessive inventory, which isn’t practical. Instead, aim for service levels that match the importance and profitability of each product. Category A items, for example, should have higher service levels and more generous safety stock, while Category C products can operate more leanly.

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5. Set Up Real-Time Alerts and Automation

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Once you’ve nailed down your reorder points and safety stock levels, it’s time to let technology do the heavy lifting. Relying on manual tracking can lead to stockouts and missed sales opportunities. Instead, integrate automated systems to keep a constant eye on your inventory and streamline your management process.

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Use Shopify Apps for Inventory Alerts

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Shopify’s built-in inventory tracking is helpful, but it doesn’t notify you when stock levels dip below your reorder points. That’s where third-party apps come in. These tools can send automated low-stock alerts 24/7, ensuring you’re never caught off guard by an unexpected shortage.

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Set up alerts specifically for your most important products. Add a buffer above your reorder point to give yourself extra time to reorder before stock runs out. For high-priority items like best-sellers, configure faster notifications, while using standard thresholds for less critical products.

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You can also customize how you receive alerts. Beyond email, consider Slack or SMS notifications to make sure the right team members get the message immediately. Enable out-of-stock alerts to flag urgent shortages as soon as they happen.

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Don’t forget to adjust your alert thresholds for seasonal spikes, like Black Friday or the holiday rush. You can also set up alerts to monitor changes in a product’s sales pace, helping you quickly respond to surging demand or other trends.

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With these alerts in place, take it a step further by automating your purchase orders.

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Automate Purchase Order Creation

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Manually creating purchase orders can be time-consuming and prone to errors. Automating this process not only saves time but also ensures accuracy.

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Start with automatic reorder suggestions. When a product hits its reorder point, your system can calculate the ideal order quantity based on factors like supplier lead times, minimum order requirements, and demand forecasts. Tools like Forstock can even generate complete purchase orders automatically when thresholds are met, speeding up the process and reducing mistakes.

To make things even smoother, integrate your automation system with your suppliers’ portals or email systems. Whether your vendor uses APIs or prefers more traditional methods, ensure your system can handle their preferred format. You can also set up approval workflows - automating low-value orders while requiring a review for higher-value ones.

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Advanced automation can take supplier performance into account, adjusting lead times and optimizing order quantities based on factors like volume discounts, shipping costs, and minimum order requirements. If you’re managing inventory across multiple locations, automation can help optimize orders based on regional demand or internal transfers.

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Keep an eye on the performance of your automated system by tracking key metrics like order accuracy, delivery times, and stockout rates. Regularly reviewing these metrics will help you refine your automation strategy and keep your inventory operations running smoothly.

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Optimize Your Inventory Management

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Join hundreds of Shopify brands using Forstock to prevent stockouts, reduce overstock, and streamline inventory operations with real-time analytics and AI-driven demand forecasting.

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Get Started

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6. Forecast Demand and Plan Purchasing

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Once you've set up automated alerts and purchase orders, the next step is to plan your purchases strategically. Smart ordering starts with understanding what your customers will want ahead of time. This is where demand forecasting comes in - it shifts your inventory management from reacting to problems to proactively preparing for them.

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By forecasting accurately, you can sidestep two major issues: running out of stock and losing sales, or overstocking and tying up your cash. Data-driven insights help you maintain just the right inventory levels. Start by reviewing past sales to uncover patterns and trends.

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Analyze Historical Sales Trends

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Your sales history is a goldmine of information. Use Shopify analytics to spot patterns that repeat, whether monthly, seasonally, or annually. Look at how specific products performed during key periods to sharpen your forecasts.

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Seasonal trends are often the easiest to identify. For instance, swimwear brands typically see sales spike in summer, while winter coats sell more during colder months. But don’t stop there - dig deeper to find weekly or monthly patterns, such as items that sell better on weekends or during certain times of the month due to consumer habits.

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Also, consider where each product is in its lifecycle. Products often start slow, gain traction, and eventually plateau or decline. Knowing this can help you adjust your purchasing plans. Keep an eye on external factors, too - economic shifts, weather changes, or even viral social media trends can unexpectedly influence demand.

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Tools like Forstock can automatically analyze these patterns, processing multiple data points to improve forecast accuracy. Segmenting your analysis by customer types, sales channels, or regions can give you a fuller picture of demand.

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Plan Purchase Orders Based on Forecasts

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Once you've identified demand trends, use those insights to make smarter purchasing decisions. Your forecasts should guide how much you order, when you order, and how you coordinate with suppliers. Instead of simply increasing order sizes, align them with expected sales peaks and slow periods.

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For example, if you anticipate a sales surge, place larger orders early to account for supplier lead times and adjust your safety stock. If demand fluctuates, time your orders to match those changes rather than relying on static numbers.

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Supplier lead times can vary, especially during busy seasons. Factor this variability into your planning - order earlier if needed or split your orders to reduce risk. These adjustments ensure your purchasing aligns with real-world constraints.

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Optimize your order sizes based on demand. Larger orders might secure volume discounts when demand is steady, while smaller, more frequent orders can help manage cash flow during slower periods. For major sales events, make sure your purchase orders reflect the expected spike in demand.

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Consider creating different purchasing plans for various scenarios. For example, you could prepare conservative, moderate, and aggressive order plans, so you're ready to pivot if actual sales differ from your predictions.

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Advanced tools can simplify this process. Forstock, for instance, can create purchase order suggestions based on your forecasts, supplier timelines, and business rules. This ensures your orders align with expected sales rather than just current inventory levels.

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Lastly, track how accurate your forecasts are by comparing them to actual sales. Metrics like forecast accuracy and bias can help you fine-tune your approach, making future purchasing decisions even more effective.

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7. Conduct Regular Cycle Counts and Stock Audits

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Even with advanced forecasting tools and automated systems, your Shopify inventory can sometimes stray from reality. Items can get damaged, misplaced, stolen, or simply miscounted due to human error. Without regular physical checks, these small issues can snowball into major headaches.

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To keep your inventory data accurate and avoid costly surprises, regular physical counts are essential. There are two key approaches: cycle counts for ongoing accuracy and full audits for a deep dive into your inventory. Both are crucial for maintaining reliable stock records.

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Schedule Regular Cycle Counts

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Cycle counting involves checking smaller sections of your inventory on a rotating schedule instead of counting everything in one go. This method keeps operations running smoothly while ensuring your inventory data stays accurate.

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A popular method is ABC cycle counting, where products are grouped by priority:

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• Category A items: These are your high-value, fast-moving products that need the most attention. Count them monthly or quarterly, depending on your sales volume and resources.
• Category B items: These moderately important products can be checked quarterly or twice a year.
• Category C items: These are low-priority products that can be counted once or twice a year without significantly impacting your business.

For example, a jewelry store selling expensive pieces might count its Category A items monthly, while a clothing retailer with a wide range of SKUs might opt for quarterly counts. The key is to strike a balance between accuracy and operational efficiency.

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Technology can make cycle counts faster and more accurate. Barcode scanners, for instance, help eliminate manual entry errors and speed up the process. Shopify POS also offers inventory counting tools that sync directly with your system, allowing for real-time updates.

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To minimize disruptions, schedule counts during slower business hours, like early mornings or late evenings. Train your team on proper counting methods, and rotate responsibilities to reduce routine errors.

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When discrepancies arise, document them immediately and dig into the causes. Are items being stored incorrectly? Is there an issue in your receiving process? Identifying patterns can help you fix these problems and prevent them from recurring.

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Cycle counts ensure your day-to-day inventory data stays reliable, but full audits are necessary for a complete picture.

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Audit Full Inventory Periodically

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Unlike cycle counts, full audits involve physically verifying your entire stock. These comprehensive checks are typically done once or twice a year, often at year-end for financial reporting.

Full audits are more disruptive since they usually require halting normal operations. However, they provide a baseline for accuracy and can uncover systemic issues that might go unnoticed during routine counts.

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Before implementing cycle counts, start with a full audit to establish where your inventory stands. This way, you’ll have a clear starting point for improvement.

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Plan your audits during naturally slower periods, such as after the holiday rush or during seasonal transitions. Allow enough time to conduct thorough counts without rushing. Assign specific sections or product categories to team members, and use tools like mobile devices or counting sheets to record quantities. For high-value items, double-counting adds an extra layer of accuracy.

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Once the audit is complete, reconcile the physical counts with your system records. Significant mismatches should be investigated to uncover issues like theft, damage, or data entry errors. While small variances are normal, larger discrepancies need immediate attention.

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Audit results can also guide improvements in your inventory processes. For instance, if certain products consistently show discrepancies, they may require more frequent cycle counts or better organization. Tracking your accuracy percentage over time can help measure progress.

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Advanced tools can simplify both cycle counts and full audits. Platforms like Forstock provide analytics that highlight which products need attention and track accuracy trends over time. This data-driven approach ensures your efforts are focused on areas that matter most.

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Accurate physical counts work hand-in-hand with automated reorder and alert systems. Remember, maintaining inventory accuracy is an ongoing effort. By combining regular cycle counts with periodic full audits, you create a reliable system that keeps your Shopify store running efficiently and your inventory data on point.

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8. Create and Track Purchase Orders

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Purchase orders play a crucial role in keeping your inventory accurate and well-stocked. They serve as detailed records of what you’ve ordered, helping to avoid errors and ensuring smooth communication with suppliers. By using a structured purchase order system, you can maintain better control over your inventory levels and avoid disruptions.

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Managing purchase orders effectively, just like inventory tracking and cycle counts, is key to preventing stock discrepancies and ensuring your shelves are replenished on time. Below, we’ll walk through how to create precise purchase orders and keep track of incoming stock.

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Create Detailed Purchase Orders

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A well-detailed purchase order sets clear expectations and minimizes confusion with suppliers. If you're using Shopify, start by going to Products > Purchase orders in your admin panel and clicking "Create purchase order" ^[3][5].

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When creating an order, select your supplier and specify the destination location. If the supplier isn’t already in your database, you can add them during this process, keeping everything organized for future orders ^[3][5].

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Make sure to include all necessary details, such as:

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• Product quantities
• Supplier SKU numbers
• Unit costs
• Tax percentages
• Shipment dates
• Carrier information and tracking numbers ^[3][5]

For products with multiple variants (like different sizes or colors), list each variant clearly to avoid misunderstandings ^[4].

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Additionally, outline payment terms - whether it’s cash on delivery, payment on receipt, advance payment, or net terms like Net 30 or Net 60. Specify the supplier’s currency and account for any extra costs, such as shipping fees, customs duties, insurance, or handling charges ^[3]. Double-check tax codes and general ledger accounts to ensure smooth financial reconciliation.

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Once all details are finalized, save the purchase order as a draft for review or mark it as "Ordered" once confirmed by the supplier ^[3][5]. Marking it as "Ordered" will automatically update your incoming inventory levels in Shopify. You can also download the finalized purchase order as a PDF to send directly to your supplier ^[3].

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Track and Reconcile Incoming Stock

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After creating a purchase order, tracking incoming stock accurately is essential for keeping your inventory on point. When shipments arrive, immediately verify the quantities against your purchase order. Watch for any discrepancies, such as missing or damaged items, and update your Shopify inventory with the actual figures and costs.

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To simplify this process, you can use automated tools like Forstock. These tools integrate with your Shopify store, making it easier to track purchase orders from creation to receipt, ensuring your inventory records stay accurate and up-to-date.

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9. Monitor Inventory KPIs and Analytics

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Once you've nailed down efficient ordering and auditing, the next step is tracking inventory KPIs to fine-tune your control processes. Keeping an eye on these metrics replaces guesswork with solid, data-backed decisions, helping you identify problems and opportunities quickly.

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Inventory KPIs (Key Performance Indicators) are measurable data points that show how well you're managing your stock. They provide clear, actionable insights into your inventory performance. Considering that about 60% of retailers' inventory records contain errors ^[6][7], having a firm grip on these metrics is crucial.

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Key Inventory Metrics to Watch

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Some metrics directly affect your cash flow and customer satisfaction - two areas no business can afford to ignore. Here are the key ones:

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• Inventory Turnover Rate: This measures how quickly you sell through your stock. You calculate it by dividing the cost of goods sold (COGS) by the average inventory value. A higher turnover rate usually suggests efficient stock management, though the "ideal" rate depends on your industry and product type.
• Stockout Rate: This tracks how often you run out of products, which can frustrate customers and hurt sales. Aim to maintain a Lost Sales Ratio between 2% and 3%. If stockouts are happening more often, it's time to take corrective action.
• Days of Inventory on Hand (DOH): This shows how many days your current inventory will last based on your sales pace. It helps you balance between overstocking (which ties up cash) and understocking (which risks stockouts).
• Perfect Order Rate: This measures the percentage of orders that are fulfilled completely, on time, and without damage. According to the American Productivity and Quality Center (APQC), top businesses achieve a 95% Perfect Order Rate ^[7].
• Inventory Shrinkage: This metric tracks losses due to theft, damage, or errors. In 2022 alone, shrinkage cost businesses $94.5 billion, averaging 1.4% of sales ^[7]. Keeping this under control can save you significant money.

Shopify and Forstock Analytics: A Winning Combo

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Shopify's admin dashboard offers basic inventory insights, such as stock levels, sales velocity, and low-stock alerts. But if you want to take it up a notch, Forstock provides advanced tools like real-time analytics and demand forecasting with 95% accuracy. Forstock’s Stock Intelligence feature goes even further by analyzing your sales patterns and giving reorder suggestions based on actual performance data. This eliminates the need for manual spreadsheet tracking and helps you spot trends and opportunities effortlessly.

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When deciding which KPIs to prioritize, focus on your business's specific pain points. For example, if you're struggling with frequent stockouts, concentrate on your stockout rate. If overstocking is draining your cash, keep an eye on inventory turnover or days of supply. Custom reporting tools make it easy to track only the metrics that matter most to your operations.

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Setting up automated alerts for critical thresholds - like when turnover falls below your target or stockouts exceed acceptable levels - can help you address issues before they escalate. These insights not only improve your current processes but also set the foundation for continuous growth and efficiency in your inventory management.

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10. Document SOPs and Best Practices

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To ensure consistent inventory management, it's essential to document your Standard Operating Procedures (SOPs) and train your team to follow them effectively. This creates clarity and consistency across your operations.

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Create Clear Workflows for Inventory Tasks

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Start by mapping out every step of your inventory process, from receiving shipments to conducting audits. Break down complex tasks into simple, actionable steps so that anyone on your team can follow them with ease.

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Here are some key areas to focus on when creating SOPs:

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• Receiving procedures: Define how to inspect incoming shipments, verify them against purchase orders, and update inventory levels in Shopify.
• Cycle counting protocols: Specify which products to count, when to count them, and how to handle any discrepancies.
• Reorder processes: Outline how to determine reorder points, create purchase orders, and communicate with suppliers.
• Stock audit procedures: Provide clear guidelines for conducting full inventory audits and documenting findings.

Enhance your SOPs with visual aids, such as screenshots from your Shopify admin panel or any third-party tools you use. These visuals make it easier for team members to understand what they should see on their screens and where to click.

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Store your SOPs in a shared, easily accessible location like a team wiki or cloud drive. Make sure to include version control - date each document and maintain a changelog so your team always knows they’re using the latest procedures.

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Train Your Team on SOPs

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Training is just as important as documentation. Host sessions where team members review SOPs and practice applying them in realistic scenarios. Tailor training to specific roles and reinforce it with regular refreshers.

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Here’s how to approach training:

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• Role-specific training: Focus on the tasks most relevant to each position. For example, your receiving team will need different training than your purchasing manager.
• Hands-on practice: Let team members perform real inventory tasks during training, such as processing a sample shipment or conducting a mock cycle count. This not only reinforces learning but also highlights any gaps in your SOPs.
• Mentorship programs: Pair new hires with experienced team members who can guide them through the procedures, fostering both knowledge sharing and team cohesion.

Track training progress by documenting who has completed which modules and when refresher sessions are due. Use assessments or practical demonstrations to ensure competency.

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Finally, make regular SOP reviews a habit. Schedule quarterly updates to refine procedures based on new tools, supplier changes, or lessons learned. Encourage feedback from your team - those on the frontlines often spot inefficiencies or opportunities for improvement that might otherwise go unnoticed.

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Conclusion: Streamline Shopify Inventory Management for Growth

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Managing inventory effectively isn't just about knowing what’s in stock - it’s about laying the groundwork for long-term success. The 12 tasks outlined in this checklist combine to form a system that minimizes errors and positions your Shopify store for growth.

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By enabling inventory tracking and standardizing SKUs, you establish a solid data framework. Using ABC analysis helps you focus on high-priority products, while real-time alerts and automation simplify reordering processes. Demand forecasting, on the other hand, ensures you make better purchasing decisions based on reliable insights.

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Regular cycle counts and stock audits ensure your records stay accurate, and clear SOPs keep your team aligned as your business scales.

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When brands adopt structured inventory management, they experience fewer stockouts, faster order fulfillment, and healthier cash flow. Plus, customers are more satisfied when their orders arrive on time, no matter the sales channel.

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To get started, focus on the basics: enable inventory tracking, standardize your SKUs, set up low-stock alerts, and introduce barcode scanning. From there, apply ABC analysis and calculate reorder points for your top-selling products to refine your operations and improve profit margins.

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Tracking your progress is key to staying on course. Keep an eye on metrics like inventory turnover, maintain cycle count accuracy above 97%, and aim to keep stockout rates low. Leverage Shopify’s built-in reporting tools and inventory management apps to monitor these KPIs in real time, adjusting your strategies based on the insights your data provides.

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FAQs

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How can I use Shopify's inventory tracking tools to avoid stockouts and overselling?

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To keep your inventory in check and avoid issues like stockouts or overselling, make sure to enable Shopify's real-time inventory tracking. This feature helps you maintain accurate stock levels across all your sales channels, so you’re always up to date.

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Another smart move is setting up low-stock alerts. These notifications let you know when your inventory dips below a specific threshold, giving you enough time to reorder and prevent running out of popular items.

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For even more efficiency, consider using automated stock replenishment tools or apps. These tools simplify inventory management by keeping you informed about stock levels and helping you maintain the right balance. The result? Fewer mistakes, happier customers, and smoother operations.

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How can ABC analysis improve my Shopify store's inventory management, and what’s the best way to categorize my products?

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ABC analysis is a smart way to zero in on the products that have the biggest influence on your Shopify store's performance. It’s all about pinpointing the top 20% of items that contribute roughly 80% of your revenue (these fall into Category A). By focusing your efforts on these key products - whether it’s restocking or managing inventory - you can make the most of your time and resources. This method helps streamline operations, prevents overstocking, and sharpens your ability to predict demand.

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Here’s how to group your products effectively:

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• Category A: These are your high-priority items. They bring in the most revenue and require close, frequent attention.
• Category B: These are moderately important products with consistent but lower sales.
• Category C: These items have minimal revenue impact and don’t need as much focus.

By following this approach, you can allocate your resources more efficiently and ensure your inventory stays balanced to maximize profitability.

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How can I set up automated stock alerts and purchase orders in Shopify to simplify inventory management?

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If you're running a Shopify store, automating stock alerts and purchase orders can make your life a lot easier. Tools like Shopify Flow let you set up workflows that notify you when inventory is running low. Even better, they can automatically generate purchase orders to keep your shelves stocked without you lifting a finger.

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For more advanced needs, third-party apps like Auto Purchase Orders or Inventory Mate offer additional features. These apps help you manage suppliers, send out low-stock alerts, and streamline the entire restocking process.

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By automating these tasks, you cut down on manual work, improve accuracy, and ensure you always have the right stock levels to meet customer demand. It's a smart way to save time and keep your business running smoothly.