Clothing Inventory Management:
The ApparelMagic Guide

From the raw materials source to the textile manufacturers to the quality assurance officer to the end customer, every item of clothing passes through many hands. Clothing inventory management encompasses all these stops (and more).

Inventory management, at its most basic, is the process of tracking, managing, and maintaining an optimal inventory level. Inventory management software for the apparel industry tracks clothing, shoes, jewelry, accessories and related items as they move between locations. Each of these steps were once manual, the information tracked by hand in paper spreadsheets and logs. 

Today, real-time inventory automation improves accuracy and saves time. In the warehouse, for example pickers, checkers, stagers and truck loaders and material operating handlers use a centralized, cloud-based way to stay up-to-date and to make the best decisions. Business owners now have inventory management software that lets them respond quickly to fashion trends and other changes in market demands and conditions.  

Terms to Know

Bill of materials (BOM) is the inventory of the raw materials as well as the quantities of each material needed to manufacture a product.

Days of stock is a period of time for which you would like to have enough stock, or stock cover. The days of stock may also be called your purchasing frequency. 

Sell-through rate is a calculation of the amount of inventory a retailer receives from a manufacturer or supplier against what is actually sold. Sell-through rate is generally a percentage of units sold during a period (typically one month). Compare to inventory turnover, which generally refers to a year at a time. 

Lead time is the amount of time between placing a purchase order and receiving products. This can include manufacturing and shipping time.

In the warehouse, a bin location is the smallest addressable unit of space where your goods are stored. This space may be a shelf, a pallet location, or a storage area.

Pick tickets are slips of paper that tell you what to pick off your shelves and pack for shipment. Pick tickets list not only the items a customer requested but how many of each and the exact style that they want. 

Work in Process (WIP) tracking means tracking each garment or other item throughout the manufacturing process; reliable barcode reading makes this tracking possible.

1. Why Do You Need Inventory Management

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Today’s clothing brands, fashion retailers and apparel companies manage inventory between physical stores and ecommerce platforms. Fashion retailers need to quickly unload items that are selling well. They need to order the items that will be popular next month or even next week.

 

Meanwhile, the cost of everything from raw materials to retail space is going up. Anyone who sells apparel, from big luxury brands to small fashion companies, must do everything they can to make operations more efficient. Brick and mortar retailers are looking for ways to add value to their customers’ shopping experience, while online shopping becomes more and more attractive to consumers.

 

Large companies can better align their supply chains with world markets by optimizing inventory allocation. Smart stock allocation strategies help them avoid stocking too much (or too little) at their online and real-world stores.

 

Complicated retail environments mean stock is spread across multiple warehouses, stores and ecommerce channels. However, retailers need to avoid empty shelves due to too little stock. They also need to avoid cluttered back rooms due to too much stock.

 

Inventory allocation requires determining the right service levels per location and balancing inventory to Improve your sell-through rate and reduce waste. You have to consider local customer demand at each location and calculate the optimal level of inventory to push to each outlet.

 

Some customer orders need to be fulfilled right away. Others aren’t as urgent. Inventory management means warehouse managers can prioritize orders based on when they need to ship, as well as by customer. balanced inventory allocation across all channels.

 

When it comes to inventory allocation, clothing brands must weigh the risk of stockouts vs the risk of markdowns/waste. This means taking into account the speed at which inventory can move from distribution centers to stores. Is there available space at the warehouses? Is there available shelf space in the stores?

 

What about stock redistribution when something changes? How much does reallocation cost and how much time does it take.

 

Technology is revolutionizing the industry. Clothing inventory management, once dependent on spreadsheets filled out by hand, is now based on software. Thanks to advances in AI/machine learning, the data it takes to allocate stock is becoming more accessible. Even small retailers and medium-sized businesses can have access to the data insights that make this optimization possible.

 

Aside from avoiding overstocks and stockouts by tracking inventory levels, clothing inventory management software is used to accomplish many things, including:

 

• Track sales processes
• Track orders
• Track deliveries
• Generate work orders and bills of materials
• Organize inventory data
• Spend less money on inventory
• Keep transactions secure

This last point—security—is a problem those who use outdated systems won’t know they have until it’s too late. Hackers love old software. They look for ways to infiltrate legacy software, since the original vendor no longer releases fixes for those vulnerabilities. Apparel businesses using old inventory management systems could be putting their business at an unneeded disadvantage and risk.

 

How do you know if it’s time for a system update? Ask the people on the warehouse floor if they are happy with the current system. If they’re constantly rebooting the computer and pulling their hair out because things are running slow, listen to them.

 

If you’re still manually tracking the movement of a new item, creating space for it on your warehouse floor and preparing purchase orders by hand, your inventory process is more difficult and time-consuming than it needs to be.

Reduce Inventory Errors

Modern inventory management solutions can reduce the errors that plague your business. For example, forecasting errors create serious headaches. Order too much and you’ll end up having to mark down inventory to move it. Order too little and you’re missing sales. You’re also missing the savings that come from ordering inventory at scale.

 

Reducing inventory errors should be a top priority. Each order goes through a picker, checker, stager and loader,If you’re using paper pick tickets to pull orders, the likelihood of delays and canceled orders goes up.

 

With a modern warehouse management system (WMS), your employees will be able to use barcode scanners to identify the products they receive, pick and ship without having to manually enter the number or exact identity of the items they’re working with. Their barcode scanners will capture this information automatically. This information will then be shared across all of your warehouse’s departments in real-time, which can help to prevent errors in purchasing, sales and billing.

 

Robust inventory management tracks orders as your employees work to complete them. You can get instant alerts about missing items and errors in production-related documentation (orders and bill of materials, for example). This means that everyone who handles an order knows its status and location in real-time, without exchanging paper pick tickets.

 

When your customer service representatives estimate delivery times to your customers, they’ll know when packages will actually be delivered and can relay that information accurately. This means shoppers are more satisfied with your business, making it likely that they’ll order from you again in the future, because they’ll know they can rely on the information you provide.

Reduce Carrying Costs

The carrying costs of inventory include the total cost of purchasing, warehousing and handling inventory. It also includes the cost of markdowns if clothing items don’t sell quickly.

 

As we’ll see, an enterprise resource planning (ERP) software integrated with a warehouse management system (WMS) gives you full visibility of your inventory at all times. This helps to make sure you have enough product on hand to satisfy demand, while keeping your carrying costs to a minimum by not having too much stock in your warehouse.

Reduce Out of Stock Inventory

An ERP system helps avoid missing sales due to a lack of inventory. By tracking the amount of every item you have on hand in real-time, these solutions help you order your most in-demand items when stock levels reach a designated level. A robust ERP system can generate purchase orders based on sales figures, minimizing the chance that you’ll run out of a product when you need it the most.

Increase Supply Chain Accuracy

Optimized warehousing, real-time item tracking, packaging accuracy, and rapid delivery all contribute to supply chain success. When applied globally, inventory management technology empowers fashion retailers and apparel companies to track their entire supply chain comprehensively. 

 

Today’s inventory solutions improve the accuracy of your supply chain fulfillment, from raw textiles to finished garments. You and all your supply chain partners are responsible for ensuring the right amount and the appropriate mix of products available at all times. Technology can help you manage your inventory and product shipments and increase the accuracy along the full length of your supply chain.

Improve Planning/Forecasting

Although the challenges vary greatly according to company and market, today’s most successful apparel companies leverage robust demand forecasting. Poor planning and forecasting results in:

 

• Stockouts/overstock
• Obsolescence
• Rushed orders
• Inefficient resource utilization

Accurate forecasting allows you to better meet customer demand while lowering overall operational costs. Accuracy, in relation to the supply chain, can be measured using the Mean Absolute Percent Error (MAPE). MAPE is calculated by dividing the absolute value of the difference between your forecasted and actual sales, dividing the result by your actual sales, and multiplying the result by 100.

Optimize Fulfillment

You want your customers to have the best experience, whether it’s online or in the store. This means aligning inventory and tracking fulfillment across customer sales channels. Today’s comprehensive order management solutions can give you full insight into new orders and new business, in addition to managing shipping and freight.  They integrate with your back office systems, letting you track orders from sales reps in the field. They let you make any necessary order adjustments before processing each order. 

 

Optimizing the fulfillment process means leveraging automated order processing at every touchpoint: warehouse operations, administration, customer service and more. Today’s technology can verify customer credit, ensure accurate pricing, and ensure fast delivery, all while minimizing processing errors.

Streamline Production

Producing goods at the right time, in sufficient quantity to meet demand, at minimum possible cost, at the level of quality your customers demand. What a balancing act!

 

As more clothing businesses introduce services such as customization into their brand, they’ve been taking more production responsibility from manufacturers. Whether you manage in-house production or work with a contract manufacturer, keeping stock in line with your orders means knowing exactly what physical resources and raw materials are required. It means scheduling production and calculating deadlines. It means tracking finished goods and allocating them to sales orders.