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The Perpetual Stock System Your Guide to Ecommerce Accuracy
A perpetual stock system is an inventory management method that gives you a real-time, continuous count of every single item you own. Every sale, return, or new shipment instantly updates your total stock levels, so you always have a live, accurate view of your inventory.
Master the Formula for Safety Stock and End Stockouts
A simple way to calculate a basic safety stock buffer is with this formula: (Maximum Daily Sales × Maximum Lead Time) – (Average Daily Sales × Average Lead Time). This gives you a baseline cushion to protect your ecommerce business from sudden sales spikes and supplier delays, helping you avoid painful stockouts.
A Guide to Inventory Management for Small Businesses
Effective inventory management means knowing exactly what stock you have, where it is, and when you need to order more. It’s the entire process of tracking your products from the moment you buy them from a supplier until they land in your customer’s hands. The goal is to have enough product to meet demand without locking up all your cash in items that just sit on the shelf.
Calculate Safety Stock to Prevent Overselling in Singapore
Here’s a quick look at the main formulas we’ll be covering. Think of this as your cheat sheet for later.
Key Safety Stock Formulas At a Glance
| Formula Type | Best For | Key Inputs Required |
|---|---|---|
| Basic Rule-of-Thumb | Sellers who are new to safety stock or have relatively stable sales and reliable suppliers. A great starting point. | Max/Average Daily Sales, Max/Average Supplier Lead Time |
| Demand Variance (Z-Score) | Businesses with unpredictable customer demand but consistent supplier lead times. Perfect for trending products. | Standard Deviation of Sales, Average Lead Time, Desired Service Level (Z-score) |
| Lead Time Variability | Sellers who face unreliable supplier delivery times but have steady customer demand. Essential for managing import delays. | Average Daily Sales, Standard Deviation of Lead Time, Desired Service Level (Z-score) |
| Periodic Review Adjustments | Anyone not using a perpetual inventory system; those who review and order stock at fixed intervals (e.g., weekly). | All of the above, plus the time between your inventory reviews. |
Each of these methods solves a slightly different problem, from basic protection to fine-tuning for specific supply chain headaches. We’ll walk through exactly how to use them.
Unlocking Your Inventory Turnover Days
Inventory turnover days is a metric that tells you, on average, how many days it takes for your business to sell its entire stock.
Think of it like the fresh ingredients in a restaurant’s kitchen. Inventory turnover days shows how quickly you use up all those ingredients to serve dishes before needing to restock.
Perpetual inventory system: Real-Time Stock Control for Your Business
Imagine trying to run your business without knowing how much money is in your bank account. You wouldn’t, right? A perpetual inventory system brings that same real-time clarity to your products. It’s a live, constantly updated view of your stock, recording every sale, return, and new delivery the moment it happens.