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Product inventory management: How does it work?

What is inventory management?

Product inventory management is the business activity connected to ordering, stocking, and using products and materials. There are different types, such as raw materials, cycle inventory and MRO goods, and prioritising inventory helps companies control what and when they need to manufacture or order to fulfil ongoing customer demand. 

It’s a key element of sustaining profitability, but despite this, many small businesses fail to practice effective management in this area. Some have too little inventory, so can’t meet demand – when it comes to eCommerce in particular, the results are instant and drastic. Potential customers click away from the site and find another seller. They are probably lost forever – online shoppers are ruthless when it comes to failing to satisfy their needs.

On the other hand, many businesses overcompensate by overstocking items “just to be on the safe side.” They always have in stock what their customers are looking for but run a serious cash flow risk – excess inventory ties up cash in tracking it and storing it.

That’s why product inventory management should lie somewhere between the two extremes. It requires work and planning to achieve an efficient product inventory management process, but cost efficiencies make your effort worth it as you:

  •         Reduce time to market by 50% and Increase sales potential by getting to market fast
  •         Reduce operational costs for product data and increase efficiencies to free up time for staff to be creative and revenue-generating. 

·         Reduce product returns due to bad information and increase cross-selling and up-selling by providing quality product information


What a PIM can do for your online inventory management

The first thing you need in place if you want to handle stock, orders and shipments seamlessly is a guarantee of excellent quality product data. Error-free product content, synchronised and updated in real-time data across all channels, is the solution all retailers are aware of, but in most cases, it seems like a vague aspiration rather than a target to be reached as soon as feasible.

By integrating a PIM for your eCommerce, you can be assured that all product content is standardised and consistent for all sales channels. It also enables businesses to deploy an omni-channel approach, with the personalised offers customers are increasingly expecting as they access brand channels across channels, on- or offline.

In relation to inventory control, a PIM stock system allows you to mark the product offer and stock levels available in every market or territory as well as adapting the content and style of product information exported to marketplaces or other third-party channels.

Integrating online inventory management into your PIM allows you to

  •         send updates to every channel simultaneously
  •         track changes
  •         amend inaccurate information
  •         verify and approve revisions
  •       apply actions like batch price promotions


All channel control is centralised and connected, so POS tools can forecast when more stock needs ordering. Again, we come back to significant gains in efficiency for the company, and a faster, more responsive and personalised customer experience, regardless of how, where, or when they shop.

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Warehouse communication

There are several logistical complexities when managing inventory operationally.

  •         Finding the correct products to fulfil orders
  •         updating the stock after some product has been returned
  •         sending petitions across different warehouses and POS
  •         answering customers’ questions about available stock


It’s so much easier with a PIM solution, as every product in storage has a rich and detailed label with specific information, so the right product will always be shipped to every customer (reducing product returns). Furthermore, you can be certain that the level of product data quality provides the foundation for absolute confidence in its correctness.

 This system also makes customer service procedures faster and smoother as anyone, remote or in store, can access updated stock levels quickly and easily

to let customers know where or when they can find the item they require. Efficient inventory management, alongside a clear and ordered product taxonomy, will ensure that automated search systems (such as on an online store or a branded mobile app) can be more effective because of the precise stock information provided by the PIM.

Integrated inventory management

The big plus in using PIM for managing product data is that it is easy to integrate with an ERP and many other plugins, connectors, and third-party applications.

Its flexibility enables collaboration at every retail phase, as the single source of truth – it saves time, costs, and resources to enable accomplishment of all time-to-market targets, including online inventory management.

A simplified process

Inventory is inherently complicated, especially if done even partially manually. The company needs to keep track of prices, quantities, suppliers, warranties, and a long etc. If this information is maintained, accessed, and altered piecemeal, it’s slower, more labour-intensive and heightens the risk of data mismatches.

So, using a PIM supports your inventory management system and guarantees high-quality data in relation to multiple areas:

  • product descriptions and classifications
  • pricing options by locations & target
  • bulk changes and uploads of product information
  • exporting product information to multiple channel types


Deploying cloud-based data, any back-office changes are updated in real time immediately after being altered, not only to the sales platform but also to POS devices.

Managing inventory how you want to

A PIM combines all product-related activity into a single function for whatever data you need to deploy – creating a product listing, product grouping, batches, brands, matrix products, bundles, combined products, and more. It can categorise different inventory groupings, like clearance items or seasonal offers, so building pricing and promotions around these categories becomes easier and faster. As part of a PIM implementation project, our product data audit will surface those data which require cleansing, so by the time you go live with your PIM solution, you are starting with the best possible version of all your legacy product data. By working from the guaranteed ‘single-source’ of a PIM’s central product data hub, enriching your product data to provide a compelling customer experience across all channels (and even across multinational markets) is straightforward, with rules-based and AI -powered automation for several processes, optimising time to market.

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