Five Inventory Management Techniques That Will Save You Money

Inventory management isn’t exactly the most glamorous part of running a business, but it is one of the most important. When your inventory is out of sync, you’re either sitting on piles of unsold product or rushing to restock your best sellers.

The good news is that you don’t need to be a supply chain wizard to get it right. We’re breaking down some effective inventory management techniques that can help you spend less, stock smarter and avoid those “how did we run out of that again?” moments.

What are inventory management techniques?

Inventory management techniques are the strategies and tactics businesses use to keep the right products in stock at the right time, without over-ordering or running out. They help you decide what to buy, how much to carry and when to course correct.

They can reduce holding costs, eliminate guesswork and help you build the best inventory management practices for your business. Whether you’re using an existing sales and inventory management system, exploring an online inventory system or incorporating spreadsheet customization into your process, these techniques help you build a more efficient and scalable approach to inventory.

How to improve inventory management (and save money!)

Unfortunately, there’s no magic wand, but there are proven ways to make your inventory strategy sharper. Here are five techniques that can help you tighten up your strategy and unlock more savings: 

1. Optimize Your Assortment 

Many brands fall into the trap of over-assorting – offering every style and pattern imaginable. It usually starts with good intentions: trying to attract more customers. The reality is that most people get overwhelmed with tons of choices, and are just looking to buy the most classic option that will last the longest. Think: basics, like black.

Trimming down your SKU multipliers (those endless styles and color combinations) can free up inventory, reduce complexity and boost profitability. It also creates space for intentional limited editions like seasonal colors or styles that drive urgency without the need for long-term inventory commitment. 

When you streamline your core assortment, you gain more leverage with suppliers. Fewer SKUs often means higher volume per item, which can help you negotiate better pricing for those select SKUs. 

Bottom line: a focused product mix sells better, costs less to manage and gives you more flexibility to experiment where it counts.

2. Use Historical Sales as Insights 

Gut instinct is great, but it’s not a strategy. One of the most common inventory mistakes brands make is assuming all items perform equally well. Spoiler: they don’t.

That’s why utilizing your historical sales data is crucial. Before you reorder or plan your assortment for a new season, go back and review what actually sold. Not what you think performed well – what the numbers actually say. 

Look at each item’s real performance and use that data to refine both your demand plan (how much you expect to sell) and your inventory plan (how much you should carry). Aligning these plans based on past results helps you stay lean, avoid waste and make confident buying decisions. As we like to say: know your numbers.

3. Implement Open-to-Buy Planning

Open-to-buy planning is one of the most practical (and underused) ways to stay in control of your inventory. Think of it like a checkbook for your buying decisions. It helps you figure out exactly how much product you should bring in based on what you already have, what’s selling and what’s coming up.

This tool helps you match your inventory flow to actual demand. It factors in vendor lead times, projected sales during that time and what you’ll need to order to avoid running out (while also avoiding a stockpile you can’t move). Open-to-buy tools adjust based on your demand forecast, so if you’ve got a big promotion coming up, it’ll account for the extra lift. If it’s a slower season, it’ll recommend ordering less. It helps you buy exactly what you need, when you need it – no more, no less.

Need help implementing open-to-buy planning for your brand? We can help!

4. Re-Forecast Frequently 

Demand and inventory forecasts aren’t a one-and-done thing. They need to evolve. One of the most effective inventory management techniques is reviewing your demand plan regularly and adjusting based on what’s actually happening. Say you plan to sell 100 units a week, but real sales are more like 70, then 50, then 30. If your inventory plan was built for the original forecast, then you’ve overstocked and are likely losing margin. Reforecasting lets you catch that early.

The key is comparing planned vs. actual performance on a consistent cadence. Then, adjust both your forecast and your inventory so you’re not over-ordering or running out. This small habit creates major flexibility, and that’s what helps you stay profitable, even when plans shift.

5. Refine Your Markdown Strategy 

Markdowns aren’t a failure – they’re a tool. The key is to plan for them, not panic into them. Build a cadence into your process: decide how long products stay at full price and when markdowns kick in. This prevents dead stock from piling up and gives you a clear exit plan for slow movers.

It’s especially critical if you're paying to store inventory. Holding onto unproductive stock racks up costs and blocks space for newness. A defined markdown strategy lets you move product with intention and protect margin along the way.

Inventory management doesn’t have to be a mess or a mystery. When you use the right inventory management techniques, you’ll spend less time cleaning up mistakes and more time scaling what works. And the best part? You’ll be saving money along the way by not over-buying, over-producing or over-paying for storage.

If your current setup isn’t cutting it, that’s okay - there are pros (like us!) who can help. We offer inventory management services tailored to your needs, whether you are just starting out, scaling fast or somewhere in between. From audits to forecasting to a full custom inventory management service, we’ll help you get it running right. 

If you’re ready to get your inventory under control (and keep more cash in your pocket), let’s make it happen. Let’s have a call to get started.