Inventory how-to

How to keep inventory costs under control

Inventory costs come down to three levers: how much stock you hold, how often you run out, and how well your orders match your suppliers' case packs and minimums.

Short answer: Inventory costs come down to three levers: how much stock you hold, how often you run out, and how well your orders match your suppliers' case packs and minimums. Control those three and your costs drop without hurting sales.

Know your real cost of holding stock

Cash tied up in inventory is a cost even if nothing goes wrong. It means money sitting on a shelf instead of in your bank account or in better-selling products. Add storage space, insurance, and the risk of markdowns if the product sells slower than planned.

Order against demand, not habit

A lot of overstock comes from ordering the same quantity every time out of habit, or rounding up "just in case." Base order quantities on actual daily sales plus lead time and a small safety buffer, not on gut feel or last year's order size.

Watch case packs and minimums closely

Suppliers often force you into round numbers: a case of 24, a minimum order of 100 units. These can push your order quantity well above what you actually need. Know the real cost of taking the next pack size up versus running slightly tighter on safety stock.

Don't let slow movers hide in the mix

Fast sellers get attention. Slow movers quietly tie up cash for months because nobody reorders them, but also nobody notices they are overstocked. Review slow-moving SKUs on a schedule, not just when you happen to look.

Step by step

  1. List every SKU with current on-hand units and daily sales rate.
  2. Calculate days of stock for each SKU: on hand divided by daily sales.
  3. Flag anything over 60-90 days of stock as a candidate to stop reordering for now.
  4. For each remaining SKU, calculate order quantity from daily sales x (lead time + days of cover) minus stock on hand and on order.
  5. Round that quantity up to the nearest case pack or supplier minimum, and note how much extra that rounding adds.
  6. Set a short list of SKUs to review monthly for slow movement, separate from your regular reorder list.
  7. Track total inventory value monthly so you can see if it is trending up or down over time.

Worked example

A store sells a mug at 4 units a day, lead time is 14 days, and they want 10 days of cover. Order quantity = 4 x (14+10) minus (30 on hand + 0 on order) = 96 - 30 = 66 units. The supplier sells in cases of 25, so the store rounds up to 75 units, meaning 9 extra units beyond the calculated need. Tracking that gap across all SKUs shows where case pack rounding is quietly adding cost.

How SteadyShelf helps

SteadyShelf calculates order quantities from your actual sales rate and lead time, and rounds to case packs and minimums automatically, so you can see the gap between what you need and what you're forced to order. It does not do landed cost or stocktakes, so you'll still need to track total inventory value and true per-unit cost outside the app.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

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FAQ

Should I just order less of everything to cut costs?

Not across the board. Cutting stock on fast movers risks stockouts, which cost you sales and sometimes customers. Target the cuts at slow movers and oversized orders caused by case pack rounding, and keep fast sellers covered.

How often should I review inventory costs?

Monthly is enough for most small and mid-size stores. Check total inventory value, days of stock on your top SKUs, and any slow movers that have been sitting for more than two or three months.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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