Inventory how-to

How to reduce inventory without losing sales

Cut inventory by SKU, not across the board.

Short answer: Cut inventory by SKU, not across the board. Trim safety stock and order quantities on slow, predictable sellers, and leave your fast movers alone or even keep them better stocked. The goal is fewer dollars sitting on the shelf while your bestsellers still have enough cover to never go out of stock.

Sort your SKUs before you cut anything

Pull a list of every variant with current on-hand units, daily sales rate, and days of stock on hand. Rank by days of stock. The SKUs sitting at 90, 120, 200 days of cover are your targets. SKUs under 30 days of cover are not targets, cutting there risks stockouts.

Lower safety days, not the forecast

Safety days cover demand spikes and supplier delays. If a supplier is reliable and lead time is short, you can often cut safety days from something like 14 to 7 without much risk. This shrinks your reorder point and the quantity you order each cycle, which lowers average inventory over time without touching your actual demand forecast.

Order smaller and more often

If a supplier allows it, switch from ordering 90 days of cover to 30 or 45 days of cover, placed more frequently. You carry less stock at any one time but refill before you run out. This only works if lead times are short and consistent. If a supplier is slow or unreliable, shrinking order size is how you end up out of stock.

Deal with dead and slow stock separately

Items with very low or no sales should not be reordered at all, regardless of what a forecast says. Discount them, bundle them manually, or write them off. Freeing cash from dead stock is a one-time cleanup, not a forecasting problem.

Watch for the stockout trap

Cutting inventory too fast on a fast-moving SKU shows up as a sales drop that looks like the product lost demand, when really it was out of stock. Before you call a cut successful, check that the SKU stayed in stock the whole period.

Step by step

  1. List every variant with on-hand units, daily sales rate, and days of stock.
  2. Flag SKUs with more than 60-90 days of cover as cut candidates.
  3. For each candidate, check the supplier's actual lead time and reliability before cutting safety days.
  4. Reduce safety days or days-of-cover target in small steps, one supplier or category at a time.
  5. Re-run the numbers after 2-4 weeks and confirm stock didn't run out.
  6. Separately identify dead stock and clear it with discounts rather than lowering its reorder settings.
  7. Leave fast movers with short days of stock untouched or increase their cover instead.

Worked example

A store has a SKU selling 2 units a day with 300 units on hand, that's 150 days of stock, way more than needed. Lead time is 10 days and safety days are set at 20, giving a reorder point of 2 x (10+20) = 60 units. Cutting safety days to 10 drops the reorder point to 2 x (10+10) = 40 units, and the next order quantity shrinks to match, so the store carries less stock while still reordering before it runs low.

How SteadyShelf helps

SteadyShelf already gives you daily sales rate, days of stock, and reorder points per SKU, so spotting overstocked variants and adjusting safety days is straightforward inside the app. It won't flag dead stock for discounting or handle bundling and write-offs, that part stays manual.

$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

Will cutting safety days cause stockouts?

It can, if the supplier's lead time is inconsistent. Only cut safety days on SKUs with reliable, on-time suppliers. For suppliers that run late often, keep safety days where they are or raise them instead.

How do I know if a SKU is dead stock versus just slow?

Look at sales over the last few months, not just the last 28 days. A SKU with a few units sold steadily every month is slow, not dead. A SKU with zero or near-zero sales for several months straight is dead stock and should be cleared out rather than reordered.

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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