How Inventory Management Can Improve Customer Satisfaction

Inventory management covers the enter SME process from raw materials and work-in-progress to finished goods. This process for Perth SMEs and their business accountants includes monitoring inventory levels, establishing the ideal stock quantities, and coordinating the procurement and storage of inventory for customer needs.

Efficient inventory management through cloud accounting software is essential for businesses to ensure the correct quantity of goods is ready to meet customer demands while reducing inventory holding costs.  Business accountants across Perth focus on reducing a company’s inventory levels without impacting customer service levels.

Inadequate inventory levels can lead to stock shortages, causing lost sales and customer dissatisfaction. Conversely, excessive inventory levels result in increased storage expenses and reduced profitability.

Good inventory management through cloud accounting software aids in maximising seasonal cashflow, reducing lead times, and enhancing supply chain efficiency. It also identifies slow-moving or obsolete stock.

Adopting effective inventory management practices can increase profits, reduce waste, and increase customer satisfaction.

Customer satisfaction plays a pivotal role in business success. Satisfied customers tend to be loyal, make repeat purchases, and advocate for the business, whereas dissatisfied customers may share negative experiences, resulting in lost sales and a tarnished reputation.

Customer satisfaction correlates with retention, which is more cost-effective than customer acquisition. Satisfied customers foster loyalty, driving repeat business and revenue growth over time.

How is inventory management linked to customer satisfaction?

The significance of inventory management in fostering customer satisfaction cannot be overstated and is well-known by Perth business accountants. The ability of a business to meet customer demands and fulfil orders on time requires good inventory management.

Consider the following ways in which inventory management directly impacts customer satisfaction:

  1. Product Availability: Customer satisfaction hinges on the availability of desired products. Customers anticipate businesses to have the items they seek, and any stock shortage or unfulfilled orders can provoke frustration and prompt customers to seek alternatives. Through effective inventory management by Perth SME accountants, businesses can ensure they have the right stock when needed.  If you do not have something to sell, you cannot sell it.
  2. Delivery Speed: Speed is paramount in satisfying customer expectations. Customers want fast delivery, and any delays can result in dissatisfaction. Effective inventory management creates fast order delivery by ensuring that products are available for shipment.
  3. Order Accuracy: If you ship the wrong thing, you will lose money and customers. Customers expect to receive the exact products they’ve ordered, and any errors can lead to irritation and discontent. By implementing effective inventory management strategies through cloud accounting software, businesses can minimise mistakes by maintaining accurate stock levels and ensuring precise order fulfilment.
  4. Product Quality: The quality of products directly influences customer satisfaction. Damaged or expired goods disappoint customers and result in lost sales. Effective inventory management enables businesses to monitor product quality closely, reducing the likelihood of selling damaged or expired items.

Inventory management maximises operational efficiency and increases customer satisfaction by ensuring product availability, fast delivery, order accuracy, and product quality standards.

Below are several strategies Perth business accountants can implement to enhance their inventory management practices and enhance customer satisfaction:

  1. Routine Inventory Audits: Conducting regular inventory audits aids in tracking and managing your inventory, mitigating the likelihood of overstocking or stockouts. Your business culture must be focused on inventory management.  If your team forget to enter inventory data into your cloud accounting program, the stock numbers will be wrong.
  1. ABC Inventory Analysis: Employing ABC inventory analysis, which categorises inventory based on value and criticality, allows Perth SMEs to prioritise their inventory management efforts efficiently.
  2. Surplus Stock: Maintaining surplus inventory assists companies in addressing unforeseen spikes in customer demand or disruptions in the supply chain.  The question of how much stock you should be holding is also a difficult one to answer.
  3. Precise Demand Forecasting: Accurate demand forecasting lets companies plan inventory levels effectively, minimising the risk of overstocking or stockouts.  A lot of cloud accounting software now has AI built into the code to help with demand forecasting – Futrli is an example of this.
  4. Just-in-Time Inventory: Adopting just-in-time inventory systems involves keeping inventory levels low and ordering products only when necessary, reducing carrying costs and the likelihood of inventory obsolescence.
  5. Cross-Docking: Implementing cross-docking entails receiving products from suppliers and promptly shipping them to customers without warehousing at the Perth SME’s factory or warehouse.  This aids in lowering inventory holding costs.
  6. Automated Inventory Management Systems: Utilizing automated inventory management systems like Xero or Unleashed aids companies in optimising inventory levels, reducing errors, and enhancing inventory visibility.

Food & Beverage:

And supermarkets cannot have white shelf space.  Effective inventory management helps you keep DIFOT (delivered in full on time) and support SKU retention.  Yet, this is merely the surface.

Freshness is paramount. No one wants wilted greens or meat with 1 day left best before. By implementing inventory practices such as FIFO (First-In-First-Out) methods, monitoring expiry dates, and upholding optimal storage conditions, you guarantee the freshness of your offerings.

Diversity is equally crucial. Customers crave variety. Inventory management empowers you to curate a diverse selection tailored to demand, preventing overstocking unpopular items and making room for enticing seasonal specials or personalised customer requests.

Safety cannot be overlooked.  It forms the bedrock of trust. Inventory management aids in tracking recalls, monitoring allergens, and enforcing stringent hygiene and handling protocols across the supply chain, instilling the peace of mind your customers rightfully seek.


Picture the frustration of scouring every corner for the perfect outfit only to encounter barren shelves. Effective inventory management guarantees product availability, stopping stock shortages and ensuring customers discover their desired items. It also fosters variety by stocking diverse options tailored to demand, infusing freshness and excitement into the shopping experience. Furthermore, real-time tracking aids in promotional planning, enabling targeted discounts on soon-to-expire items and elevating customer satisfaction.


In manufacturing, delays stemming from missing parts can spell disaster. Precise forecasting and streamlined ordering processes avert bottlenecks. Yet, inventory management extends beyond parts alone; it encompasses raw material management, curbing waste and optimising costs, ultimately leading to competitive pricing and delighted customers.


In healthcare, even minor inventory hiccups can yield grave consequences. Robust inventory management safeguards patient well-being by ensuring the availability of vital medical supplies and equipment. It plays an instrumental role in medication oversight, staving off shortages of life-saving drugs and guaranteeing precise administration. Moreover, vigilance in tracking expiry dates and upholding proper storage conditions ensures product safety, a cornerstone of patient satisfaction.


In the ever-evolving landscape of technology, customer satisfaction hinges on the availability of cutting-edge gadgets.  Tech inventory falls in value daily.  Good inventory management adapts to fluctuating demands for new devices while ensuring essential accessories like chargers and cases remain in stock. Leveraging data-driven insights enables anticipating future trends, facilitating inventory adjustments to stay ahead of the curve and thrill tech-savvy customers.


In the realm of online retail, every click carries weight. Efficient inventory management eliminates the dreaded “out of stock” scenario, averting lost sales and customer frustration. Real-time tracking and precise product descriptions foster trust and transparency, while swift and reliable order fulfilment ensures timely deliveries, surpassing customer expectations.

Remember, inventory management is more than numbers on a spreadsheet; it’s about comprehending your customers’ needs and strategically utilising your stock to meet them, which is where Perth business accountants are critical. By prioritising availability, cost-effectiveness, and safety, you can use inventory to elevate customer satisfaction.

Excellent Inventory Management Practices:

Toyota’s Innovative Approach:

Renowned in the automotive sector, Toyota stands out for its innovative inventory management system. Employing the just-in-time (JIT) method, Toyota focuses on reducing inventory levels and enhancing efficiency by delivering products precisely when customer demand arises. This strategy has enabled Toyota to minimise lead times, eliminate waste, and ensure the timely delivery of high-quality products.

Of course, Toyota’s JIT system came under fire when supplier shortages stopped the entire production run.

Walmart’s Precision System:

As a global retail powerhouse, Walmart excels in inventory management efficiency. Leveraging a sophisticated system, Walmart tracks inventory levels in real-time, optimising stock levels to mitigate the risks of stockouts or overstocking. This approach ensures product availability when customers need them, reducing wait times and enhancing overall customer satisfaction.

Amazon’s Cutting-Edge Solutions:

Amazon boasts an advanced inventory management system. Constantly monitoring inventory levels and demand, Amazon fine-tunes stock levels to minimise the likelihood of stockouts or excess inventory. Operating in real-time, this system enables Amazon to adapt to changes in demand swiftly, ensuring products are readily available to customers and reducing wait times significantly.

Amazon’s Fulfillment by Amazon (FBA) service also revolutionises order fulfillment. By allowing sellers to store products in Amazon’s warehouses and leveraging Amazon’s logistics and customer service support, FBA ensures fast and reliable shipping. This seamless fulfilment process enhances customer satisfaction by guaranteeing swift and dependable product delivery.

Challenges in Inventory Management:

While effective inventory management can enhance customer satisfaction, companies often encounter various hurdles when implementing inventory management strategies.

These challenges include:

High Inventory Carrying Costs: Maintaining excessive inventory levels can result in elevated carrying costs, potentially impacting a company’s profitability.

Inventory Obsolescence: Slow-moving or unsold inventory may become obsolete, leading to financial losses for the company.

Supplier Reliability: Dependence on suppliers for timely and accurate inventory deliveries poses a challenge. Supplier failures can disrupt supply chains and hinder a company’s ability to meet customer demand.

Forecasting Accuracy: Inaccurate demand forecasts can result in overstocking or stockouts, adversely affecting customer satisfaction.

Seasonal Fluctuations: Products subject to seasonal demand variations present challenges in managing inventory levels and meeting customer expectations throughout the year.

Product Perishability: Items with limited shelf life, such as fresh food, require meticulous inventory management to minimise waste and ensure customers receive fresh products.

Implementation Costs: Implementing inventory management systems and strategies can be prohibitive, particularly for smaller businesses with limited resources.

Navigating these challenges demands careful planning, robust strategies, and adaptable solutions to optimise inventory management practices and maintain customer satisfaction.  Using a Perth business accountant like Westcourt who is a Xero Platinum partner is a good stepping stone to make sure your inventory management is on track.

How to Overcome Challenges in Inventory Management:

Companies can adopt various strategies to enhance inventory management practices to surmount the hurdles linked with inventory management.

Implement Inventory Cloud Accounting Software: Adopting inventory management software like ServiceM8, SimPro and Unleashed can streamline inventory-related tasks, enhance inventory visibility, and mitigate the risk of stockouts or overstocking through automation.

Harness Data Analytics: Leveraging data analytics enables companies to glean insights into customer demand patterns, product seasonality, and other trends. This fosters more accurate inventory forecasting, minimising the likelihood of overstocking or stockouts.

Optimize Supply Chain Management: Cultivating robust relationships with suppliers and adhering to supply chain management best practices bolster supplier reliability, thereby reducing the risk of stockouts.

Embrace Just-in-Time Inventory: Just-in-time inventory systems advocate maintaining minimal inventory levels and ordering products as needed. This approach reduces carrying costs and mitigates the risk of inventory obsolescence.

Explore Outsourcing Inventory Management: Entrusting inventory management to third-party logistics providers alleviates the burden on internal teams. This allows companies to focus on core business activities while ensuring optimal inventory levels and punctual deliveries.

By implementing these strategies, companies can tackle inventory management challenges head-on, fostering customer satisfaction, minimising carrying costs, curbing waste, and ensuring timely product delivery to meet customer demands.


Good inventory management practices are often seen as the bane of many family businesses.  However, it should not be so.  With the right culture, strategic focus and use of cloud accounting software, inventory management should become a competitive advantage.  This is where Westcourt comes in – as a Xero Platinum Partner, we are deeply skilled in automating and implementing software that works for Perth SMEs.  Coupled with our single focus on family-owned businesses and our global network through GGI we are the natural choice for business owners wanting to get a hold of their business – so why not call us today?

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