How Does Quantity On Hand Work? Definition And Importance In Ecommerce 

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Picture this: your ecommerce brand is about to run a big sale for one of your most popular products. In preparation, you order more inventory from your manufacturer. 

But when the day of the sale comes and hundreds of orders start pouring in, you quickly realize that you’re in trouble. The inventory you ordered from the manufacturer hasn’t arrived at your fulfillment center yet, and you don’t have enough units at your fulfillment center to fulfill all of them.  

This scenario is why it’s important for ecommerce brands to track quantity on hand. When you know how much inventory you physically have in your facility that’s ready and available for order fulfillment, you can make more informed decisions about reordering inventory, maintain optimal stock levels, and better meet customer demand. 

In this article, we’ll walk through what quantity on hand means, how it differs from other inventory metrics, and what role it plays in your inventory management strategy. 

What is quantity on hand? 

Quantity on hand plays a vital role in inventory tracking as it gives you an accurate understanding of your inventory needs. It provides you with the operational visibility needed to plan your procurement according to your warehouse capacity. 

Quantity on hand vs. available quantity 

Available quantity refers to all the inventory that is available to be used to fulfill orders. It excludes any inventory that is: 

• Allocated or reserved to fulfill outstanding orders (also known as inventory backlog) 
• Picked for orders 
• Shipped out in orders 

In contrast, quantity on hand is a slightly broader metric, as it does include inventory that’s been reserved for outstanding orders.  

Together, these two metrics give you an extremely granular understanding of your stock availability, and help prevent you from selling inventory you don’t actually have anymore. 

Quantity on hand vs. stock on hand 

Quantity on hand is similar to stock on hand, as they both refer to the total number of products physically in your warehouse. However, stock on hand is a broader term that encompasses your total inventory assets (i.e., every unit of every SKU you carry).

Meanwhile, quantity on hand is usually used to track the count of specific inventory items (such as the amount of units you have of one particular SKU). As such, stock on hand lacks the real-time usability of quantity on hand for immediate decision-making. 

Why tracking quantity on hand is crucial for ecommerce businesses 

You might assume that tracking quantity on hand is too granular or unnecessary in the grand scheme of things. But being aware of your quantity on hand at any given time is actually incredibly important, and materially impacts your business in a couple of different ways.  

Impacts on customer satisfaction 

Imagine seeing something that you like on a website, only to find out that it’s out of stock. Chances are that you’ll go somewhere else to find a similar item instead of waiting for it to come back in stock. It might even ruin your whole shopping experience with the original seller.  

To avoid these situations, build customer loyalty, and improve customer satisfaction, it’s crucial for ecommerce sellers to meet demand when it comes – and to so that, they need to maintain sufficient stock levels.  

Accurately tracking your on-hand quantity is a crucial step to maintaining stock availability, as it helps you identify when you’re running low on specific items. This way, you can plan timely reorders and replenish your inventory before you actually run out of stock. 

In other words, it helps you avoid  stockouts and maintain product availability to effectively meet customer demand. Moreover, the ability to reduce backorders and ensure faster deliveries could help to improve customer satisfaction. 

Role in cost management 

Tracking your on-hand inventory doesn’t just help you see how much inventory you need; it also gives you an idea of how much you don’t need. When measured alongside factors like warehouse capacity and lead times, quantity on hand helps make sure you don’t accidentally order more inventory than your space can physically hold, or than you would need to meet demand. 

This helps you optimize cash flow by reducing the amount of capital that’s tied up in unnecessary inventory. Additionally, the less excess inventory you’re stocking, the less storage space you’ll need to pay for, which reduces inventory holding costs. These are both crucial steps to better manage your costs and improve your bottom line. 

How to track quantity on hand 

Tracking quantity on hand can be a straightforward process as long as you implement the right tools and best practices. Here are a few steps to tracking your inventory quantity on hand. 

Manual vs. automated tracking methods 

Manual inventory tracking methods involve using spreadsheets to record transactions and inventory quantities. This can be a time-consuming process that’s prone to errors, although it may be cost-effective for smaller operations. But to maintain high levels of inventory accuracy and speed up the tracking process, automated tracking systems (often built into inventory management software solutions) are key.

This includes ecommerce automation tools that automatically record every single transaction and activity to track inventory movement across the warehouse. Warehouse staff make use of barcode scanners to capture inventory data and update your records in the inventory management system. That way, your inventory quantity on hand is automatically updated in real time throughout your warehouse workflow.  

If an item is picked from the shelves and moved to fulfillment, it’s no longer accounted for in your total inventory count. This not only saves you time, but also minimizes the risk of human error or discrepancies with real-time inventory adjustments.   

Leverage warehouse management software technology 

In the same vein, warehouse management systems play a vital role in accurate and efficient tracking of inventory quantity. Solutions like ShipBob’s WMS have the capability to track your inventory movement in real time across multiple fulfillment centers. This helps you to accurately track the number of items you have in stock throughout your entire operation. 

With the system serving as a single source of truth, you get the most updated inventory count based on the latest inventory movement at various locations. If a single item gets picked and packed in one warehouse, the WMS automatically updates your quantity on hand count at that warehouse to reflect it, delving seamless visibility and stock control across multiple fulfillment centers.  

Additionally, the WMS syncs with your ecommerce platform and sales channels, enabling you to use a single pool of inventory to manage demand. The system will account for a reserved quantity of inventory based on new sales, giving you a more realistic understanding of your inventory needs. Inventory quantity is then updated in real time when items are picked for fulfillment. 

Prioritize analytics for improved accuracy 

On its own, quantity on hand may not paint a complete picture of your exact inventory needs. However, with comprehensive inventory analytics to help you understand your inventory performance, you can get an even better understanding of how to plan your procurement. 

For instance, ShipBob’s analytics dashboard helps you track real-time inventory performance and combines it with other data, such as order history and demand patterns. This can then be used to figure out how many units you need to reorder and when, allowing you to prevent costly stockouts without the risk of overstocking. 

Similarly, accurate demand forecasting helps you make informed decisions on reorder points and procurement timelines so you can maintain optimal stock levels at all times. 

How ShipBob helps ecommerce businesses optimize quantity on hand 

ShipBob’s powerful inventory management tools and leading fulfillment solutions help you streamline inventory tracking, enabling you to strategically optimize your quantity on hand and improve your bottom line. 

Here are just some of the ways ecommerce brands use ShipBob’s solutions to master their quantity on hand and inventory management.   

Real-time visibility across fulfillment centers 

ShipBob’s software features built-in inventory management capabilities and provides you with real-time inventory visibility across a global network of fulfillment centers. Inventory data is synced in real time based on inventory movement and activities across the supply chain workflow. If an item gets picked for fulfillment in one warehouse, the change in your QoH data is automatically recorded and reflected in your count for that facility. 

ShipBob also allows you to fulfill orders from the most appropriate fulfillment center based on proximity and stock availability. In addition to automatically forwarding orders to the fulfillment center closest to the end customer to minimize shipping costs and times, ShipBob can also route orders to a different facility if one of your fulfillment centers is out of stock for an item. This way, all orders get fulfilled in a timely manner, regardless of stockouts.  

“We have over 5,000 SKUs, but that hasn’t been a problem for us in working with ShipBob. Their dashboard gives us visibility to inventory management, which has been excellent. ShipBob’s inventory counts are very accurate to what’s on-hand, and we can always see what we have available there. We also have an integration between our ERP, NetSuite, and ShipBob, so inventory data is always being fed back into NetSuite for us to view inventory counts there.”

Charlotte Katona, President of Makesy 

Inventory Placement Program for strategic inventory distribution 

ShipBob’s Inventory Placement Program allows sellers in the United States to strategically distribute their inventory between various fulfillment centers. Using your brand’s actual order data and history, ShipBob’s proprietary algorithm recommends an optimal distribution strategy across ShipBob’s network of dozens of fulfillment centers worldwide.  

This program helps you stock more on-hand inventory at locations that see high customer demand, helping you maintain optimal inventory quantities across each fulfillment center without spending hours or days to do it.  

ShipBob will even handle physically distributing your inventory for you. Simply send all your inbound inventory to one hub location, and ShipBob’s team will take care of the rest.    

“IPP has been a game changer for us. First, it reduces costs for us, because we’re shipping more orders a much shorter distance. Second, and maybe equally as important, it’s reducing the time that customers have to wait to get packages.

The other great thing about IPP is that it makes inventory allocation so much easier. Trying to figure out how much of what inventory to send where could be wildly complex for our supply chain managers – but since ShipBob automatically tracks our order and shipping data for us, that data basically tells us our optimal inventory distribution.

We also get automatic reminders notifying us well before inventory levels are getting depleted, so we don’t have to constantly be checking our stock levels. IPP has saved our supply chain team a lot of extra work, and they also feel really supported by ShipBob and know that they can turn to them for help.”

Tyler McCann, Co-Founder of Taste Salud

Optimize quantity on hand with ShipBob’s proprietary WMS 

ShipBob’s powerful warehouse management system helps you maintain operational visibility to optimize your inventory management efforts. The system automatically syncs your inventory data based on the latest activities across the warehouse, so if new inventory is received, the quantity on hand is automatically updated to give you the latest information. 

The WMS also comes equipped with tools to reduce mis-picks and improve inventory accuracy. Your warehouse staff can use barcode scanners to verify their picks and record them in the system, ensuring order accuracy while helping you keep your inventory levels updated in real time. This streamlines the inventory management process so you can optimize quantity on hand. 

Integrating ShipBob’s WMS into our Miami warehouse has really helped our in-house business on so many levels. It did wonders for our inventory accuracy—having a system that would decrement inventory in real-time based on shipments gave us a lot more insight into our inventory movement and made our inventory counts in different fulfillment stages much more reliable.

Before ShipBob, we used to do a lot of that tracking and updating manually and it was a lot more work for our team as well, so automating everything through ShipBob’s WMS has been very helpful. Also with the amount of sales volume that we drive, we have to nail our inventory tracking across the entire supply chain.”

Rachel Tannenholz, President, and Melissa Mosheim, Director of Logistics at Aroma360 

For more information on how ShipBob can help you track your inventory and manage fulfillment, click the button below to get in touch. 

Quantity on hand FAQs 

Below are answers to the most commonly asked questions about quantity on hand. 

This article originally appeared on ShipBob and is available here for further discovery.