- Damaged customer experience.
- Redundancy and confusion from human error.
- Product shrinkage.
- Siloed tracking and information-sharing.
Customize your omnichannel inventory modelEver-expanding delivery channels mean once-solid inventory systems require regular updates and optimizations. This is evident in the growth of Buy Online, Pickup In Store (BOPIS), shoppable social media platforms and other disruptive trends triggered by e-commerce and COVID-19. Your inventory management system must be capable of fulfilling orders from an array of sources both on and offline — while consistently and accurately restocking.
Inventory management techniquesTo accomplish this shipping and supply cycle, you might decide on one of the following inventory control methods:
- First In First Out (FIFO): Products stocked first are sold first.
- Just In Time (JIT): Products/materials are created only when they’re specifically needed, rather than stocking just-in-case inventory that may never be sold.
- ABC analysis: Organizing a warehouse from best- to worst-selling products (A is high priority, B is mid priority, C is low priority). Stock A inventory needs consistent quality assurance, storage space and reordering, whereas Stock B and Stock C might not require as much hands-on management.
- Storefront-first: While e-commerce and contactless shopping make BOPIS convenient for shoppers and less costly for shippers, inventory that sits in brick-and-mortar stores should be prioritized first for sales and shipment, where applicable. (If you don’t prioritize store-based inventory first, you at least need an efficient inventory system that can track and move products between stores or between online channels.)
- Reorder Point (ROP): The ideal window of time and price point at which to replenish inventory to avoid running out of supplies or overstocking.
- Economic Order Quantity (EOQ): The amount of product that should be ordered while reducing storage and holding costs.
Define your KPIsThere’s no shortage of key performance indicators (KPIs) by which to measure your business. The United States Postal Service promotes and explains 10 metrics here, including:
- Average Days to Sell Inventory (DSI): Length of time to convert inventory into sales.
- Holding costs: Unsold inventory and associated costs of “holding” them potentially indefinitely.
- Perfect Order Rate: The ratio of orders that are the right product in the right package at the right amount at the right destination — and documented “rightly” in the system.
- Employee KPIs.
- Sales KPIs.
- Operations KPIs.
- Receiving KPIs.
Map your software to your KPIsA lack of visibility into your inventory data results in lost opportunities and wasted resources. More specifically, that means missing out on chances to:
- Secure repeat orders and lifetime customers.
- Reduce shopping cart abandonment.
- Upsell and cross-sell product offerings.
- Benchmark performance metrics against internal historical trends, industry standards and competitor success.
- Integrating with existing applications and software (or entirely replacing legacy systems).
- Explicitly featuring and supporting the KPIs you track.
- Reflecting real-time inventory data for all stakeholders who need access.
- Sharing and exporting information to other lines of business, vendors and external partners without losing data integrity.
Emphasize your returns policyThe rise of the reverse supply chain adds another dimension to your warehouse inflows and outflows. All of your reordering policies must account for products being returned at higher rates in recent years and months — potentially as much as 40% can be expected to be returned. Without an effective returns policy, you might be stuck with:
- Defective or duplicate stock.
- Poor customer experience.
- Increased carrier and holding costs.
Subscribe to GMT's newsletter to get the latest updates
Get the latest updates 📪
Subscribe to our monthly newsletter to stay in the know of Parcel industry and GMT updates.