Inventory Management: The Secret Weapon of eCommerce Success

Imagine a customer is eager to buy one of your products, only to be met with a dreaded “Out of Stock” message. This disappointment can lead to lost sales and long-term customer dissatisfaction. Metrics like conversion rates and abandoned carts will take a hit, reflecting your inability to fulfil customer needs.

But “Out of Stock” isn’t the only enemy. Inaccurate inventory data can be even more damaging. Imagine an item listed as available online but mysteriously missing from the warehouse when picking the order. The resulting delays and inefficiency create a far greater burden.

An effective inventory management system will tackle these problems head-on. By optimising stock levels, you’ll delight customers and avoid the financial drain of an overstocked warehouse. This translates to improved customer satisfaction and increased productivity.  It also reduces costs for insurance, potential write-offs of expired goods, and freight through a reduction in shipments per order. 

Effective inventory management is essential in driving a healthier profit margin through cost reduction and increased efficiency.

Building a Strong Foundation for Managing Inventory

The cornerstones of successful inventory management are:

• Good master data that reduces errors during processes such as purchase order receipt, sales order picking, and counting.
• Effective inventory management software including:
  • Forecasting modules that are actively managed to improve availability and minimise stock outs.
  • Warehouse and transport modules to track and monitor inventory items, sales orders, and manage shipments. 
• Robust end-to-end warehouse processes and accompanying inventory audits, including regular cycle counts to maintain stock integrity.
• Relevant KPIs that underpin performance, including line-fill, forecast accuracy, inventory accuracy, shrink, mis-picks, process compliance, shipments per order. 

Optimising Inventory for Business Success

Inventory management can be enhanced through continuous improvement tools and techniques can be used to improve the data, processes, and quality of output from your inventory management system. With our clients, we typically find opportunities exist in:

• Vendor compliance contracts with suppliers to ensure booking slots are requested, and products are presented in the right format with the correct documentation to drive efficient processing.

• Supplier management through appropriate KPIs, regular master data validations and effective planning parameters. 
• Streamlining the throughput of goods in by having the appropriate hardware and automation, making items available to your customers sooner.

• Maximising the output of your inventory management software through product segmentation, ABCs and service level factors.
• Addressing forecast bias. 
• Collaborative approaches to promotional campaigns with sales and marketing.
• Product life-cycle processes to maximise the success of new products and accelerate the depletion of slow moving, obsolete and/or end-of-season items. 
• Assigning dedicated resource with a structured approach to conduct Perpetual Inventory counts to maintain stock integrity.
• Implementing measures to prevent Damage, Loss, Theft (Shrink).
• Having appropriate levels of data to drive management actions. 

By embracing these strategies and fostering collaboration across different business functions, eCommerce businesses can unlock the full potential of inventory management. This translates to a significant competitive edge, allowing businesses to not only meet but exceed the evolving expectations of their customers.

We’ve supported a variety of businesses to improve their online customer experience through their supply chain and logistics strategy. Please contact us if you’d like our support.

References

¹ https://www.statista.com/topics/2333/e-commerce-in-the-united-kingdom/

² https://www.ons.gov.uk/businessindustryandtrade/retailindustry/timeseries/j4mc/drs

³ https://www.oberlo.com/statistics/ecommerce-sales-by-country