As your online retail business grows, how do you make sure you hold the right amount of stock? Too much, and you may tie up working capital and inhibit growth. Not enough, and may you disappoint your customers.
A rock-solid inventory management system becomes even more important as your business grows.
A great example of a company that has reaped the reward from smart inventory management is Kmart. Under Guy Russo's leadership, the Australian retailer closed 15 of its local distribution centres, electing to store products offshore and only bring them in when needed.
This move saved the company $60 million. And the lean approach to storage and logistics, along with a marked shift in Kmart's overall retail strategy, has delivered a significant turnaround for the company.
Russo knew that the less product they stored in their Australian warehouses, the better. This example demonstrates how, by housing the majority of product at Asian manufacturing sites and implementing a just-in-time inventory management model, you could free up capital and created a more streamlined supply chain.
To streamline your logistics and supply chain models as Kmart has done – which may ultimately free up working capital so you can invest in growing your business – you need an inventory management system that gives you complete visibility into stock levels, movement of product, and more. You may need real-time insights, data and analytics to calculate the optimum levels of stock to hold. When you're dealing with hundreds or thousands of pallets, you can't guess.
Importantly, if you outsource any part of your supply chain, you must ensure that your 3PL provides data about stock levels and movements in real-time.
"StarTrack 3PL can provide complete visibility into all stock at all times, including delivery. We scan every single product when it arrives and enter it into a cloud-based system. Customers can then view their products remotely, see how long items have been sitting on the shelf, and manage their stock profile externally," said Shaun Patterson, General Manager Marketing at StarTrack.
Gain full visibility into your inventory
Know the volume and value of your inventory; and get a clear picture of what your fast-moving stock is, and where it sits. This knowledge can be used to your advantage – place your fast-moving stock close to the picker to reduce picking and packing costs; and make better business decisions around acquisition and fulfilment.
Boost your OTIF score
This is your 'on time in full' score, and it measures how often you can deliver the right stock on time. Many retailers regard it as the 'pulse' of their business. The higher your score, the happier your customers – which may increase your sales.
"Supply chain leaders deliver on time in full (OTIF) on 95.7% of occasions and have an impressive 15.3 inventory turns [cost of sales divided by average inventory level], while the laggards achieve only 3.8 turns."1
Streamline your operations
Implement cost-saving strategies like demand planning and integration with other business systems. When your inventory systems are talking to back-end financial, CRM and shopping cart systems, you could realise significant time and cost savings. See other ways to streamline inventory management.
Manage seasonal demand
Using the reports and insights from an inventory management system, you'll gain an accurate picture of the flow of stock at different times of year, helping you to forecast production and ensure you hold the right amount of product as the seasons change.
Enhance the customer experience
When inventory systems 'talk' to shopping cart systems and your eCommerce site, a customer can instantly see whether an item they love is currently in-stock. If it's not in stock, they can see how long before it's back on the shelf. This visibility could be crucial to keeping customers happy.
For a consumer keen to get their hands on the latest gadget from your online store, there's nothing worse than being told there's a two-week wait.
Not only does a 3PL help to expedite the delivery of products, but it can also help with the steps before delivery – such as ensuring that products are stocked to appropriate levels in the warehouse. After all, getting your products into the hands of consumers faster will keep you one step ahead of the competition.
Box sums it up well. "3PL has made our total offer much better. There's no way in our old set-up that we'd have been able to get products out so quickly."
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