January 2018 | Commentary | E_Commerce

Inventory Strategies That Satisfy and Retain Customers

Tags: E-commerce, Logistics, Supply Chain

Jonathan Tran is Product Marketing Manager, Ingram Micro Commerce, 800-445-5066

The Amazon Effect continues to weigh heavily on the supply chain. Consumers expect to receive packages within a few days—or within one day—of placing an order. The demand for lightning-quick fulfillment, coupled with myriad small-order additions, has led to a complex operating environment.

Shipping is the second-most widely reported reason for consumer dissatisfaction when shopping online, says a 2017 consumer survey by market research company Statista. Lost packages and late deliveries are the two most common causes of consumer dissatisfaction, according to a second Statista survey.

Any one of the various moving supply chain parts may be responsible for shipping delays. For instance, inventory discrepancies at warehouses might be the reason for a slow shipment—if a consumer places an order for an item that isn't actually in stock (despite what the website says), the warehouse cannot fulfill the order.

Keeping Good Records

Shippers can turn their attention to the following three frequently overlooked components of inventory record management.

1. Don't let short shipment holds bog down the entire warehouse. Late-arriving packages are often the result of inventory inaccuracies, when the quantity of an item listed is less than the quantity received. When short-shipped orders happen, they can create an inventory freeze and affect the warehouse's ability to fulfill additional orders.

Rather than freeze a warehouse's entire inventory, shippers can ensure fulfillment systems unlock held inventory in order to fulfill orders not associated with the SKU in question.

2. Normalize adjustment codes across inventory pools. As companies grow, they tend to use a variety of different warehouses in disparate geographic locations. As the number of inventory pools increases, managing inventory across those pools often becomes more complex. After a short-shipped order, for instance, if inventory adjustment codes at different warehouses are not all synced, it's difficult to know which held items to unfreeze.

Normalizing inventory codes across all warehouses seems like an obvious answer, but it is a solution that many companies leave out of their maintenance routines. Normalizing codes provides a better idea of the items that are potentially available and helps forecast when an order can be fulfilled.

3. Connected inventory-adjustment systems. A lack of centralized management tools is a common root cause of issues like these. Identifying shipment holds and syncing inventory adjustment codes won't help improve short-shipped rates unless there is a way to manage all those changes.

Before addressing these components, organizations should ensure all databases and other inventory processing systems are connected and working in lockstep to highlight inventory discrepancies and stop issues before they start.

Simplify and Streamline

In their study Inventory Record Inaccuracy: An Empirical Analysis, Nicole DeHoratius and Ananth Raman explored more than 250,000 SKUs across one retailer's 37 stores. The study found 65 percent of inventory records were inaccurate and product categories were responsible for much of the variance.

Essentially, implementing tools and processes to simplify store environments and streamline distribution is key to fixing inventory inaccuracies and ensuring consumers remain happy. Follow these tips to better position yourself for future growth and retention.

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