Order Management

10 Best Web-Based Order Management Software (OMS) for eCommerce in 2024

The goal of every retail business is to sell as many items as they can to turn over a profit. However, in order to achieve that goal, they need to have in place a centralized solution that consolidates order, sales, delivery and return data across sales channels, physical stores, their own website, and more. Doing this is important because when a company deals with multiple orders and starts to scale up its operations, managing and keeping track of them can start to become disorganized and can fluster the people who are in charge of maintaining the order and sales records. Having an automated software solution that can automatically enter the relevant data every time an item is purchased, delivered or returned can drastically smoothen out the order management process and reduce the number of mistakes or omissions that are made. In this blog, we will thoroughly explore what order management software is, its functions, the benefits associated with it, factors to consider when making a choice and the top 10 web based order management systems currently available. What is Order Management Software? Order management software is a type of web-based tool that helps businesses manage their orders and inventory across multiple channels. It allows companies to control every aspect of their orders, including order entry, order processing, inventory management, shipping, reverse logistics and customer service. With an order management system in place, businesses can efficiently manage their orders, reduce errors, improve order accuracy and speed up order processing times. Order management software can integrate with other systems, such as accounting and CRM software, providing a complete solution for managing a business's sales and customer service operations. Order management software can be used in a variety of industries, including eCommerce, retail, manufacturing and distribution. It is especially useful for companies that sell products across multiple channels, such as online marketplaces, brick-and-mortar stores, and mobile apps. [contactus_lilgoodness] Top 3 Functions of Web-Based Order Management Systems Keeping Tabs on Your Inventory Levels For most retail companies, managing inventory across several channels ranks highly on their list of challenges. If you haven't laid the groundwork for scalable development, monitoring the velocity, volume, and fulfillment of omnichannel orders can bottleneck your organization. An order management system can aid merchants in managing inventory across all of their sales platforms. It is a product specifically made to assist eCommerce businesses planning to enhance their inventory management procedure during the coming years. An OMS can help in multiple ways, such as being able to receive real-time updates of inventory levels across all online marketplaces, understanding which products receive the most demand per channel and much more. Automating Your Fulfillment Procedure By treating the entire supply chain as a connected ecosystem, modern web-based order management systems can enable sellers to automate their in-house procedures from order placement to fulfillment. Online store owners who want to expedite the processing, selection and delivery of orders can depend on an OMS for multiple tasks such as accepting payments regardless of currency or delivery destination, printing shipping labels, routing customer orders to the relevant courier services, transmitting order data to wholesalers or 3PLs so they can start the order fulfillment process and more. Storing Sensitive Customer Details A CRM system is a type of order management tool that gives retailers access to all the data they have gathered from a customer, including past purchases, lifetime value and location. Using this data, retailers can customize their marketing efforts towards specific customers in an effort to close transactions. An OMS can synchronize with most CRMs and consolidate every piece of customer information. A company, for instance, could use information from its OMS to develop consumer segments based on their location, income, purchase history, return data, and more. Therefore, each segment can be targeted based on the traits they have exhibited to create a higher chance of getting a purchase from them. What are the Benefits of Using Order Management Software for eCommerce? Enhances Order Precision Conducting order fulfillment without an OMS is a dangerous endeavor. Spreadsheet-based order processing exposes you to the occurrence of human mistakes. Errors resulting from manual order management is the primary source of inventory or fulfillment problems for the majority of merchants. This leads to logistical headaches in addition to ruining client experiences, especially if the incorrect product is shipped to a consumer. Both the number of returns you'll need to handle and the cost of fixing incorrect orders will increase dramatically. Therefore, using order management software will instantly streamline the way orders are processed and items are dispatched. You can learn more on how to streamline shipping processes. Enables Faster Shipping Modern consumers continue to place a premium not only on low delivery costs but also on how quickly a product is delivered after an order is placed. When shopping online, most consumers choose same-day delivery or 2-day/next-day delivery. This is a need that brands must meet to increase the chance of recurring business. By comparing stock levels across many warehouses, order management software optimizes the picking and packing procedure, determines the fulfillment facility with stock that is closest to the customer, dispatches the product as quickly as possible and sends order data to the relevant location. This enables orders to be dispatched and delivered as soon as possible. Reduces the Prevalence of Overstocking and Understocking Many businesses have too much cash locked up in inventory and sellers can lose up to 12% of annual sales as a result of these two major issues, which are frequently caused by a lack of understanding of the required inventory levels to have. Overstocking refers to the accumulation of huge amounts of unsold inventory that suggests you are financially strapped because you are paying for both the products themselves and the storage costs to keep it. Conversely, stockouts refer to when sellers don't have enough inventory to meet demand. This means that you will have to turn away clients and persuade them to come back after the inventory has been restocked, causing dissatisfaction. The presence of order management software will negate these risks as it can help forecast demand and suggest the right amounts of inventory to store. Improves the Customer Experience It is evident that shipping is a sensitive topic for contemporary consumers. Customers value more than just the timeliness of your fulfillment procedure. 97% of customers want to know where their orders are, the delivery stage they are in and when they should expect the items to reach them. Using order management software enables retailers to fulfill these demands. The majority of platforms feature built-in order tracking that, upon request, provides clients with updates on the status of their packages. It's the kind of openness that converts customers into posting positive feedback as opposed to unfavorable reviews online. Enables You to Sell Globally The estimated value of the worldwide eCommerce market is $4.5 trillion. The capacity to reach clients globally is definitely a strength for eCommerce brands. Their only restriction was the procedures required to accept and complete orders from abroad. This is where order management software aids eCommerce companies in expanding globally. Retailers can do things such as accept several currencies as payment for orders coming from abroad, send order information automatically to 3PL partners in the relevant nation and send information to the warehouse that is most convenient for the end user. Factors to Consider to Choose an Order Management Software for eCommerce in 2023 Your Own Short-Term and Long-Term Objectives Finding the ideal order management software begins with knowing what purposes you will use it for, much like investing in any new form of software. Organize a meeting with your internal decision-makers to determine which features are essential and which are optional. Don't forget to consider future scalability and growth prospects throughout these discussions. Your decision-making should be significantly influenced by your plans for expanding the company. An order management software for eCommerce that can expand together with the business is necessary. The Quotations Provided by Each Company Vendors of web based order management systems will submit proposals to you for consideration if you inquire with them. These proposals aim to clarify the technical specifications and constraints of the system you intend to deploy so that you and them are on the same page. Don't forget to describe in full how you anticipate the order management software to operate in your organization. Provide details such as your order totals, number of units, the CRM you use, and training and hiring constraints to vendors so they can customize the bid for your company. The Availability of Options You Have It is unlikely that your initial contact with multiple order management software companies will instantly lead to the perfect match for your business. In order to analyze possible vendors, develop a list of multiple options that you can choose from. Make contact with each provider to set up a product demo or trial. To ensure you're choosing wisely, come up with a requirements checklist for each OMS vendor during this process and tick off each box depending on the services they offer. By doing this, you will be able to easily compare which options fit your requirements and which don’t, so you can shortlist and choose the best one. Top 10 Order Management Software Solutions (OMS) in 2023 WareIQ Source Founding Year: 2019Features: Inventory level monitoring, demand forecasting, smart placement recommendations, space optimization, multiple integrations and more.Country of Origin: IndiaPricing: On-requestDescription: WareIQ is an eCommerce fulfillment company providing end-to-end fulfillment services starting from warehousing to smart inventory placement to inventory management to last mile deliveries. It has a dedicated inventory management and order fulfillment platform that uses a wide variety of technology, such as AI and ML to help provide a deeper understanding of how to optimize inventory management and streamline various storage and procurement procedures. The company is quickly emerging as one of the best order management software companies out there due to its USP of having a unified platform where users get all the features mentioned below from just WareIQ's smart fulfillment platform:Warehouse and inventory managementOrder managementCourier allocation and trackingNDR and returns managementAnalytics and insights QuickBooks Source Founding Year: 1983Features: Multiple eCommerce integrations, Inventory and order tracking, reporting facilities, business intelligence metrics, partnerships with multiple channels and more.Country of Origin: USAPricing: Between $10 to $30 per monthDescription: A well-known brand in the accounting and order management software industry is QuickBooks. This program offers a wide range of capabilities on a single platform, allowing you to access and complete all of your accounting tasks in one convenient location. Its primary focus is on accounting as well as order management. Although QuickBooks is a well-known brand in the industry and has a wide range of capabilities, it is best suited towards the order management requirements of small businesses because it only supports a modest number of transactions and users. Brightpearl Source Founding Year: 2007Features: In-built CRM, automated pre-sales procedures, back order management, access to customer information, multiple integrations and more.Country of Origin: UKPricing: On-request Description: Multiple order management features are available in the Brightpearl OMS. The order management software, which was created for multichannel retailers, gathers data from numerous sales platforms and displays it in a single dashboard. Sellers can compartmentalize order fulfillment, automate pre-sales processes and manage back orders thanks to its extensive order fulfillment options. Moreover, Brightpearl also includes an in-built CRM. Retailers are able to know where, what and how a consumer made their purchases. It includes the fundamental contact information that assistance requests would require from customer service teams. Adobe Commerce Source Founding Year: 2016Features: Flexible solutions, global order fulfillment, multiple integrations, refunds and back order handling, inventory tracking and more.Country of Origin: USAPricing: On-requestDescription: Founded in 2016 as Magento and later acquired by Adobe, Adobe Commerce is an order management software that enables seamless cross-channel interactions and enables you to sell or fulfill orders from anywhere on the globe. It is renowned for its capacity to modify depending on the nature and scale of the requirement. It is a fantastic platform for individuals who require a high-quality order management system. It is adaptable and provides a lot of useful features but this benefit also has the drawback of making it difficult to use. LinnWorks Source Founding Year: 2010Features: Good adaptability, multiple online integrations, business performance analytics, automated data synchronization, access to multiple channels and more.Country of Origin: UKPricing: On-requestDescription: Linnworks is an order management software based in the UK. Businesses across multiple sectors can sell wherever their clients are by using Linnworks, which manages, connects and automates online commerce procedures. With Linnworks, you can get actionable analytics across online marketplaces and storage locations while managing your omnichannel orders, inventory and fulfillment from a centralized dashboard. The company offers a consolidated platform with all your order management requirements in one place. Skubana Source Founding Year: 2015Features: Generation of sales reports, cross-platform inventory tracking, multiple integrations, a single dashboard for all your information, automated order routing and more.Country of Origin: USAPricing: Starts at $999 per monthDescription: Skubana is one of the best order management software solutions around. The platform gives you the ability to effectively manage all the order management operations of your eCommerce company by precisely tracking your inventory levels and order history and even provides forecasts based on your historical data to help you expand. Although Skubana is a well regarded platform and has a tonne of functionality, using the system can be challenging and it is also quite expensive compared to other options on this list. Zoho Source Founding Year: 1996Features: Single dashboard access, inventory and order tracking, multiple integrations, automated reorder alerts, generation of sales reports and more.Country of Origin: IndiaPricing: Between $39 to $199 per monthDescription: Zoho is an order management software that you can use to manage both inventory and orders. You can link it with multiple website hosting platforms as well as most online marketplaces. It enables you to always keep track of your inventory levels, receives real-time order-related information and get alerts whenever any SKUs drop below the pre-specified reorder threshold. You can also use it to keep track of important information like pricing, costs and availability to keep your inventory organized. Every time a sale occurs, your inventory levels will automatically be updated across all of your sales platforms. Netsuite Source Founding Year: 1998Features: Various automations, multiple integrations, seamless synchronization of data, currency-specific pricing, customer support and more.Country of Origin: USAPricing: Starts at $499 per monthDescription: NetSuite is an omnichannel order management software that manages your orders from the point at which they are placed until they are delivered to the customer. With the aid of some comprehensive tools, such as currency-specific pricing, multiple automations, multiple delivery options and more, this OMS can help streamline both your order management and delivery processes. The company can accommodate companies of all sizes ranging from small startups to large-scale MNCs. Salesforce Source Founding Year: 1999Features: In-built CRM, inventory level monitoring, multiple integrations, customer data insights, access to multiple channels and more.Country of Origin: USA Pricing: Between $0.15 to $0.50 per orderDescription: Salesforce is an order management software that connects customers to products whenever, wherever and however they want them by integrating commerce, marketing and quality service. Because of its foundation as one of the world's top CRM tools, it seamlessly blends customer-focused information gathering and order management, enabling merchants to offer adaptable, omnichannel operations at a scale that is truly global. Therefore, the company is best suited if you have not already partnered with a CRM. Orderbot Source Founding Year: 2009Features: Inventory level monitoring, multiple integrations, data synchronization, historical analytics, order tracking and more.Country of Origin: CanadaPricing: On-requestDescription: Orderbot is an order management software that allows you to sync inventory data across platforms and websites, issue shopping alerts and import order history from other sites. Additionally, it can integrate orders that arrive from online marketplaces with clear visibility, as well as process payments and send real-time alerts for both orders and inventory levels. The platform can synchronize with numerous shipping companies, as well as accounting programmes. You can also integrate with ERP programs with a little extra work. Conclusion: What Makes WareIQ’s Order Management Software the Top Solution for Your Business? Investing in comprehensive order management software can save your business a ton of time, effort and money in the long run. It streamlines the way orders are accepted, processed, dispatched and fulfilled, and can also handle procedures like returns and tracking inventory levels across multiple online marketplaces and physical stores. It is able to store vital customer information, which can assist you in tailoring your marketing solutions to give you a higher chance of success. Just like how online video platforms have negated the need to physically store multiple CDs by giving you access to thousands of movies and shows at your fingertips, order management software can store all of the most important data across multiple platforms and stores in a single dashboard, reducing clutter and organizing it in a way that is easy to understand and accessible by whoever needs to view it. You can enable all these benefits by partnering with WareIQ. WareIQ is an inventory management and order fulfillment company that provides dedicated tools to optimize your inventory management and order fulfillment procedures. Some of the main services we offer are listed below: An In-House OMS We have a custom-built OMS that can integrate with multiple online sales platforms and CRMs to help you store and manage all your order and inventory data in one place. Real-Time Alerts Our OMS provides automated real-time updates regarding orders and inventory levels and can also set automated reorder triggers whenever a particular item is running low. Accurate Inventory Forecasting By giving you access to historical order and inventory storage data from prior seasons, we help you ascertain how many units you need to store of a particular item based on its current and future demand. Order Management Software (OMS): FAQs What are the key features of order management software?The key features of order management software typically include:- Order entry- Order processing- Inventory management- Shipping- Customer service How does order management software work?Order management software typically integrates with a business's existing systems, such as accounting and CRM software, to provide a complete solution for managing orders and inventory. Who can benefit from using order management software?Businesses in a variety of industries, including eCommerce, retail, manufacturing and distribution, can benefit from using order management software. Can order management software help with order accuracy?Yes, order management software can help improve order accuracy by automating order entry and reducing errors in the order processing and fulfillment process. Can order management software be customized to fit a business's specific needs?Yes, order management software can often be customized to fit a business's specific needs and workflows. Which is the best OMS for eCommerce in India in 2023?The best OMS currently available in India is WareIQ. This is because it offers all the advanced features you need, such as integration with multiple online selling platforms, web-hosting sites and shipping companies, the ability to automate replenishment triggers, real-time order and inventory-level updates and much more, in addition to being very affordable and flexible.

March 18, 2023

Minimum Order Quantity Explained: Formula to Calculate MOQ & 10 Benefits of MOQ for eCommerce Business in 2024

These days, starting a business is not a big deal, especially in the eCommerce space. People have enough money through their own resources or through investors but what they lack are knowledge and free time. They may know about the basics of demand and supply but don’t know how the nuances of running an eCommerce business or various factors that affect online business growth in multiple ways. Those factors can be efficient inventory management, warehouse management, streamlined last-mile deliveries, payment collections, etc. In eCommerce, inventory plays a crucial role. It is the biggest asset of a business among all its resources. Buying goods or raw materials isn't always easy for a seller. You need to find a trustworthy company that not only sells the necessary supplies at the right price but also allows you to order the most suitable amount possible and preferably, does not impose a minimum order quantity (MOQ). It is critical to understand how minimum order quantity works and why some suppliers may employ it. If appropriately controlled, it can help you boost your profits with increasing cash flow. MOQ can impact several aspects of an eCommerce business, including inventory management, pricing strategy, and customer experience. In this blog, we'll dive into the importance of MOQ and provide tips calculating MOQ and for finding the right balance between maximizing sales and minimizing costs. What is Minimum Order Quantity (Meaning of MOQ)? Minimum order quantity is the least number of units of a product that a retailer offers to sell to their customers at a particular time. In the eCommerce industry, it is mostly offered by a manufacturer or supplier in the context of production activity. A merchant can ask you to order an MOQ for a certain amount of money. MOQs are a reflection of the financial limits faced by suppliers while fulfilling an order. These can include expenditures associated with material, machinery, and completion of that order, such as shipping costs. It is maintained by suppliers to maintain sales margins and lower the operational and logistical costs of the business. What are the Different Types of Minimum Order Quantity (MOQ)? Simple Minimum Order Quantity Many businesses are not retailers although they have to fulfill a single order. The lowest limit could be the minimum order quantity or the least amount spent on the purchase. For example, a bike dealer directly buys bikes from the manufacturer but sells them in individual units. They maintain MOQ with a limited amount of stock with keeping in mind the constraints of economic factors by their target buyers. Complex Minimum Order Quantity Here, a retailer deals with many constraints at one time by taking care of various metrics such as price charts, quantity, quality, etc. A good example of this is orders placed by a grocery store owner or a chemist. A chemist has to fulfill orders for several medicines at a time for which they have to store different types of medicines in varying quantities. How does Minimum Order Quantity Affect Inventory? For both the supplier and the buyer, the minimum order quantity has a significant impact on inventory. Sellers who pick a high minimum quantity must produce and store large amounts and thus, their inventory management is affected by the MOQ. Buyers, on the other hand, must determine whether they require their product's MOQ, or else find another supplier with a lower minimum order quantity or explore various other inventory storage solutions. Buyers must think about things like storage capacity and the potential savings from acquiring products in bulk. Main Point of Difference Between Low MOQ and High MOQ High Minimum Order Quantity (MOQ) Suppliers with a high minimum order may need to keep a large amount of inventory with them to fulfill orders. Suppliers may need more time to fulfill orders if they want to keep inventory levels low and adopt just-in-time inventory management. Inventory requirements that are larger involve a lot of working capital and take up a lot of warehouse space. However, they save administrative expenses since products or raw materials can be ordered less frequently, resulting in savings further down the supply chain. While stockouts are less likely, there is a higher chance of products becoming obsolete with a high minimum value, particularly in the case of electronics. Low Minimum Order Quantity (MOQ) Suppliers don't require as much inventory on hand for orders with a low minimum order quantity because the typical order size is likely to be smaller. This could result in lower inventory levels and higher inventory turnover. A low minimum value might put a strain on your sales team, forcing them to manage more customers and work more to generate leads. Because orders are placed more frequently, administrative costs are higher. While low MOQ suppliers suffer the danger of running out of stock, they also run the risk of obsolescence. How to Calculate Minimum Order Quantity? There is no particular formula to calculate MOQ. It depends on various factors of a business like its size, location, operational sector, etc. It is built up to accommodate each supplier's unique problems and business needs. Businesses must select whether they want a lower minimum order quantity with a higher price when purchasing from their suppliers or vice versa. The more you buy from suppliers, the easier it is for them to cut costs per unit, which is why this system exists. Even though there is no set quantity for MOQ, there are a few things to consider when determining the optimum MOQ. Estimating Demand Demand forecasting considers product type, competition, seasonality, and other factors when calculating how many units you will sell as a merchant while ordering inventory. This information can assist you in making your next purchase decision. Inventory and demand forecasting go hand in hand in this equation. You might find that the manufacturer's minimum order quantity isn't far off from what you'd be able to sell. You'll also want to factor in your overall timeline for preparing the inventory to be shipped, which should include lead times, freight transit times, receipt of goods in the warehouse from your third-party logistics service provider (3PL), and any other potential delays, as you may find the need to order inventory sooner than expected. Knowing Your Break-Even Point If you want to set your minimum order quantity, you'll need to know what your break-even point is. When you recover the customer acquisition cost and your customer returns through email marketing efforts, you will get a better idea during the second transaction for DTC orders. Consider the lowest per-unit monetary amount you're willing to charge in exchange for a larger order value for wholesale agreements. It can't be so low that your profit margins suffer but if you're not merely paying for lesser amounts at a greater price, discounted prices are expected. Calculating Holding Capacity and Cost Some items are more costly to store than others (due to size, duration of storage, and special ecommerce warehousing requirements). It's more cost-effective to keep such items out of your inventory for as long as possible. The true cost of storing all of your products will reflect in your inventory holding cost, which you must consider before spending extensively on inventory. Framing Your MOQ Strategy Let's assume that you have high demand at all times. Suppose on average, your partners order 200 units per order, and you need to sell at least 150 units per order to break even. If your partners or clients have previously agreed to buy 200-unit orders, you might need to set your minimum order quantity to 200 units, or even lower to 150. Benefits of Minimum Order Quantity for Multichannel eCommerce Sellers and Buyers in 2023 A seller who sells their products on multiple channels including their websites through means such as dropshipping and 3rd party fulfillment has to strongly take care of the minimum order quantity. These days, retailers taking advantage of multi-location warehousing rely on order management software to manage all their orders and inventory. It helps them to cut costs on individual products which are transferred to buyers. Benefits for Sellers Better Cash Flow A seller should stock the right volume of inventory so that is not too high that they have to hold it for long periods of time where their money remains withheld and not too low where they cannot fulfill all their orders. Proper maintenance of minimum order quantity helps them to save more efficiently and have a better cash flow. Low Inventory Costs Storing a high volume of inventory is expensive. You not only need to pay to rent storage but also on tracking and maintaining inventory levels and keeping it safe. You will have to spend a lot of money to buy a high volume of inventory which is stuck for a long time. Assurance of Profit If an MOQ is set, orders are at the lowest amount after calculating the profit and it will not affect the inventory and transportation cost. This gives the business a guaranteed profit margin. Benefits for Buyers Increase in Savings When a seller saves money while selling a product, the effects trickle down to the buyers as well. This makes the end customer receive discounted prices from a seller who effectively manages inventory levels using minimum order quantity. Fresher Inventory A buyer buying products from a seller who follows MOQ will get fresh items because the seller stores the least amount of inventory that is needed. Steps to Implement Minimum Order Quantity (MOQ) Every idea, if tried and tested, can yield promising results compared to carrying out ideas that have not been researched. So for MOQ, these are the steps to achieve a better output. Calculate the Target MOQImplement the MOQ Calculate the Target Minimum Order Quantity This is the most essential thing to do while implementing minimum order quantity. You cannot purchase a lot of items and keep your inventory stocked with just those products. If these items are not going to get sold shortly then: There will be less space in your inventory to store other items.Your money will be stuck until the products are sold.The products could get expiredThe value of the products gets loweredThey start to need more maintenanceCosts will accumulate with time So for an easy check on this, you can take the following precautions: Figuring Out Demand Forecast the demand that you will need to fulfill in the future. Adjust your minimum order quantity per seasonal demands, the nature of the products, etc. Calculate the Break-Even Point Know the break-even point of a single product before you place an order in bulk. Consider All Possible Costs You must calculate all the costs associated with different minimum order quantity levels such as holding and transportation costs. Some products are expensive to store depending on their size, duration of storage, and special storage conditions. (e.g., fruits, vegetables) Implement the Minimum Order Quantity After all the trouble to calculate the right minimum order quantity, implementing MOQ is also a major task for the buyer. While implementing the MOQ, you may need to rent a warehouse, secure it, connect it to logistics partners, keep track of it, keep updating it, and add services like branded shipping, dropshipping fulfillment, etc. to it. You can also partner with a third-party fulfillment provider who will take care of all these things and give you extra benefits like multi-warehousing with MOQ, access to high-tech inventory management software, connections to more courier aggregators, RTO indicators, etc. Conclusion: Successfully implementing Minimum Order Quantity with WareIQ in 2023 As you we have discovered, MOQ is important for eCommerce players who are maintaining multiple shops at a time on multiple selling platforms. They have a lot of things to focus on. Instead of micromanaging things that will consume all of their time, they should focus on other important aspects and manage the business. WareIQ can be a solution for this. It provides you with the facility of multiple warehousing or fulfillment centers in different locations.You get an actual count of your inventory before initiating MOQs.You will have to spend less on warehouse (inventory) management after MOQ.It sends you a reminder for low inventory.It eases your holding capacity for a long time.It lowers your freight rate by placing your inventory near areas of high demand.It helps you to find the best logistic partner to make your fulfillment hassle-free.It enables you to promise your customers same-day and next-day delivery.It has features such as RTO Shield to prevent high costs associated with product returns. WareIQ offers sellers a full-stack platform. They also offer fulfillment centers near the recipient, which is something that not every eCommerce company can do. To save time, you can obtain all of your logistical needs in one place: inventory management, shipping orders, customer delivery concerns, and performance analysis. To enable firms to offer two-day deliveries, WareIQ maintains a network of fulfillment centers across India. They also collaborate with third-party companies to assist in the operations of their services, such as last-mile delivery. WareIQ handles issues that arise during order fulfillment, such as damaged or lost inventory, and responds immediately to provide a positive customer experience. To keep your cash flowing, they offer COD remittance twice weekly. Finding the most efficient and dependable choice for your delivery, as well as managing returns, are all taken care of. Minimum Order Quantity (MOQ): FAQs (Frequently Asked Questions) What does a minimum order mean?The smallest amount of a product that can be ordered in one delivery, usually to spread shipping expenses across a reasonable number of units, is known as the minimum order. We do not have an MOQ, and all of our wholesale products are sold in modest pack sizes through advanced shipping services. How do you find the minimum order quantity?There is no such formula for calculating it. MOQ depends on various factors like the size of the business, type of business, nature of the product, season for sale, and much more. What is MOQ in Supply Chain?The minimum order quantity, or MOQ, is the smallest order size that a supplier will accept. The smallest number of units is frequently used. Suppliers can, however, specify the minimum order quantity based on the order value. What is the purpose of MOQ?The goal of minimum order quantity is for suppliers to maximize their earnings while simultaneously getting rid of more inventory and weeding out "discount shoppers." What is EOQ & MOQ?Economic Order Quantity (EOQ) is a formula used in inventory management to calculate the optimal order quantity for a particular product. It takes into account the cost of ordering, the cost of holding inventory, and the demand for the product. The goal of using EOQ is to minimize the total inventory costs, which includes both the cost of ordering and the cost of holding inventory.Minimum Order Quantity (MOQ) is the minimum quantity of a product that a supplier is willing to sell to a customer. MOQs are often set to ensure that the supplier can produce or procure the product at a cost-effective price point. For example, a supplier may have a higher production cost for smaller quantities, and so may set an MOQ to ensure that they can cover their costs and make a profit. MOQs can vary depending on the product, supplier, and market conditions. How do you fix the minimum order quantity?If you are a buyer there is typically nothing that can fix the minimum order quantity (MOQ) set by a supplier. However, there are a few strategies you can use to try to negotiate a lower MOQ or find ways to work around it:1. Negotiate with the supplier: If you are a valuable customer or can demonstrate that you have a significant demand for the product, you may be able to negotiate a lower MOQ with the supplier.2. Look for alternative suppliers: If the MOQ set by your current supplier is too high for your needs, you can research other suppliers who may offer a lower MOQ.3. Group orders: Consider combining orders with other buyers to reach the supplier's MOQ. This strategy can help you save on shipping costs and reduce the overall cost per unit.4. Adjust your purchasing strategy: You can adjust your ordering frequency or the quantity you order each time to work within the supplier's MOQ. This strategy may require some planning and forecasting, but it can help you avoid overstocking or tying up too much capital in inventory.

February 25, 2023

What is Return To Origin and Non-Delivery Report in eCommerce? Top Reasons For NDR in eCommerce and How To Reduce RTO With NDR Follow-Ups in 2024

The eCommerce sector has experienced tremendous growth recently, particularly in D2C businesses, because they have fundamentally altered the interaction between consumers and brands. The secure and prompt delivery of the merchandise inventory is the key priority of an eCommerce vendor. Unfortunately, however, delivery delays happen frequently. Occurrences include stopped shipments, delayed deliveries, incomplete addresses, customers unable to pay the COD amount, inaccurate addresses, or even customers who refuse to accept the delivery for their particular reason. Customers' worries may grow as a result. In e-commerce, return shipments can account for up to 20% of all shipments, according to a recent KPMG study. For orders that are paid in cash on delivery (COD), this cost increases to 40%. Even the most successful companies encounter many delivery exceptions each month. These delivery outliers may appear insignificant, but they can quickly snowball into missed deliveries and subsequent losses. There is a considerable likelihood that a delivery error will become a Non-Delivery Report in eCommerce and then an RTO. As a result, your company is left to suffer the weight of a loss that was mostly preventable. You might wonder how it might be avoided. Through management and strategic planning, as with everything in business. In more detail, let's examine the cause-and-effect cycle that delivery exceptions cause and its many attributes. What Do The Terms Return to Origin (RTO) and (NDR) Non-Delivery Report in eCommerce Shipping Mean? In e-commerce, a non-delivery report (NDR) is a notification that is sent when a delivery attempt for an email message has failed. This can occur for a variety of reasons, such as the recipient's email address being invalid or the email server being temporarily unavailable. When an NDR is generated, it is typically sent back to the sender of the original email message with details about the failure. This can help the sender to understand why the message was not delivered and take steps to resolve the issue. For example, the sender may need to update their email list to remove invalid addresses or retry sending the message at a later time. In the context of e-commerce, NDRs can be important for a variety of reasons. For example, if a customer has not received a confirmation email or shipping notification, they may contact the retailer to ask about the status of their order. If the retailer receives an NDR for the email they sent to the customer, they may need to take additional steps to ensure that the message is delivered or to communicate with the customer through an alternative means. To ensure successful delivery, the courier makes several efforts to deliver the package. First, orders are given the RTO status, which stands for Return to Origin, if they are canceled or after numerous unsuccessful delivery efforts. The order must now be returned to the original warehouse it was first sent from because, as the term implies, the purchase has effectively been reversed. It can then be reloaded in your inventory and sold once more there. In this last mile of delivery, many potential problems could arise and lead to failure. Incomplete deliveries result in a Return To Origin (RTO). In addition, customers may have a negative impression of your brand, significantly degrading their delivery experience. Because of this, firms should give Non-Delivery Reports in eCommerce much thought when planning their shipping operations. Read Here: How to Address Last-Mile Delivery The WareIQ Way. [contactus_uth] Top 8 Reasons For NDR in eCommerce Which Can Lead to RTO (Return To Origin) in eCommerce in 2024 The RTO and NDR can harm any organization's long-term growth and profitability. You now have a general understanding of how NDR and RTO operate in the eCommerce business. But to truly comprehend how each of them functions, we must understand the causes of the Non-Delivery Report in eCommerce, which might result in RTO of order. These are the principal causes of NDRs: Incomplete Or Incorrect Addresses A buyer can make a mistake when providing the delivery address. For example, a consumer may accidentally or unintentionally enter the wrong delivery address. This could make it difficult for the delivery employee to locate the customer's location, making it harder for them to finish the delivery. Incomplete Or Incorrect Customer Contact Another issue comparable to the above could arise if a customer unintentionally enters the incorrect phone number. Therefore, the delivery employee would only be able to reach the customer if and when they needed directions to the delivery location. As a result, the order would be designated as NDR. Unavailable or Unreachable customers Once the customer has received their order, it is only considered fulfilled. The order can only be fulfilled if the delivery person has any issues locating the delivery location or if the customer is there to accept the delivery when the delivery agent arrives at the customer's location. The order then needs to be fulfilled. To confirm the delivery location, the delivery person will attempt to phone the customer. However, the delivery agent would only be able to finish the delivery if the customer's contact number was reached. Rescheduled Delivery By The Consumer Customers can select a different day and time for delivery if they are present or need help to make payment at a specific time or on the day delivery is supposed to take place. This information should be given to the delivery agent at the delivery time, who would then update it as the basis of the Non-Delivery Report in eCommerce. Customer Refuses Delivery Suppose a customer is dissatisfied with the delivery process or the state of the product upon delivery. In that case, they may exercise their right to reject or refuse an order after making a purchase. This could be more pleasant for eCommerce companies, yet it frequently happens, especially with COD orders. Customers are more inclined to cancel a purchase when payment has not been made. Consumer Unable To Make The Payment With COD purchases, it's common for the customer to require additional time to prepare the delivery payment. As a result, deliveries are commonly late because delivery staff constantly interact with clients to secure the necessary payment. Also, the customer can either cancel their purchase or set an alternative delivery time. This is only possible who opt for cash-on-delivery courier services. Customer's Changing Opinion Customers can change their minds about their purchases, which is only one of the numerous benefits of digital purchasing. They can even do this after the package is delivered, which can frequently happen because customers often need to remember about their purchases until they arrive or receive a call from the delivery person. They could then proceed to cancel the order after declining the delivery in the first place. Falsified Delivery Attempt By The Carrier Agent Fake deliveries are one of the most troublesome Non-Delivery Report in eCommerce that brands come across. In this case, the order is still marked as a failed delivery even though the delivery employee did not attempt to deliver it to the customer's address. They may negatively affect the customer experience if not resolved swiftly and effectively. Suggested Read: Learn in detail about eCommerce Delivery Partners How to Reduce RTO with NDR follow-Ups to Decrease RTOs (%) in eCommerce in 2024? You already understand how damaging NDR and RTO can be to your company's brand and customer experience. Non-Delivery Reports in eCommerce must be handled carefully, with reasons previously indicated, if RTOs are to be avoided. A structured methodology and significant thought must go into handling NDRs. With the help of this procedure, you can handle NDRs autonomously, turning them into successful deliveries rather than RTOs. Implementing a basic system for NDR management follow-ups is required to manage the Non-Delivery Report in eCommerce industry. Determine Various NDR Causes There are many potential causes for an NDR (the most probable of which we've listed above). You may find out the best line of action by looking at these reasons for NDR in eCommerce. You can use it to determine which Non-Delivery Report in eCommerce have a high likelihood of succeeding and which have a high probability of repeatedly failing. Using this, you can handle NDRs accordingly. Encourage Consumer Participation Nothing irritates clients more than keeping their orders secret or needing to learn about order delivery. In addition, they want to ensure that their money has been well spent. You should contact clients based on the reason for a Non-Delivery Report in eCommerce to validate the cause and, more crucially, to gather information for a successful delivery. As a result, customers not only get to supply the necessary information directly, but they also get to feel involved in the delivery process, which can improve the experience. Monitor False Deliveries Delivery personnel who falsely mark an order as an NDR instead of attempting to deliver it are committing a sort of Non-Delivery Report in eCommerce, known as fake deliveries. These have a terrible impact on customer satisfaction and profitability because they increase the likelihood of RTOs. Due to no fault of their own, customers are left waiting for an order that never arrives and dealing with several delivery attempts. Making sure this number is maintained at a minimum can be accomplished by tracking phone deliveries among various carriers. Interact With Carriers A collaborative effort is necessary to ensure that the delivery of the Non-Delivery Report in eCommerce is successful. You must first receive notification of the NDRs from the carriers. Then, you must give the carrier the appropriate information after receiving it from the consumer for delivery. Any indirect communication with carriers or ineffective communication methods could also fail in the subsequent delivery attempt. How Can Technological Innovations Like NDR Management Software Solutions Contribute To Reducing RTOs? Source The four measures mentioned above are critically necessary for the fundamental management of NDRs to lower RTO%. However, you must use more sophisticated and technologically enabled resources if you want to reduce your RTO% as well as your NDR statistics significantly. You need specific features in NDR management solutions to automate the process of NDR management and quickly complete numerous follow-ups. An NDR management software solution is the first thing you need to have tied to your handy logistics toolbelt. Essentially, this system will assist you in automating and streamlining your NDR management workflow. Rapid NDR Updates Carriers are responsible for providing NDR updates, which they usually do in bulk after each business day. This implies that it takes a day to answer. Using an NDR management system with API connectors will ensure you get NDR updates in real time as they happen, which will speed up your response time. NDR Segregation With AI Support We included the various reasons for NDR in eCommerce previously. The easiest way to recognize and classify Non-Delivery Report in eCommerce to choose the most effective approaches to addressing them is through these causes. You should acquire an AI-enabled mechanism from an NDR management system that is set up to track NDRs according to the cause of the delivery failure. Automate Customer Communications The next step is to discuss these concerns with customers after you have sorted and classified various Non-Delivery Report in eCommerce according to their reasons (incorrect address, client unavailability, etc.). When NDR management software is used, clients are automatically contacted with questions about specific issues. These questions will specifically address the reason for the unsuccessful delivery. For instance, if the address is incorrect and an NDR results, a query will be issued asking for the proper address and the closest recognizable landmark. Optimizing Customer Response Time Automating these issue-specific queries can speed up the rate at which customers receive their inquiries and answers. Intelligent NDR management software will send simplified inquiries that ask for precise information, such as a backup contact number or the closest landmark to the delivery location, with multiple-choice or text-fill options. Real-Time Updating Carriers and Follow-Ups After Each Delivery Attempt You need to provide that information to the carrier as soon as you receive a customer response, and in record speed, no less. Only then can the delivery person attempt their subsequent delivery with knowledge. Your clients' responses can be automatically forwarded to carriers using an NDR management system to finish delivery. You must use equivalent caution in those rare cases where delivery reattempts fail despite following the specified Non-Delivery Report in eCommerce processes. Using an NDR management software entails following up with clients via automated conversations to find out why the delivery attempt failed and how it can go smoothly. Analytics-Based NDR Reduction Data gathering and analytics rely heavily on NDR management software. You can keep track of all your Non-Delivery Report in eCommerce over time to see what difficulties you might have overlooked and what issues the data suggests as remedies. You can detect fake deliveries by keeping track of NDRs and their causes. You can then take note of their most frequent occurrences and patterns. Then, with the help of your carrier and eCommerce NDR management software, you can start making deliberate efforts to reduce RTO with NDR follow-ups. Conclusion One challenge that is somewhat particular to Indian eCommerce operations is a high RTO percentage. As a result, brands must utilize data-driven management techniques to address specific problems. An NDR management system skillfully combines technology and logistics expertise to simplify workflow. This procedure prioritizes Non-Delivery Report in eCommerce based on their tendency to be resolved and targets NDRs according to their cause. Establishing a Non-Delivery Report in eCommerce system is fairly straightforward. Address the issues that have readily available solutions initially. Then, acquire data that will assist you in comprehending the more complicated concerns at the same time. Next, automate all predictable processes, then finish. An NDR management system, at its core, enables your company to communicate with customers more efficiently and enhance their post-purchase experience. How Does WareIQ Help Businesses Through Efficient Management of Non-Delivery Report in eCommerce in 2024? For managing Non-Delivery Reports in eCommerce, WareIQ features a reliable 3-step verification method. Verification of Non-Delivery Report in eCommerce by: IVR and SMS CallingWhatsApp Last-mile team manual verification eCommerce & D2C brands may handle Non-Delivery Report in eCommerce effectively by doing the following with WareIQ's Control Tower feature: Utilize our NDR dashboard to monitor eCommerce KPIs like NDR raised, reattempt requested, cancelled, and delivered, among others.Recognize the top 3 reasons for NDR in eCommerce and act right away.Get details for every order and respond to Non-Delivery Report in eCommerce immediately. [signup] NDR Non-Delivery Report in eCommerce FAQs What Does Non-Delivery Report in eCommerce mean?NDR, which stands for Non-Delivery Report in eCommerce, is a well-known acronym for B2B and D2C brands. An eCommerce business receives a notification from a courier service partner alerting them that a specific delivery has failed and providing information about the failed delivery. An order is only considered finished when it has been given to the customer after it has reached the last step of the delivery. How does Return To Origin and Non-Delivery Report in eCommerce operate?When processing a Non-Delivery Report in eCommerce, you must respond with "Reattempt" or "Return to Origin" and the necessary notes once the NDR has been raised. Return to Origin is the term used. An order is returned to the pickup site once the delivery service marks it as undeliverable after repeated tries. How may an NDR management system be set up in B2C and D2C eCommerce brands?Use the following methods to set up a system for Non-Delivery Report in eCommerce:1. React quickly; any delay in getting in touch with clients after the initial delivery attempt multiplies the likelihood of RTO.2. Utilize many channels to communicate with customers in NDRs, including manual and IVRS calls, emails, SMS, and notifications.3. Encourage call centre staff to turn Non-Delivery Report in eCommerce into successful deliveries.4. Choose better courier partners for upcoming orders using NDR data.5. Encourage customers to switch from cash-on-delivery to prepaid orders before delivery efforts are made. How can I reduce RTO in my eCommerce business?To reduce the return to origin (RTO) in your e-commerce business, you can take the following steps:Improve your order fulfillment process: Streamline your order fulfillment process to reduce the time it takes to process and ship orders. This can include automating certain tasks, such as packing and labeling, and using real-time inventory management systems.i) Invest in reliable shipping carriers: Choose shipping carriers that have a track record of delivering packages on time and accurately. Consider using multiple carriers to increase the chances of timely delivery.ii) Communicate with your customers: Keep your customers informed about the status of their orders and any potential delays. This can help reduce the likelihood of returns due to customer dissatisfaction.iii) Offer clear return policies: Make sure your return policies are clear and easy to understand. This can help reduce the number of returns due to misunderstandings or confusion.iv) Consider offering free returns: Offering free returns can make it easier for customers to return items, which can reduce the number of returns overall.v) Use tracking and delivery confirmation: Use tracking and delivery confirmation to ensure that orders are delivered to the correct address and to track any returns that may be made.By taking these steps, you can reduce the RTO in your e-commerce business and improve customer satisfaction.

November 25, 2022

Omnichannel Order Management: A Detailed Guide on the Meaning, Examples and Benefits of Omni Channel Management to eCommerce Retailers in 2024

What we already know is that consumer expectations in retail have shifted. This isn't anything new. Many of these shifts in the online consumer behavior can be attributed to the on-demand economy. Instant satisfaction is the word of the game. So, what can businesses do to retain and attract customers? The solution is straightforward. Make purchasing simple by providing outstanding customer service, timely shipping and convenient fulfillment options. Omnichannel order management is critical to edging out competitors and remaining at the forefront of the ever-changing retail landscape and in this blog, we will take a detailed look at what it is. What is Omnichannel Order Management? A software system that allows you to access customer, order, and inventory information across multiple selling channels is known as omnichannel order management. It manages all orders across the company while providing the necessary information for eCommerce and point-of-sale systems to function properly. Omnichannel order routing, store fulfillment and enterprise inventory are among the primary features. It also serves as a customer support platform, allowing you to see a comprehensive view of your business with real-time information in a single, unified location. In brief, omnichannel order management enables customers to shop and return items from any location. A comprehensive omnichannel OMS empowers both your employees and your consumers. [contactus_gynoveda] Examples of the Working of Omnichannel Order Management Regardless of which channel captures an order, it goes through a number of states and steps that are all contained within the omnichannel order management system. Because no two orders are alike, the lifetime of each order may differ - certain phases or steps may be particularly unique to that specific order. When a customer buys a product, the game is on. Time and honesty are critical. What's the status of my order? How quickly will it be shipped? When can I expect it? These are the burning questions that your customers want to know the answers to. Assume a customer in Nagpur places an online order for a variety of products. After capturing the order, the OMS concludes that the quickest way to get the product into the hands of the consumer is to fulfill it from the Mumbai warehouse. However, it is quickly established that one of the items in that warehouse is out of stock. This results in an exception because the entire order cannot be fulfilled there. The order gets diverted for fulfillment from the Hyderabad warehouse location in a matter of minutes. Depending on available inventory and delivery speed, the order could have been fulfilled from either warehouse. In this case, however, intelligent order routing indicated that the Hyderabad shop was the most efficient option. Top 10 Benefits of Omnichannel Order Management Source Consumer expectations indicate that they desire a consistent experience regardless of their habits along their purchasing process. This has generated difficulties for manufacturers and omnichannel retailers alike, as inventory and orders must now be managed across all channels. Adopting an omnichannel order management system would boost your client satisfaction. Furthermore, omnichannel order management can assist firms in improving operational efficiency and lowering expenses. Here are the top ten advantages of omnichannel order management for your company: Improved Customer Experience By controlling inventory and orders across all sales channels through omnichannel order management, manufacturers can deliver a smooth shopping experience for their customers. There are numerous reasons why improving customer experience is critical. Customers who are satisfied with a firm are more inclined to return and promote it to others. Customer satisfaction can also lead to decreased acquisition costs because satisfied consumers are less likely to take their business elsewhere. Finally, a better customer experience and customer feedback can make your consumers happy, that is always something to strive for. Enhanced Operational Efficiency By eliminating the need to manually reconcile inventory and orders across numerous channels, omnichannel order management can help manufacturers enhance operational efficiency. Because it has a direct impact on the bottom line, operational efficiency is critical for any firm. A corporation can save money and enhance revenue flow by streamlining its ecommerce operations and reducing waste. Furthermore, increased operational efficiency can help a business compete more effectively in the market by lowering costs and increasing productivity. Finally, operational efficiency is critical for every company that wishes to prosper. Increased Cost Savings If you want to enter a new market, you don't have to open a new store in a new area - you can simply create a website and sell from your present location, allowing you to enter new markets from the comfort of your own home. Then there are the less tangible sources of cost savings. By employing omnichannel order management, you will eliminate the need for middlemen or third-party services by keeping everything in-house. Other cost savings come from improving client retention and centralizing all of your customers' data. Boosted Sales Figures Every company's lifeblood is sales. A company cannot live without sales. This is why higher sales are critical for companies of all sizes. To begin with, increased sales equal more revenue. This is critical for every organization since it allows them to reinvest in their operations, develop their activities and hire new employees. Increased sales can also lead to better brand recognition and awareness. Customers are more inclined to view a company favourably and suggest it to others when they see it selling more products or services. Ultimately, greater revenues signify a company's progress and expansion is critical for any company that wants to succeed in the long run. Businesses can secure their continued success and longevity by expanding their revenue]. If you want to enhance sales for your company, there are several things you may do: Create a Good Marketing Strategy for Your Company: This will ensure that potential buyers are aware of your products or services and what distinguishes them. Concentrate on delivering exceptional customer service; when clients have a pleasant experience with your company, they are far more likely to return and refer you to others.Always Be on the Lookout for Innovative Ways to Reach Out to Potential Customers: Make sure you're doing everything you can to get your business in front of as many people as possible, whether it is through online marketing or traditional techniques like print ads or word-of-mouth marketing. Improved Customer Retention Omnichannel order management can help manufacturers boost client retention by providing a better customer experience. Furthermore, happy clients are more likely to refer people to your company, which can help you acquire new customers. Customers who are satisfied are also more loyal and less likely to switch to a competitor. So, while increased customer retention can lead to increased sales and profits, it can also assist you with building a stronger, more loyal client base. Enhanced Supply Chain Management By offering visibility into inventory and orders across all channels, omnichannel order management can help manufacturers enhance supply chain management. Today, supply chain management (SCM) is crucial for enterprises. Organizations can increase their overall performance and competitiveness by using an efficient and effective SCM system, monitoring its success and making changes as necessary. Increased Visibility By providing visibility into inventory and orders across all channels, an omnichannel order management approach can assist manufacturers in making better decisions about safety stock levels and promotions. Businesses that sell their products or services through several channels are more likely to be seen by potential customers. Companies can boost their chances of getting found by clients looking for what they have to offer by being present on many platforms. Improved Data Quality Omnichannel order management can help firms enhance data quality by offering visibility into inventory and orders across all channels. This improved data quality can lead to better stock-level and promotion decisions. Improved data quality is crucial for various reasons: Making sound business decisions requires accurate and dependable dataHigh-quality data can assist businesses in improving their operational efficiency and performanceGood data can assist businesses in developing more effective marketing strategies and better targeting their advertising effortsbetter data quality can help organizations of all sizes Reduced Risk Manufacturers can reduce risk by enhancing data quality and real-time inventory visibility with an omnichannel order management approach. One of the most serious concerns about selling online is the possibility of fraud. Businesses can avoid this risk by having several points of contact with their customers when employing an omnichannel approach. This allows any questionable behaviours to be swiftly discovered and addressed. Another risk of selling online is the possibility of losing consumer information. Customers often enter their personal information such as their name, address and credit card number, when purchasing products or services online. Unauthorized parties may gain access to this information if it is not adequately safeguarded. Improved Decision-Making Improved data quality and visibility are essential omnichannel order management benefits that help manufacturers make better decisions about stock levels and promotions. Making decisions is a vital element of running a business and the capacity to make better judgments can mean the difference between success and failure. A successful decision is influenced by a number of elements and understanding these factors can help you make better decisions in your own business. How to Determine if You Need Omnichannel Order Management for Your Company in 2024? Customers nowadays are, without a doubt, more connected than ever before. They c can easily switch between online and offline channels, frequently utilizing numerous devices to research and acquire products or services. As a result, in order to compete, firms must embrace omnichannel order management. Omnichannel order management seeks to deliver a consistent experience for customers regardless of how they interact with your company. This entails developing uniform messaging and branding across all channels and making it simple for customers to switch between them. It is crucial to remember, however, that not all firms will need to take an omnichannel approach. A single-channel technique may be sufficient in some circumstances. If you are unsure whether an omnichannel strategy is appropriate for your company, consider the following factors: Your Clients Do your clients seamlessly switch between online and offline channels? If this is the case, an omnichannel approach is most likely required to properly reach them. Your Products and Services Are your items or services complicated, necessitating substantial research prior to purchase? If this is the case, an omnichannel selling strategy will be beneficial in supplying customers with information. Your Competitors Are your competitors utilizing an omnichannel strategy? If this is the case, you may need to do so as well in order to remain competitive. Finally, only you can decide whether an omnichannel strategy is best for your company. However, if you want to reach more people and deliver a better experience, it is something to think about. 3 Ways to Improve Your Omnichannel Order Management Examine Your Existing Order Management Technique First, you should examine your present inventory and order management systems. How do you handle inventory and orders? Do you have a system that can be scaled as more sales channels are added? Is inventory synchronized across all of the channels via which you sell, or is it siloed? Do you use spreadsheets to keep track of your inventory or do you have a more advanced method? As your company grows, this can become a costly mistake. Spreadsheets are time-consuming and prone to human mistakes. They also lack the real-time features that order management software provides. If a customer places an order, you'll have to manually move inventory in your spreadsheets throughout the fulfillment process. As you add additional channels, the likelihood of costly errors grows. The sooner you transition to a unified order management system, the more efficient your omnichannel order management will be. Recognize Your Customer's Journey The sooner you transition to a unified order management system, the better. Knowing how an omnichannel solution could fit into your organization begins with understanding your customer journey. Where do your customers shop for your product? Do you have a physical presence? If yes, do your clients prefer curbside pickup? Are people requesting refunds without visiting the store? Are they engaging with your brand on social media? Do you have products available on big marketplaces such as Amazon and Flipkart? The bigger the number of touchpoints and channels, the greater the requirement for omnichannel order management software that connects them all. The more stem, the better. Consider the Various Options You Have There are various solutions available if you believe your eCommerce organization requires an omnichannel order management system to help you manage your shipping and logistics across several platforms. For example, if you need a comprehensive order and inventory management platform, there are many solutions that make it easy to expand into additional channels, and customer information, inventory and order management can be synced across all platforms. If you sell across many channels and need to streamline fulfillment, consider working with a 3PL like WareIQ, which also provides direct connections with major omnichannel solutions. Conclusion Omnichannel order management is not a new concept but it has grown in importance in recent years as consumers have grown more comfortable purchasing online and on mobile devices. The value of omnichannel order management is obvious for both retailers and customers. It can help retailers enhance revenue, inventory visibility and customer loyalty. It delivers a more convenient and smooth buying experience for customers. However, order management for merchants using the omnichannel method is not without difficulties. It can be time-consuming and costly for merchants to adopt and it necessitates close collaboration across many departments inside the organization. Despite the hurdles, many companies are using omnichannel order management to sell across multiple channels. Brick-and-mortar retailers must discover ways to provide the same degree of convenience and customer service as their online competitors in order to compete in today's market. If you are an omnichannel seller that needs assistance with managing and fulfilling orders across platforms, consider partnering with WareIQ. WareIQ is one of India’s fastest-growing eCommerce fulfillment companies. We employ advanced technology to provide a vast number of eCommerce services. In regards to omnichannel order management, we provide a custom WMS that can integrate with more than 12 of the biggest eCommerce marketplaces such as Amazon, eBay, Flipkart, Meesho and more so that you can consolidate and view all your order and inventory data through one single dashboard. Omnichannel Order Management: FAQs What exactly is the function of an omnichannel order management system?An order management system (OMS) is a digital method of managing an order's lifecycle. It keeps track of all information and processes such as order entry, inventory management, fulfillment, and after-sales support. An OMS provides visibility to both the company and the buyer. What are the best practices for omnichannel order management?These practices will save you time, money, and hassle:- Manage all of your inventory in one spot- Accept automation- Re-examine your packing techniques- Create a system for dealing with returned objects- Train your employees What are the characteristics of omnichannel order management?Some common characteristics of omnichannel order management are mentioned below:- Highly scalable order processing- Multi-channel order aggregation and processing- Increased customer visibility- Data integration across platforms How much does an Omnichannel Order Management system cost?The cost of an Omnichannel Order Management system can vary depending on the complexity of the system, the number of users, and the level of customization required. On average, prices can range from a few thousand dollars to tens of thousands of dollars. Contact us directly to know in detail or to request a quote. How can I choose the right Omnichannel Order Management system for my business?Consider your specific business needs and choose a system that offers the features you require. Research and compare different options, read customer reviews and seek recommendations from industry experts. It's also important to evaluate the vendor's level of support and reliability.

August 30, 2022

What is Order Cycle Time? Meaning, Advantages, Strategies to Improve Customer Order Cycle Time in eCommerce in 2024

In the world of flash sales and deals and same-day delivery in the eCommerce business, some sellers find it difficult to keep up while others find it easier and also save a lot of money in the process. This enables these sellers to serve more customers. There is a lot of time between when a consumer places an order and when it is actually delivered. Many businesses strive to reduce their order cycle time as much as possible. Understanding your purchase order cycle time and how to apply it to your business can help you control how quickly customers receive their orders. This article explains customer order cycle time, why it's significant, how to quantify it and what you can do to make it better. What is Order Cycle Time? Order cycle time is a key performance indicator (KPI) that measures and takes into account all of the steps and processes that eCommerce operations must go through to fulfill an order after it has been placed by a customer. Your overall order cycle time will be shorter if your processes are effective and longer if they are ineffective. Understanding your entire order cycle time is crucial because studies have shown that longer customer order cycle times significantly affect a company's ability to retain clients and get new ones. [contactus_uth] Advantages of Purchase Order Cycle Time Tracks Your KPIs As you know now, order cycle time is a key performance indicator that is used to measure a business’s fulfillment potential. It shows how well you can fulfill an order after getting a customer places it through your website or other selling platforms. Even if your customers are satisfied with the delivery time, you still need to track the monetary expenses you spend so that you further streamline all the processes. Reduces Travel Times Reducing the distance travelled to complete a task is one of the easiest methods to reduce order cycle time. Simply doing this can have a significant impact on your efficiency and production because time spent on travelling is time not spent on other value-adding activities. The main factor in the order cycle time is travel. The total purchase order cycle time can be sharply decreased if the distance travelled can be minimized. By emphasizing early errors and creating more effective pathways, you can achieve this. Your resources will be more productive by securing SKUs based on picking ability. A carton flow rack or shelf can reduce storage space and travel time if all of your SKUs are chosen from pallets and many of them are slow movers. Helps Forecast ETA ETA is crucial information for a buyer. Every customer wants to know the ETA of their order before they place it as this can affect their purchasing decisions. An accurate ETA can be conveyed only if the seller has a good idea of their order cycle time and if the ETA is on the lower side compared to the distance the order has to travel, it is believed the order cycle time is working properly. Detects Incompetencies in the Supply Chain Identifying the order cycle time of your business might help you spot supply-chain problems that can be delaying your order fulfillment procedure. A lengthy order cycle time is a sign that your supply chain process needs to be reviewed to find any inefficiencies or extra stages that could be eliminated completely or streamlined. For example, a lengthier order cycle time can result from manual order receipts, which can be labor-consuming and error-prone. You can also see how we analyse supply chain metrics. How can Order Cycle Time be Measured? The calculation for customer order cycle time is as follows: Order Cycle Time = (Delivery Date - Order Date) / Total Number of Orders Shipped Using the above formula, you can calculate the cycle time for customer orders. The following processes are involved in calculating the purchase order cycle time: Collect client informationSubtract the delivery date from the order dateDivide that by the total number of shipped ordersInterpret the outcomes Gather customer information, including delivery and order dates, as well as the total number of shipped orders and enter it into the formula. Some companies keep track of this information in a spreadsheet or client database. You might gather the information you need more quickly with the use of an automated system. When you get your results, compare them to the objectives of your business. You can pinpoint any areas that need improvement by using this method. You can also keep track of the information, recalculate on a monthly basis and evaluate any advancements. 6 Methods to Reduce Customer Order Cycle Time in 2024 Evaluate And Improve Inventory Flow Longer order cycle times can often be attributed in a large part to bottlenecks in the warehouse. For example, check whether goods can be located with ease, if the shelving racks are properly spaced apart to allow for quick movement and if the location of your fulfillment bay is too far away from the picking area. The selection and packing process can be slowed significantly by any of these obstacles. You can shorten the time it takes for an order to be processed by detecting these inefficiencies. Measure your warehouse KPIs first then look for areas where you can make changes. To maximize the use of the available space and increase picking effectiveness, you might need to optimize your warehouse setup and apply warehouse slotting. Set Strict Rules Improving your processes depends on your fulfillment personnel being guided by defined rules and processes. To expedite the process and get orders from the shelves to the packing room as soon as possible, you may be required to reduce the size of the picking batches. To make it simple to sort or pick up returned items faster, you can also establish rules for how and where to leave them. Setting restrictions on when to order additional inventory is also crucial for preventing stockouts and backorders which can slow down your order cycle time. Examine your present delivery management strategy. You should set rules for what to do with the information in the event of delivery exceptions in addition to giving your personnel access to real-time eCommerce order tracking. In order to set reasonable expectations, it's crucial to be open and honest with your clients regarding your delivery practices, such as shipment cutoff times. Have a Backup Plan for Late Deliveries There are many cases where you can face late deliveries because of reasons such as stockouts, inefficiency in the supply chain, technical glitches, etc. So for all these cases, you as a seller must have a checklist of backup plans associated with each situation. You can partner with more than a single fulfillment company, have deals with merchants to dropship automatically in case of a stockout and a WMS that takes care of technical aspects of your fulfillment process. Constantly Evaluate Your Order Cycle Time Order cycle times can vary periodically, particularly if the supply chain is altered or disrupted. An unanticipated delivery hindrance, for instance, can cause an order cycle to take substantially longer than is typical. After deploying an automated system to enhance your warehouse receiving procedure, you can observe a significantly reduced order cycle time. Your supply chain's entire range of factors can have an impact on this statistic. Your order cycle time needs to be closely monitored and evaluated on a regular basis. By doing so, you can decide whether you need to assess your supply chain procedures and make any accelerated changes. It's an excellent approach to assess whether the adjustments you've made have a positive impact on your customer order cycle time. Give Incentives to Involved Resources Order cycle time is something that a seller needs to take constant care of to maintain and try and reduce. It will make no difference to the involved resources whether they fulfill one order a day or 10 orders a day. Giving them an incentive to enhance the quantity and quality of their services, whether it is inventory management, packaging orders or delivering them, as this result in a major reduction in your order cycle time. Outsource Fulfillment The simplest solution to reducing your order cycle time is to delegate the fulfillment operation to professionals. Using a third-party logistics partner to outsource fulfillment is a good approach to guarantee that orders are immediately confirmed, chosen, packed and dispatched. A tech-enabled 3PL should enable you to automate a sizable piece of the fulfillment process. Many 3PLs include technology that easily integrates with your online store. As soon as orders are placed by clients, they are automatically accepted in their warehouses and fulfillment facilities. So, the orders are processed automatically, allowing them to pass rapidly through the fulfillment pipeline and be delivered to your consumers within a few hours. Additionally, by automating the process, less manual work will be required, lowering the possibility of errors while increasing order accuracy. Conclusion: Reduce Your Order Cycle Time With WareIQ Reducing order cycle time is a major concern for most eCommerce businesses as it directly impacts their ability to fulfill orders. The best method to reduce your order cycle time is to outsource your fulfillment service requirements to a 3PL company like WareIQ. WareIQ’s USP is offering Prime-like delivery to everyone but for much lower costs and with more coverage. We offer services like same-day and next-day delivery and oversee your entire logistics process which helps reduce your order cycle time while ensuring that orders are delivered efficiently and on schedule. Utilizing WMS software, WareIQ allows you to effectively manage multiple orders and decentralized inventory that is located in multiple fulfillment centers at your fingertips while also assisting you in streamlining your fulfillment processes. WareIQ's integration with multiple eCommerce selling platforms ensures that orders are automatically accepted and processed. Orders can be processed and delivered more quickly as a result, cutting down on fulfillment and delivery delays. Additionally, we provide real-time inventory level updates. This implies that your online business will always have precise stock level information, preventing customers from placing purchases for items that are out of stock. As a result, backlogs and delayed fulfillment can be avoided by utilizing and optimizing your sales history and precisely forecasting future demand. Setting reorder points for both finished items and product inventory can be done using this data together with additional considerations like the production wait time. By doing so, you can increase supply chain speed and avoid problems like stockouts and backlogs that could lengthen the time it takes to process an order. Order Cycle Time: FAQs How to calculate EOQ order cycle?The order quantity is divided by the yearly demand and the resulting fraction is then multiplied by the number of working days in the year to determine the EOQ order cycle. What is cycle time in the supply chain?The duration of time it would take to complete a customer's order if all inventory levels were zero at the moment the order was placed is measured by the supply chain cycle time which is a comprehensive metric and is a total of the longest lead times for each phase of the supply chain cycle. What is the difference between lead time and cycle time?Lead time measures the period of time between a customer order and order fulfillment, while cycle time measures the amount of time it takes a team to create a product. Because cycle time fits within the timeframe of lead time, lead time is always longer than cycle time. What is the customer order promised cycle time?This cycle time performance indicator reflects how long it should take from the time a customer places an order to when it is delivered. The cycle time will largely stay the same; it will only change if you can guarantee a shorter time from order to delivery. Is cycle time the same as flow time?No. The time it takes for a single unit to complete the entire manufacturing process is known as the flow time. Cycle time is the average amount of time required to complete the entire manufacturing process for one unit.

July 25, 2022

The Importance of First Attempt Delivery and 3 Methods to Increase Your First Attempt Delivery Rate (FADR) in 2022

In the vast world of eCommerce retail, one of the most crucial aspects is to ensure that customers receive their orders on the promised date and time. Delayed order delivery can result in confusion regarding the customer being present at the location, someone being available to receive the order, the delivery executive trying to contact the customer to clarify the location and so on. This is why it is in every retailer’s best interests to try and deliver orders according to the ETA mentioned to the customer to be able to have a smooth receipt of the order by them and to avoid further implications such as initiation of returns, dissatisfaction caused by longer delivery timelines and inconvenience caused to all parties involved because of the inability of the order to be successfully delivered. In this blog, we will go over the meaning of first attempt delivery, its importance, the main reasons for its occurrence and 3 important methods for retailers to increase their first attempt delivery rate. Read along. What is First Attempt Delivery? First attempt delivery is classified as the initial attempt of a last-mile delivery partner to fruitfully deliver an order to a customer, regardless of whether they are in the position to receive it or not. The number of first attempt delivery attempts can vary depending on factors such as the customer’s availability, if there is someone on the premises that can accept the order on their behalf or if the delivery partner has arrived either before or after the scheduled delivery date and time mentioned by the order tracking software. The number of last-mile deliveries that are successfully fulfilled by a company is known as the first attempt delivery rate (FADR). It is beneficial for retailers to have a high FADR as this indicates that most orders are fulfilled seamlessly, without any errors occurring from either end. Conversely, a low FADR can spell trouble for a business as this can often mean more return initiations, customer displeasure and negative reviews online. [contactus_lilgoodness] Importance of First Attempt Delivery Improves Customer Experience Online shopping customers in this day and age are accustomed to instant gratification due to same-day and next-day delivery becoming the norm and eCommerce retailers constantly striving to find ways to cut delivery timelines even further. Thus, when a delivery is delayed and does not arrive on time, it further amplifies the negative impression that customers will have of that business. When a first attempt delivery is successful, customers will have an overall positive opinion of their whole interaction with a company, as this reiterates how effortless and less-time consuming online shopping can be. Mitigates Added Expenses If a first attempt delivery isn’t successfully accepted by the customer, retailers will have to shell out additional resources on subsequent delivery attempts, which can instantly add up costs. If an order has to be re-delivered multiple times, the general costs associated with the delivery process can triple, reducing the profit margin of the business in the process. A successful first delivery attempt reduces the need for any of these additional costs and retailers can focus on fulfilling other orders instead of being held up in trying to deliver prior orders. You can also read : How to reduce shipping costs? Enhances Brand Image If a company has a high first attempt delivery rate (FADR) and has a ton of positive reviews from previous customers relating to their order delivery experience, it enhances the brand image of the company and inspires confidence in new customers that they will receive their orders in a punctual manner. This can increase conversion rates as potential customers generally trust the opinions and experiences of existing customers, which leads to overall satisfaction and an increase in the popularity of a brand. Helps Gain a Competitive Advantage When a brand has consistently positive reviews regarding first attempt delivery, it will instantly garner a favourable reputation among new customers, compared to a company that is flooded with negative feedback and complaints. Customers spend hours trying to find the best possible deals and if they are assured that they will get better service with one company than its competitors, they will gravitate towards that company for their requirements. Main Reasons for Failed First Delivery Attempts Incorrect Address Information A large portion of the success of first attempt delivery depends on whether the location details are accurate. If the wrong address is entered in the system or is given by the customer, delays in delivery become inevitable due to the need for the delivery executive to find the new location and travel there. Wrong Contact Details Imprecise contact details can have a drastically negative impact on first attempt delivery due to the fact that customers will not be able to be contacted in the event of a delay or if the wrong location details are given. Instead of the delivery executive being able to contact the customer and clarify any queries relating to the location or other details they might have, they may have to send it back to the warehouse and try again on another day. Unforeseen Circumstances Order fulfillment is subject to many factors that are not within the control of the retailer or the delivery partner. Common unforeseen occurrences include vehicle breakdowns, traffic congestion, road repairs and protests or festivities causing road blockages, among many others. Unavailability of the Customer The main reason that inhibits first attempt delivery is the unavailability of the customer when the delivery partner reaches their location. This can be due to multiple factors, some of which can be attributed to the retailer, such as delayed delivery, earlier arrival than the specified ETA or problems in finding the location but can also be the fault of the customer themselves, such as not being physically present due to other commitments, not informing family or friends to collect the parcel or mistakenly giving the wrong address or contact details. 3 Key Methods to Increase Your First Attempt Delivery Rate Consolidate All Your Information Collating all the information about a company’s logistical and operational processes, especially relating to last-mile delivery, and also all the data about the specific order can have a positive impact on their first attempt delivery rate. This ensures that all the information needed by the delivery executive to have a successful first attempt delivery is at their fingertips and can reduce the number of errors or mishaps that occur during the fulfillment process. Employ Real-Time Order Tracking Advanced order tracking software can help significantly in increasing the first attempt delivery rate of a company. By making all the tracking information about the order available to both the delivery personnel and the customer such as the stage of fulfillment, real-time updates when the parcel enters a new phase and any cause of delays or revisions in the ETA, both parties will have a better idea of when the first delivery attempt will be made and the customer can make the necessary arrangements to ensure that the order is picked up. Automate Important Processes Automating processes using advanced software solutions such as sending notifications to customers every time there is an update in the order fulfillment cycle, ensuring that the delivery partner is present to pick up the order when it arrives at the dispatch point and making sure that they have all the relevant information regarding the delivery location and contact details of the customer, increases the chances of the first delivery attempt of being a success. Conclusion: How Can WareIQ’s Offerings Help Improve Your First Attempt Delivery? First attempt delivery is an extremely important aspect of order fulfillment and the success of the company as a whole as it determines how efficiently and frequently they can fulfill orders. If a company has a high first attempt delivery rate, it generally indicates that the time taken to fulfill each order and the costs involved are reduced. On the other hand, if a company has a low FADR, it conveys that the cost and time involved in delivering each order are higher than it needs to be and this can result in fewer sales and reduced profit margins. These factors can have a large impact on the operational capacity of a company. If you are an eCommerce retailer and need help with increasing your first attempt delivery rate and any other eCommerce requirements you may have, you can place your faith in WareIQ. WareIQ is one of the country’s leading eCommerce fulfillment companies. We take advantage of advanced technology in every department relating to eCommerce fulfillment to ensure high rates of success and fewer mistakes or errors. Some of the ways that WareIQ can help to improve your first attempt delivery are as follows: We offer intelligent inventory placement in a pan-India network of fulfillment centers and dark stores to ensure that your inventory is located close to your customers and major transport hubs, which reduces delivery timelines.We offer an advanced WMS that can track your inventory across multiple fulfillment centers and can integrate with more than 12 of the biggest eCommerce marketplaces.We provide branded tracking facilities that can be customised as per your requirements to give you and your customers an enhanced order tracking experience.We have partnered with more than 20 of the largest shipping aggregators in the country and always ensure the quickest and most cost-effective delivery for every order. Give your first attempt delivery the boost it needs to be successful by partnering with WareIQ. First Attempt Delivery: FAQs What is first attempt delivery important?Delivering an order in the first attempt can save a business a lot of time, hassle and money and also saves their customers a lot of inconveniences. Overall, both parties benefit when an order is delivered and accepted on time. What is last-mile delivery?Last-mile delivery involves the on-ground picking up and delivery of an order from the final warehouse to the customer’s location by a delivery executive. What happens if a first delivery attempt is unsuccessful?The delivery attempt will be marked as failed, which indicates that the delivery executive attempted to deliver the order but was unsuccessful. The order will then head back to the warehouse from where there will be attempts to deliver it again until the customer receives it. Why is order tracking necessary?Order tracking provides insights into the journey of a parcel to the customer that ordered it. This helps reassure the customer that it is on its way and they can ensure that they are available to collect it to avoid unnecessary confusion. Does WareIQ offer other eCommerce solutions?Yes, WareIQ provides a whole range of services from storage and inventory management to shipping and last-mile delivery using advanced technology.

July 19, 2022

Reorder Quantity Formula: Complete Guide Including Definition, Importance, and 3 Easy Steps to Calculate Reorder Quantity in 2024

The inventory of an eCommerce business is its most important asset and one of the most complex and crucial facets of operating an online store is inventory management. Additionally, it gets harder to keep track of stock levels with the more SKUs you have. Without effective inventory control, you can face situations such as overstocking products, which might expire or become outdated before you sell them and running out of stock, and losing clients and sales opportunities. It takes the right balance to have the proper quantities of a product. The reorder quantity formula is used by eCommerce companies to calculate this. Generally, they use the economic order quantity (EOQ) formula to reduce the cost of transportation, warehousing space, stockouts, and overstocks so that they can determine the ideal order amount. One of the best techniques to calculate the number of goods you need to purchase to maintain the proper stock levels is using the reorder quantity formula. Let us go into detail to understand what it entails. What is Reorder Quantity? Reorder quantity is the total amount of units of a product that you seek from a manufacturer or supplier for an inventory replenishment purchase order. The precise number shouldn't be too high so that you have too much capital invested in inventory and subsequent increased storage costs but it also shouldn't be too low so that there isn't enough safety stock and you have the danger of running out of inventory before you can order the next batch. The ordered amount or number of units must be optimal while taking into account a variety of elements, including the cost of the order, the cost of transportation, the cost of transporting the order, etc. The reorder quantity strikes the best balance between a number of variables, including quantity discounts, freight, storage expenses, and the need for working capital. [contactus_gynoveda] 3 Easy Steps to Calculate Reorder Quantity Using the Reorder Quantity Formula Determine Average Daily Usage Average daily use refers to the number of your product's units that are sold each day. Usually, thirty days is a common timeframe but it changes during different seasons or festivals. For instance, if you need to place an order for a product before a festival, your ADU should be determined using that festival’s ADU from the previous year. Calculate Average Lead Time Average lead time refers to the time span between when a supplier receives a purchase order and when they deliver it to the seller's warehouse or fulfillment center. The average lead time is calculated in days. If you reordered inventory on 1st January, your average lead time is 30 days if it is available to be used to fulfill customer orders by 30th January. Calculate the Reorder Quantity You can determine how much inventory you need to reorder by multiplying average daily use (ADU) and average lead time (ALT). Let's have a look at how to determine the reorder amount for a specific product: -ADU is 25 -ALT is 30 days Your reorder quantity using the reorder quantity formula will be: =ADU X ALT =25 X 30 =750 Recalculating your reorder quantity frequently is advised, especially as your order volume rises and if you sell seasonal items. When the reorder level is determined properly, replenishment stock should arrive immediately before the number of units of the existing stock drops to zero. Why is the Reorder Quantity Formula Important for 2023? Helps to Avoid Stockouts Lost sales result from low inventory. Backorders and split shipments are always an option, but they don't provide a seamless consumer experience. Reorder quantity allows you to order just enough to fulfill orders until your next purchase, while reorder level allows you to secure a recovery in time before your inventory runs out and helps handle stockout. Assists in Minimizing Expenses Additionally, you should avoid overstocking your inventory which will ultimately block your capital. You will need to expand your warehousing storage capacity or opt for storing items in multiple warehouses if your stock levels are too high. By estimating reorder quantity, you will be able to maintain just the right amount of inventory which will result in lower storage costs, less wastage, and fewer operational costs. Helps in Managing Inventory You can set up notifications in your inventory management system, allow live inventory tracking, and manage changes in demand over time when you know precisely how much to reorder and when you need to replenish by using the reorder quantity formula to calculate the reorder quantity you need. Example of Calculating Reorder Quantity You don't require reorder quantity calculator always, just using the 3-steps mentioned before we can calculate reorder quantity in a minute. To calculate your reorder level, multiply your average usage rate by the lead time for an inventory item. Be diligent while entering the time values you are using. If you are calculating average daily usage then put the lead time value in days. Suppose, Rajesh experiences an average daily sale of his items as 2500 units and the lead time for producing new units is 7 days, the re-order level will be: 2500 units x 7 days = 1,75,000 units. When the inventory level of items is left at 1,75,000 units in stock, Rajesh needs to reorder and stock more units. By the lead time the additional units arrive in 7 days, the on-hand inventory balance may have reduced to zero. Reorder Quantity VS Reorder Level: 4 Key Differences Differences Between Reorder Quantity and Reorder Level are listed down here; Comparison Chart [table id=32 /] We Hope, this table of reorder quantity vs reorder level made the concept clear. Conclusion: How Does WareIQ Help eCommerce Firms to determine their Reorder Quantity Accurately? For an eCommerce business to be managed successfully, knowing how much inventory to repurchase is the most important question to answer. With the help of the reorder quantity formula, you know that your incoming and outbound logistical workflows are being improved by ordering the proper quantity of goods. With the help of WareIQ, eCommerce businesses can manage inventory, forecast demand, pack orders, lower shipping costs, and fulfill customer expectations. We will optimize your data in real-time, automate your reordering quantity and move your inventory to relevant warehouses that are nearest to high-demand locations and transportation hubs if you choose us to store goods in our fulfillment centers. WareIQ helps brands improve their shipping strategy with a nationwide network of fulfillment facilities and technology that is integrated with the leading eCommerce platforms. Reorder Quantity Formula: FAQs (Frequently Asked Questions) How do you calculate optimal reorder quantity?The formula to calculate your optimal reorder quantity is:[{2 X (Annual Usage in Units X Setup Cost) / Annual Carrying Cost per Unit}^(1/2)] How do you calculate inventory to be reordered?The formula to calculate the reorder level of stock is:Reorder Level = Minimum Stock + Average Consumption During Normal Delivery Time What is the reorder level in inventory?The inventory level at which a company should place a buying order to top off its stock is determined by the reorder level formula. When the reorder level is determined properly, replenishment stock should arrive immediately when the amount of existing stock drops to zero. What is the reorder quantity?Reorder quantity, also known as the reorder point, is the quantity of an order to be placed for purchasing a specific item that needs to be restocked. It is based on the supplier's average replenishment period, the item's maximum usage during the replenishment interval and the need for safety stock.

June 27, 2022

How to Calculate Reorder Level? Definition, Advantages, and Easy 5-Step Calculations for the Reorder Point Formula in 2024

By being able to execute proper business calculations, eCommerce retailers can advance in their goals. In the eCommerce industry, knowing when and how many products you require to fulfill orders is crucial. One method to show your aptitude for forecasting inventory and assisting your business in maximizing profits is by performing these calculations precisely and efficiently. Timing and the amount of inventory ordered should be accurate. If you have all the data, you can automate the re-ordering process. Today we will go into detail about the reorder level and how to calculate it using the reorder level formula, examples in different scenarios to maintain your inventory needs, and much more. What is a Reorder Level? Reorder level, also known as reorder point in management accounting, is the inventory level at which a business would place a new order or begin a new production run. Reorder level is influenced by a company's lead time for work orders, demand during that period, and whether or not it should keep a safety stock. The time it takes the company's suppliers to manufacture and deliver the ordered units is known as the work-order lead time. It is critical to determine the appropriate reorder level. A company may receive the ordered units faster than anticipated if it places a fresh order too soon and this could result in increased carrying expenses such as storage rent, opportunity costs, etc. Conversely, if an order is placed too late, the company would incur stock-out expenses, such as missed sales and customer dissatisfaction. [contactus_uth] Advantages of Reorder Level A conventional advantage of reorder level is to avoid stock shortage. Reorder levels are important since they enable a company to increase productivity and perhaps even revenues and profits. This is due to the fact that acquiring the right quantity of inventory can help the company run effectively while avoiding uncertainties like product waste. Reorder levels that are precise also aid in lowering carrying costs and other costs related to storing inventory. Rent, insurance, and potential spoilage are some carrying expenses that can be avoided or decreased with prudent ordering levels. Reorder level calculations are another useful tool for ensuring uniformity among team members when several people are in charge of issuing orders. The stock requirements are automatically activated at the order point. You may optimize your inventory list and reduce administrative time by using the reorder level model, which is a helpful decision-making tool. This reality enables you to concentrate on bringing value to your company while letting the system function on its own. Using this system has a number of benefits, including: Providing better service to both internal and external customersPreventing delays throughout the supply chainLowering the inventory costMaximizing the space in your inventoryStaff members focus on value-added tasks while saving timePutting facts and evidence in front of speculationForming a communication bridge between seller and manufacturerAvoiding overstockingAvoiding getting the items too earlyPreventing your capital from getting held upMaking inbound and outbound logistics more efficient Reorder Level Formula: Calculation in 5 Simple Steps in 2024 Reorder Level or Reorder Points can be calculated in 5 Easy Steps explained below; Determine Your Average Demand The very first step is determining the average demand for a product or material. This refers to how many units of a specific commodity you sell or utilize over a certain period of time. There could be several retail items you require each day, week, or month, such as dishes, shoes, laptops, etc. You might also need a specific quantity of manufacturing material over time. Because demand may change from one period of time to the next, try estimating your inventory utilization over several of your chosen time periods and calculate the average of those results. This might be especially true for businesses or products that depend on outside factors. Calculate Your Lead Time The lead time is the period of time between when you place an order till the time you receive the shipment of goods. Use the same time unit (days, weeks, months, etc.) that you used to establish your average demand to calculate your lead time. You should calculate your lead time in days if your average daily demand is 100 goods. The wait time would be measured in weeks if your demand was 100 products per week. If deliveries are regular, you can generally automatically establish your lead time by looking up your order and delivery history. If delivery times are unpredictable, get the average lead times of a large number of orders. If outside circumstances affect how long it takes to get a delivery, use alternative lead times. Decide if You Should Keep a Safety Stock Determining whether you maintain a safety stock or not, depends on your preference. You will have to use a different formula for your reorder level for different situations. A business may retain some goods or materials on hand as safety stock in case certain circumstances arise, such as an unexpected spike in demand or a delivery problem. If you want to know if your inventory needs a safety buffer, compare the amount of stock you maintain on hand versus the amount you sell or use. You can also work with a business executive to determine whether your organization has a policy of maintaining a safety stock on hand and whether you should factor this into your reorder level. Any adjustments you might make or recommend making to your inventory levels should be communicated clearly. Use the Reorder Level Formula Calculate reorder levels with the proper formula using your average demand, lead time, and safety stock. The formula is as follows: Reorder Level Formula = (Average Demand × Lead Time) The formula in case safety stock is kept by the company: Reorder level = [(Average Demand × Lead Time) + Safety Stock] Your average demand and lead time should be calculated in the same unit of time. Your lead time should be calculated in days if your demand is calculated in units of products per day. Your lead time should also be measured in weeks if your demand is too. To ensure accuracy, think about working on your calculations simultaneously or asking a teammate to do so. You can also read this detailed article on Reorder Quantity Formula. Assess and Adjust as Required Finally, review your reorder level calculations and make any necessary adjustments. You might need to adjust your reorder level to account for the increased demand if, for instance, you find you are running low on the item before your next purchase comes in. You might need to modify your reorder level if orders start showing up with time changes. Determining a Fixed Reorder Level Stock While determining a fixed Reorder Level Stock the following factors are involved: Rate of Material Consumption It is the amount of material or number of items you sell in a lead time period. The material and items are averaged as per the duration of the time frame taken. Safety Margin Before you calculate the reorder level, you should keep a safety margin of stocks with you in case of higher demand than the average demand level. Delivery Period or Lead Time The average delivery period or average lead time is the time taken to get the stock after placing an order to your merchant or directly to the manufacturer. Maintaining a Minimum Stock Level Minimum stock level maintenance specifically helps small and medium-sized sellers and sellers who have limited storage space in different locations. This keeps your business supplied with stock and helps avoid uncertainty in inventory. Storage Fees and Interest on Materials-Related Capital Investments This is the crucial part to think about. You may calculate and order inventory as per your demand and your capacity to fulfill orders. This is not applicable if you have your own storage facilities but if you partner with a 3PL fulfillment company and use their fulfillment centers to store inventory, you will have to pay monthly subscription fees or for the amount of storage you are utilizing. Having an Emergency Fund Keep aside an excess amount of capital in liquid form to tackle uncertainties like machine breakdowns, supply-chain failures, increases in rates, etc. Many times, work is on hold in the logistics chain because of payment dues for certain processes. Read how should you plan your logistics in eCommerce. The Reorder Level of Stock Calculation in Different Circumstances Case 1 – Without Safety Stock Mr. Sanjay’s bookstore sells 200 books on average in a week. The maximum demand in a week is 217 laptops. If the lead time is 3 weeks then the reorder level calculation using the reorder level formula would be: Reorder level = Maximum usage(weekly) × Lead time (in weeks) = 217 units × 3 weeks = 651 units It means that every time the number of books decreases to 651, Mr. Sanjay’s bookstore must place a new order. Case 2 – With Safety Stock Suppose you are a bike seller with the following figures: Demand Minimum Demand: 40 bikes per month Average Demand: 50 bikes per month Maximum Demand: 60 bikes per month Safety Stock: 15 bikes Lead Time Minimum Lead Time: 1 month Average Lead Time: 1.25 months Maximum Lead Time: 1.5 months The reorder level of your outlet using the reorder point formula would be: Reorder Level = (Maximum Demand × Maximum Lead Time) + Safety Stock = (60 units × 1.5 weeks) + 15 units = 90 units + 15 units = 105 units Note: Both demand and lead time must be expressed in the same time unit, i.e., in days, weeks, etc. Modified Reorder Level Formula The amount of reordering presumes a constant pace of inventory consumption, which is usually false. For instance, if usage levels fluctuate often, the reorder level will be too low, resulting in a lack of inventory when it is required for production. On the other hand, this reorder procedure will result in having too much inventory on hand if actual usage decreases. It might be helpful to account for extra stock on hand and replace the average daily usage rate with the maximum daily usage rate in the reorder point formula in order to prevent stock-out situations. The revised reorder level formula is as follows: | [(Maximum Daily Usage Rate x Lead Time) + Safety Stock] | Conclusion: Choosing WareIQ for Faster and More Accurate Reorder Levels After understanding the importance of reorder level, it is understood that establishing reorder points is beneficial so that you can reduce your capital investments and make sure that your company is running as efficiently as possible in terms of both inbound and outbound logistics. The requirement for accurate data for supply chain planning and presenting a precise picture of customer demand is the most crucial and occasionally, most difficult aspect of effectively calculating reorder levels. You could wind up with too much or too little stock if the data is incorrect and the calculation is wrong. WareIQ can help eCommerce firms to manage inventory, anticipate demand, pack orders, cut shipping costs, and meet consumer expectations. In case you seek to store inventory in multiple WareIQ fulfillment centers, we will automate your reordering levels, optimize your data and reshuffle your inventory to relevant warehouses that are close to high-demand locations and transport hubs. WareIQ assists brands in enhancing their shipping strategies with a network of fulfillment centers spread out across the country and technology that is integrated with the top eCommerce platforms. Reorder Level Formula FAQs How do you calculate reorder level?The reorder point formula is used to calculate reorder levels which is as follows:Reorder Level = [(Average Demand × Lead Time) + Safety Stock] Why is the reordering point important?Effective inventory management requires a reorder point. Ensuring that there is always enough stock in your inventory reduces holding costs and avoids stockouts, overstocking and lost sales. What is the Safety Stock Formula?The safety stock is calculated by multiplying your desired service factor, which represents the amount and frequency by which the average lead time deviates from the actual lead time. What is the EOQ Reorder Level?The Economic Order Quantity or EOQ reorder point is a formula used to calculate the number of units of inventory to order by which the lowest possible total order cost occurs.

June 24, 2022

Why is eCommerce Order Tracking Important? Top 5 Tools for Tracking eCommerce Orders in 2024

Since eCommerce businesses rely on logistics companies to get their products into customers' hands, the logistics industry as a whole has been directly impacted. The logistics industry has expanded enormously as a result of the rise of the eCommerce sector, providing new technologies to help improve online shopping experiences. eCommerce order tracking is one such service that stands out in the world of eCommerce logistics. Advanced eCommerce order tracking software allows companies to track and manage their orders while they are in transit. This allows businesses to fix any issues that may arise during transit, as well as provide customers with information about the eCommerce order status of their goods. Today we will learn about every aspect of eCommerce order tracking and how it is beneficial to the eCommerce industry in 2024 by ensuring customers can keep an eye on their orders as well as helping retailers understand if there are any errors or delays that have taken place. What is eCommerce Order Tracking? eCommerce order tracking is the process through which customers can track the eCommerce fulfillment status of their orders in real-time. It includes features like shipment tracking, Estimated Time of Arrival(ETA), and frequent updates on the location of the order. It plays an important role in enhancing the customer experience while product fulfillment, ETA and being notified of any delays, help a retailer track the product if they have opted for dropshipping, retail fulfillment, choosing a third-party logistics service, or tracking reverse logistics during order fulfillment. [contactus_gynoveda] Top Factors that Affect eCommerce Tracking Order Lack of Technology eCommerce order tracking requires the use of advanced technology, mostly from the seller's end. A supply chain system must get updated at each stage and should reflect in the eCommerce order tracking page. Any failure of technology at any point will affect the entire process. A few points to note are: A buyer just needs to have a smartphone to access the eCommerce order status but a seller needs to have advanced software.A good website is required to check for Pincode availability.An automated mail sender for sending order placement confirmation messages and emails with the order tracking IDs is needed.An order tracking tool is required such as a webpage.Human resources are required to handle and update it in case of any errors or glitches.An advanced software system is required to automate the entire eCommerce order tracking process.A dedicated customer care official to handle any related queries and issues is needed.A chatbot is needed to answer minor tracking-related queries in real-time. Shortage of Capital Investment A small eCommerce business with limited capital can barely afford to place MOQs and EOQs so they may also struggle to afford a decent eCommerce order tracking software. Developing an eCommerce order status system and keeping it connected with real-time logistics processes is a money-consuming task. It not only requires a huge one-time investment but also a constant short-term investment. Lack of Fulfillment Processes Fulfillment is a term that consists of various aspects that need to be taken into consideration and includes tasks such as transportation and logistics. Order fulfillment consists of eCommerce order status, proper inventory tracking, order information needed for picking the product from a particular warehouse, creating scan codes and tracking ID/number, ETA, etc. Lack of Expertise A supply chain runs 24/7 on high-end technology. It demands 100% accuracy and the shortest delivery time possible. For such tasks, retailers or their partners are required to be well-versed in technology as well as fieldwork expertise. Any mistake can ultimately result in a loss for a seller in terms of product damage and can create a bad image which ultimately results in poor feedback and buyer relinquishment. 5 Benefits of eCommerce Order Tracking Increases Customer Satisfaction With the eCommerce industry being so competitive, online shopping practically requires providing a good customer experience. If you don't want to lose business and seek to provide similar facilities to Amazon or other eCommerce giants, you must have an eCommerce order tracking system in place. Customers will notice if you don't provide the anticipated quality of service, putting your client loyalty at risk. Customers are more likely to write a positive review and re-buy from you in the future if you provide eCommerce order tracking to them. It not only gives them the most up-to-date information but also a sense that you care about their overall experience. Before reaching the customer, an order may pass through a post office or sorting facility after leaving a warehouse, 3PL fulfillment center, or packing facility. Customers will be less confused if they are kept informed. Reduces Costs Engaging customers is a very tough task for a business. Many companies do numerous things to keep their customers engaged such as arranging quizzes, running campaigns, and promoting their brands on social media, which costs them a lot of money. Customers want to be able to follow the progress of their orders. If you don't supply it, you'll almost certainly have to deal with hundreds of WISMO (where is my order) calls consumer complaints, and inquiries, which will be quite expensive in the long run. It's a vital scenario; if you don't act quickly, your customer reviews will suffer. It can devalue the brand's image. The number of inquiry calls/messages will drop considerably if you provide order tracking to customers where all tracking information would be generated automatically. You may save effort, reduce the stress on your customer service team and focus on quality assurance by automating order fulfillment with order tracking. This will save you time and money, allowing you to spend it in other ways to improve client experiences. Controls Order Fulfillment Quality It enables eCommerce companies to deal with problems in real time. The lifetime value of your consumers will rise when these basic solutions are provided. Also, many eCommerce sellers partner with third-party fulfillment providers for taking advantage of multiple warehouses at an optimum cost where they do not control logistics directly so with eCommerce order tracking, they can track their products when they are dispatched for fulfillment. Lowers Workload Expenses Whether you have a large customer service team or not, they will still benefit from automating eCommerce order tracking procedures. They might put this time saved to good use by providing personalised service to dissatisfied clients. Overall, your consumer experience becomes more smooth while maintaining a high level of quality. Helps in Tracking RTOs Order tracking benefits both eCommerce firms and their customers from a 360-degree perspective. This can also come in handy when dealing with a large number of RTO requests. Sellers can get an idea about which products and orders are being returned and from which locations, which can assist in the mitigation of RTO-related losses. Top Strategies to Get the Most Out of Tracking eCommerce Orders Utilize eCommerce Order Status Pages as a Means of Marketing eCommerce order tracking pages can be customized to tell customers about upcoming or existing flash sales, the introduction of new products, positive customer testimonials, and ask them for valuable feedback. This increases the amount of time a customer spends on your page as opposed to your competitor's websites. Integrate Live Chatbots for Answering Tracking-Related Queries in Real-Time In today’s world, people are in the habit of two-way communication. They want to ask questions and get a reply to their queries immediately and most sellers do not have a customer support executive to handle these queries so Live Chat through bots comes to the rescue. If sellers facilitate a Live Chat customer support system, they will turn out to have a better customer experience with a more personalized touch. Show Buyers Your Appreciation During Every Purchase The tracking system will know when the product got delivered, so automate a thank you letter to show the buyer that you appreciate the purchase. Additionally, you can give extra discounts to the same customer for further purchases, based on terms and conditions. Collect as Much Data About the Order and the Customer as You Can Customer data can be a potential MQL (marketing qualified lead) for any seller. They know that the buyer might buy similar products or products related to their last purchase, in the future. Most eCommerce giants are spending billions on acquiring customer data by not only collecting it but also buying it because they know that it will help them to figure out and forecast according to customers’ preferences. Mention the ETA and Adjust it According to Delivery Forecasts When a buyer arrives at your page and sees your products’ availability on multiple eCommerce selling channels, they check if the delivery is serviceable to their address and what the ETA is. Providing an accurate ETA is helpful for both parties because the customer gets an expectation of when it will arrive and the seller has a target of when they need to deliver the order. Use Personalized Data for Future Campaigns Post completion of the delivery, the eCommerce order tracking page provides a confirmation of the delivery and can include a field for customers to provide their feedback or give ratings for the various services they have encountered. Honest feedback helps provide valuable insight into a buyer’s tastes and behaviours which can be used in marketing and promotional campaigns in the future. Top 5 Tools for eCommerce Order Tracking in 2024 WareIQ Source Among the order tracking tools that are available, WareIQ is one the best and most trustable tracking tools for eCommerce orders and enables real-time tracking across India. WareIQ is a full-stack eCommerce fulfillment platform that provides superior order management services too. It enables order management, inventory management, returns management and a whole lot more as well as order tracking for online sellers and their customers, across multiple channels. It also utilizes a pan-India network of warehouses to enable same-day or next-day shipping to buyers. A few features of the fulfillment company are listed below: Manages order data, inventory levels, and billing from the same systemFulfillment of orders, as well as providing branded shippingReduces RTO rates through an RTO ShieldStores inventory in multiple- fulfillment centers across the countryHelps in ordering inventory according to EOQ and MOQQuick setup, scale-up, and scale-down according to seasonality, sales order velocity, and other factors It helps sellers to enable and utilize the facilities in three simple steps: Step 1 Suggests intelligent inventory placements. To recommend optimal inventory placement, it uses technology to analyze the order density, SKU velocity, seasonality, and market trend by location. Step 2 Picks up your products and distribute them to their hubs from your central warehouse. They combine their platform with sellers' online storefronts and marketplaces. Step 3 Pick, Pack, and Ship; uses the same inventory to fulfill orders from the seller’s online marketplaces, and offers smart shipping where the fastest and cheapest courier service is always chosen to enable the fastest possible delivery at all times. WareIQ provides a full shipping journey and real-time order updates on the tracking page. It offers branded tracking page exclusively to its e-commerce clients to boost brand awareness, repeat customers & improve post-purchase engagement. Shippo Source Shippo is an integrated shipping partner for Gator Website Builder's eCommerce websites. It also works with Magento and WooCommerce, as well as Mercari, Etsy, eBay, and Amazon marketplace systems, as well as national postal services in some non-US nations. It offers drastically discounted fares on major domestic and international carriers. A few features are listed below: Order fulfillment and branded tracking updatesQuick returns and finding the best shipping ratesVendors can provide delivery updates to consumers via email and textCreation of branded tracking pages on the website ShipStation Source ShipStation is a comprehensive shipping tool that manages orders from major eCommerce channels, gets the cheapest prices from different carriers, keeps customers up to speed on order status, streamlines customer returns, records inventory and provides statistics. Marketplaces like Amazon, Walmart, Alibaba, Etsy, eBay, and Jet use Shipstation. Some of their features are: Is compatible with both WooCommerce and MagentoWorks with major shipping companies and provides low ratesAllows you to create a bespoke tracking system for mobile and desktop that displays to your consumers, where their order is and the ETA Shipway Source Shipway is an eCommerce automation tool that helps companies automate their order management and shipping processes. It employs artificial intelligence to automate and avoid fraud, as well as to assist businesses in executing deliveries smoothly. To maximize the chances of connecting with customers, the platform uses different methods to reach out to them. It works with over 12,000 brands and is integrated with over 600 carriers in local and international marketsMonitors about 200,000 orders per day and has sent out more than 500 million notices to dateAssists businesses in creating branded tracking pages for a better user experienceSends out real-time and periodic updates on the status of orders which results in reduced inquiry callsGenerates detailed reports on carrier performance and aids in the reduction of RTO rates ShipWell Source ShipWell is a transportation management solution that helps companies to keep track of their orders while they travel. ShipWell uses data from ELDs and mobile devices to provide real-time product tracking. The platform employs notifications to keep you updated on the status of your order while it's in transit. A managed service team is also available for high-quality client assistance on the platform. Ensures end-to-end visibility with native ELD connectors and the Shipwell Mobile appTracks and traces shipments on the platform, which has access to over 2 million ELD-connected units and 850,000 driversEliminates blind spots throughout the shipment lifecycleIdentifies potential risks so that they are taken care ofImproves customer service by streamlining carrier touchpoints Conclusion: What eCommerce Order Tracking Facilities Does WareIQ Provide? WareIQ helps you to enhance customer experience by allowing them to track their orders at every stage of fulfillment, including when they are received, packed, shipped, in transit, out for delivery, and delivered. Even if an item is being returned, refunded, or exchanged, there will be reverse order tracking provided to both parties to mitigate any confusion. Online customers are notified in real-time through all channels - email, WhatsApp, text messages, etc. In addition, we offer the ability to customize your eCommerce order tracking page with product snippets, brand details and customer care information, so that users will stay engaged with your brand even after purchase. WareIQ's branded tracking page is an opportunity to turn your order tracking page into a profitable marketing channel, where you cross-sell & up-sell using marketing banners, logos, store links etc. [signup] eCommerce Order Tracking FAQs What is branded order tracking?A branded eCommerce order tracking page improves the post-purchase experience of customers by putting useful information through clear and customized content. What is eCommerce order tracking?Clients can track the eCommerce order status of their online orders in real-time with eCommerce order tracking technology. Expected delivery dates, shipment tracking, and regular updates on the eCommerce order status are among the main services it provides. Can I track a package with the order number?No. The order number and the tracking number are two separate numbers. Buyers can only track their packages using a tracking number; tracing a parcel using the order number is not feasible. How does product tracking work?In simple terms, monitoring a package or courier entails locating packages and containers, as well as other items, during the sorting and delivery process. This allows you to confirm their location and source, as well as get an estimated delivery date. Can WareIQ help me with order tracking?Definitely, Yes! WareIQ can help you with eCommerce order tracking and reverse order tracking.

June 06, 2022

What is Cost Per Unit? How to Calculate Cost Per Unit? Top 5 Strategies For Minimising it.

A business’s survival depends on the bottom line. Whether your business is into providing products or services, the key metric you have to monitor is the net profit. Net profit is defined as the difference between total revenue and total cost. Analyzing revenues and expenses gives a clear indication of whether a company is performing and working effectively. A key way of increasing your profit margins is to calculate cost per unit and find ways of reducing it as much as possible. What is the Meaning of Cost Per Unit? Cost per unit is the sum of all the expenses that a company incurs to produce, store and sell one unit of a product or a service. It is also known as the cost of goods sold. There are various elements to calculate cost per unit. They are classified into two groups – fixed costs and variable costs. In order to calculate cost per unit, the first step is to ascertain operational profitability. Fixed Costs: Fixed costs are those that stay the same irrespective of the volume of production. Examples include capital equipment, rent, insurance, etc. Variable Costs: Variable costs vary based on the volume of output. Examples of this are direct materials and direct labour. Both can be reduced by employing the cheapest labour or outsourcing production to the most efficient manufacturer. [contactus_gynoveda] Importance of Cost Per Unit Calculating cost per unit is important because it is a key determinant of net profit per unit or earnings per share (EPS). EPS is a key performance indicator used by shareholders to assess performance. It also helps you to price your products appropriately. Knowing the cost of production will let you make a well-informed decision about the markup value. It helps you amplify the SKU (stock-keeping units), which are your highest profit generators, and assists in boosting customer loyalty and satisfaction. Also, if you know the different costing elements, you can work towards reducing the different components. If your cost of production is accurate, you can undertake SKU rationalisation and decide which products to keep and discontinue. These measures will help in space rationalisation and price optimisation with the key goal of improving cash flows, increasing return on invested capital, and boosting operating margins. A large organisation can lower unit costs through economies of scale and optimise the market offering price. You must calculate the cost per unit for all the various SKUs. How to Calculate Cost Per Unit (with Examples)? You must ascertain the total fixed cost and the total variable cost of production to calculate the cost per unit. Their sum must be divided by the total number of units produced to derive the unit cost of production. Cost Per Unit Formula The cost per unit is (Total Fixed Costs + Total variable Costs)/Total number of units produced. Cost Per Unit Formula Example 1: Let the Total Fixed Cost be Rs 1,00,000. Total Variable Cost is Rs 2,50,000. In a year, 50,000 units are produced. Cost Per Unit= (1,00,000+2,50,000)/50,000 which makes the cost of production Rs 7 per unit. Cost Per Unit Formula Example 2: Let Total Fixed Costs be Rs 1,00,000. The unit cost per unit is Rs 3. The total number of units produced in a year is 20,000. Cost Per Unit = (Total Fixed Cost/ Total Output) + Variable cost per unit = 1,00,000/ 20,000 + Rs 3= Rs 5+Rs 3 which makes the cost of production Rs 8 per unit. If there is a reduction in the volume of units produced, total variable costs will reduce but the fixed cost per unit increases as the denominator decreases. If there is an increased output, total variable costs will increase proportionately but the fixed cost per unit will come down. Difference Between Cost Per Unit and Price Per Unit [table id=22 /] Based on this difference between its price per unit and cost per unit, the company can determine how much discount it can offer on its SKUs as a part of its marketing campaigns. At the bare minimum, a company should at least cover its breakeven costs. 5 Strategies to Minimise Cost Per Unit Improve Logistical Strategy It is important to build a logistics platform with a third-party logistics provider that has the required number of people, processes, and technology to report costs and service performance. Plan, execute, and optimise your transportation network with effective communication to all the involved parties. Use technology and analyse data to optimise freight. Look at procurement processes, mode selection, and supply chain network design. Don’t forget the KPIs, including reporting, monitoring, and logistics process improvement. Examining trends over time helps cut unnecessary costs and inefficiencies in the supply chain. Reduce Material Expenses Some ways to do this include the following: Substitute lower-cost materialsEliminate unnecessary product featuresReduce wasteNegotiate until you get the lowest possible price for the best quality productLeverage suppliers for faster delivery times and lower financing costsImplement a system of Just-in-Time inventory to reduce excessive stocking and material-carrying costsDecide when to trade off material carrying costs with higher discounts from the supplierMake use of bargaining opportunities to access materials available at prices lower than their cost of productionBarter finished goods for raw materialsOffer faster payments for better price discountsNegotiate long-term supply arrangements to ensure a steady supply chain and stable material costs Reduce Overall Holding Costs You can reduce overall holding costs by doing the following: Optimise reorder levelsMake minimum order quantities work for youAvoid overstockingGet rid of your dead stockDecrease supplier lead timeUse inventory management software Minimise the Volume of Wasted Inventory, Reshipments, and Cancellations Use an efficient inventory management system to minimise overstocked inventory, leading to outdated, unsold inventory and incorrect customer demand forecasting, leading to overaccumulation of stock. Be aware that the product life cycle is becoming shorter and people’s shopping habits also constantly change. Optimise inventory levels to reduce wastage and also logistics costs. Set up inventory buffers to prevent problems across the supply chain and avoid overselling and underselling inventory across marketplace channels. Buffers are supplies or products kept in place to deal with demand forecasting or supply chain fluctuations that can arise in the future. Improving supply chain management helps reduce excessive inventory across various processes on the supply chain. Avoid excessive safety stocks to prevent stockouts unless you are in a cyclical or seasonal industry. Project future demand levels properly. Consolidate your supplier base to get the benefit of improved delivery time. Centralise the inventory function and use the ABC inventory management system to manage inventory properly. Negotiate required minimum order quantities with your supplier. To avoid reshipments and cancellations, review product weights and sizes and ensure you have the correct measurements of each product and its packing boxes. Accuracy is important to avoid shipping delays. Discrepancies between the actual sizes and weights and the numbers provided on the shipping container can cause unnecessary problems and delay delivery. Automate warehouse and order fulfillment operations to ensure minimal human error. Electronic documents for electronic signature verification help avoid human mistakes resulting in reshipments and cancellations. Eliminate Underperforming Products To do this, you can then follow the points listed below: Assess the product’s profitability regarding its return on investment and return on time spentAssess customer feedback about the product’s acceptance in the market. If it is unfavourable, then it is better to eliminate itRe-evaluate your product offering to see whether you can recalibrate or revitalize it. If it is a divergent product, look to eliminate itDo a BCG or a GE-McKinsey Matrix to assess the product's performance and stability How WareIQ Helps Reduce Fulfillment Costs Per Unit Inventory Optimisation Inventory gets stored in proximity to areas of high demand, ensuring same-day and next-day delivery. WareIQ provides a Warehouse Management System and expertise for efficient management of inventory and warehouse processes. Payment Based on Utilised Storage Space You only pay for the warehousing facilities you use, so you incur lower inventory storing costs. Reduced Supply Chain Expenses WareIQ provides a one-stop shop for all your logistics needs, from managing inventory to shipping orders, solving COD, NDR, or fraud issues, and analysing performance. This enables eCommerce businesses to focus on growing their business and outsource all inventory management and shipping requirements while ultimately reducing shipping costs. Bulk Carrier Pricing WareIQ is integrated with all major selling platforms and on-demand courier companies. We find the fastest and most reliable option for each order to get it delivered to the customer; this also enables you to get the best pricing and fastest delivery on each order. Innovative Technological Solutions WareIQ unifies network, technology, and expertise to offer end-to-end fulfillment services. [signup] Cost Per Unit FAQs What is the importance of cost per unit?Calculation of the cost per unit is an essential aspect for any company because it helps in determining The main purpose to calculate cost per unit is that it helps businesses get a clearer picture of the exact price they need to charge for specific products in order to maintain their required profit margins. What factors contribute to reducing cost per unit?A few factors that can help to reduce cost per unit are listed below:- Considering remote working for employees- Travelling less- Hiring interns- Using internet marketing- Reducing inventory levels- Paying invoices early- Outsourcing bookkeeping processes- Printing less What is the primary differentiator between cost unit and unit cost?Cost unit is the base unit that is required for buying the least amount of a given product where as unit cost is the least cost to purchase a unit of a product. What are some features of cost per unit?A few features of cost per unit are:- Number- Area- Volume- Length- Weight- Time- Value How can WareIQ help to reduce and calculate cost per unit?WareIQ provides multiple services across the fulfillment spectrum to enable you to optimize every process of the supply chain. We also give help you implement strategies to lower your cost per unit for all your products.

May 29, 2022

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