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5 Different Trust Badges to Increase eCommerce Sales. How Do WareIQ’s Post Ship Badges Enhance Customer Experience and Boost eCommerce Conversions?

5 Different Trust Badges to Increase eCommerce Sales. How Do WareIQ’s Post Ship Badges Enhance Customer Experience and Boost eCommerce Conversions?

According to studies, more than 60% of customers do not end up purchasing items because no trust badges are visible on the website. Trust badges are a simple symbol that reassures customers that they are on the right track and instils trust in them. The lower the average shopping cart abandonment rate, the greater the increase in sales. Let's get started with how you can use trust badges to increase eCommerce sales, the various types, how to place them on your website and much more. What are Trust Badges in eCommerce? A trust badge is a symbol that is displayed on a website to inform visitors that the brand is genuine and trustworthy. They are also known as site seals, shipping tags, or fast delivery tags. They're essential for sites that collect personal or financial information, such as eCommerce or membership websites. Retailers also use trust badges to increase eCommerce sales. Customers are easily put off by shady websites that do not indicate that their data is secure. Many trust badges are created by third parties-providers. Once you've met their requirements, you can use their services which could include anything from purchasing an SSL certificate to having your business practices reviewed. [contactus_gynoveda] Why Does Your Website Need Trust Badges to Increase eCommerce Sales? Trust badges persuade customers that they can entrust their personal and financial information to your website. Shopping cart abandonment can have a detrimental impact on eCommerce sites. 17% of people abandon their shopping carts because they do not trust the website with their credit card information. A few factors of trust badges are listed below: A bar graph titled "Reasons for Checkout Abandonment" specifies that 49% of people surveyed said that they abandoned their cart due to extra costs being too high.A trust badge or shipping tag displayed at the appropriate point in the checkout process indicates that customers' information is secure.The same payment-related trust issues will also apply to membership websites. Even if you have a free version or a free trial, you may still need to ensure that users can enter their personal information safely during registration. You can have strategically placed trust badges to increase eCommerce sales.  Where Do Trust Badges Go on Websites? An intriguing aspect of research conducted by Baymard is the discovery that, depending on the design of the website, users perceived certain parts of a page to be more secure than others. It is important where you place your trust badge to increase eCommerce sales. A trust badge can be placed anywhere on your website. Still, it will most likely have the greatest impact in places where the buyer questions the site's security, such as a checkout or registration page, in order to reassure them that it is secure. Let's take a look at some popular placement options: Homepage A trust badge or fast delivery tag on your homepage immediately begins to build user trust. Many businesses have a trust badge above the fold on their homepage but it could also detract from the design. Trust badges or shipping tags on the homepage should be visible but not overpowering. If you don't think your site seal fits with the design of your page, there are plenty of other places you can put one. Site Footer One of the simplest ways to spread trust is to place a trust badge in your site's footer. When you add it to your website's footer, it will appear on all pages, including the homepage. However, that should not be the only location you consider. Many customers never look at the footer, especially when deciding whether to enter their credit card information into a checkout form. You also don't want the footer to become overly cluttered with site seals, social media icons, and other information. Just add trust badges to increase eCommerce sales. Product Pages A common location for trust seals on a product page is right next to the "Add to cart" option. It helps customers to achieve more trust in the business while checking out. Checkout Page For most businesses, the checkout page or form is the most important place to include a trust badge or a fast delivery tag. You want users to see that trust seal right when they're wondering if it's safe to enter sensitive payment information. Types of Trust Badges A trust badge is any website icon that provides visitors with a sense of security. Some of the most common ones are listed below: SSL Certificate Badge SSL is an abbreviation for Secure Sockets Layer. It is a protocol for encrypting and authenticating data sent between two applications, such as a browser and a web server. TLS, or Transport Layer Security, is a newer, more up-to-date version of SSL, but SSL remains the more commonly used term. While some service providers use SSL/TLS certificates, others use SSL to refer to both protocols. You've probably seen the little padlock next to a URL in your browser that indicates a secure connection (or a warning message that your connection isn't secure). Those are predicated on the presence of a valid SSL certificate. Many SSL certificate providers also provide a trust badge that you can place on your website. Security Badge SSL site seals are not the only trust badges that you can obtain to demonstrate the trustworthiness of your website. Some providers specify the security features required to obtain a badge. TRUSTe, for example, awards businesses a trust badge based on their adherence to international privacy standards such as GDPR. Accepted Payment Badge You'll notice that 7% of respondents in the Baymard Institute study abandoned their shopping carts due to a lack of payment options. Consumers prefer payment options with well-known brands such as Visa, MasterCard or PayPal. When a shopper can use their preferred method of payment, the site feels more secure and legitimate. An accepted payment trust badge informs your site visitors that you accept those payment methods and adhere to the stringent security requirements of those payment providers.These badges are typically free and simple to obtain from payment cards or online payment companies. You can learn more about them by visiting their websites. This is one method that delivery companies use trust badges to increase eCommerce sales. Third-Party Endorsement Badge There are a few trust badges available that endorse your company as a whole. The Better Business Bureau offers an impressive but difficult-to-obtain badge (BBB). After receiving BBB accreditation, you can display this badge on your website. It will cost you $75 to apply for accreditation. Assume the BBB investigates your business practices and determines you meet its standards. In that case, depending on the size of your company, you'll have to pay at least a few hundred dollars per year to maintain accreditation. You can also get a free endorsement badge from Google Reviews. This badge displays your seller rating if you have received at least 100 reviews in the last year. All you have to do is follow the Google Reviews guidelines. Your older customers will be impressed by the BBB badge. Google, on the other hand, will have more brand recognition if your site's audience consists primarily of Millenial and Gen Z shoppers. If you are a SaaS company, you can also include badges from crowd-sourced review sites such as G2 Crowd. This use of trust badges to increase eCommerce sales will also increase your credibility with potential customers. Guarantee Badge Guarantee badges differ from the other types of trust seals that we have discussed. They are typically not provided by a third party and are not subject to a certification process. They are simply an image that represents a promise made by your company to its customers. Among the most common guarantee badges are: Shipping is always freeReturns are freeGuaranteed money back These badges are necessary because customer concerns about eCommerce are not limited to data security. They also want evidence that you will provide a pleasant shopping experience. Ensure that the badges work. Simple 30-day money-back guarantee trust badges to increase eCommerce sales did so by 32.57% on a website that used it. How to Add Trust Badges to Your Website Adding trust badges to increase eCommerce sales on your website does not require much technical knowledge. Many of them are easily added using the basic WordPress editor or other simple methods. A few of them are listed below: WooCommerce Checkout Templates The default WooCommerce checkout form already includes accepted payment icons, which serve the same function as trust badges to increase eCommerce sales. However, it may be beneficial to include additional trust seals on your checkout page. If you know how to code, you can add elements to the page yourself by using action hooks. You'll need the following: woocommerce_before_checkout_formwoocommerce_checkout_before_customer_detailswoocommerce_checkout_billingwoocommerce_checkout_shippingwoocommerce_checkout_after_customer_detailswoocommerce_checkout_before_order_reviewwoocommerce_checkout_order_reviewwoocommerce_checkout_after_order_reviewWoocommerce_after_checkout_form Browse the many available WooCommerce themes for one that allows you to add images to your trust badge location of choice for a more basic customization method. It does not provide as much flexibility as custom coding, but it is straightforward. WordPress plugins are also available that allow you to display badges on your checkout page and elsewhere. WordPress Plugins Using WordPress plugins, you have a plethora of options for adding trust badges to increase eCommerce sales. We've already mentioned Google Reviews and Customer Reviews for WooCommerce as badges for customer reviews. Review plugins are an excellent way to increase trust in your website. Some even provide additional badges based on reviews, such as Widget for Yelp Reviews. Other plugins, such as YITH WooCommerce Badge Management, allow you to create badges in a variety of styles for your product catalogue. This type of badge plugin is ideal for shipping tags or fast delivery tags that say "free shipping" or "free returns." Finally, if you use the SiteLock plugin, some WordPress security programs, such as SiteLock, provide site seals. TrustedSite is a plugin that allows you to earn certifications and trust badges. Images Your trust badge could be as simple as an image placed on a WordPress page. Simply upload the image file and strategically place it on the page of your choice. HTML or JavaScript Some trust badges to increase eCommerce sales include a source code for embedding the badge on your website. It's common for badges to include links or pop-ups with certificate information. You can place these badges in your WordPress theme's header or footer. Why Your Website Still Needs Trust Badges to Increase eCommerce Sales We've learned a few things about trust in our years of experience — what customers want, how to best earn their trust, and so on. It all comes down to three key points: Consumers Prefer to Buy From Brands They Trust Almost anyone can now start an eCommerce business. As a result, modern customers are inundated with offers, emails and websites with which they are unfamiliar. At the same time, the world's largest corporations are frequently involved in widely publicized data breaches involving the personal information of their customers. It's no surprise that 40% of shoppers say they no longer buy from brands they like because of trust issues. However, trust today is about more than just the brand and a potential customer's familiarity with it. It is also about the visitor's experience and viewpoint. Take, for example, Burt's Bees, a large, well-known brand that saw a significant increase in conversions when trust badges were displayed. This is because brands typically speak to the level of product trust rather than the online purchasing experience on their eCommerce store. Thus, it is not only useful to provide trust badges to increase eCommerce sales but they are also essential for customers who want to ensure that a website and online transactions on it are safe and secure. Trust is About More Than Online Security and Personal Information The risks of modern shopping have shifted. Concerns that used to revolve solely around website security have now expanded to include eCommerce performance, scam avoidance, business practices, shipping fulfillment and customer data protection, to name a few. Based on this (and the test results), there is still a significant need for trust badges to increase eCommerce sales, particularly those that address multiple aspects of business trust in addition to security. The Trusted Site system, for example, addresses both security (scans for malware, viruses and valid SSL certificates) and trust concerns (verified business information, shopper identity protection and issue-free orders). A comprehensive trust mark like this one puts customers at ease throughout the entire online shopping process. Trust Badges Regularly Increase Conversion Rates  Even if security isn't at the top of customers' minds as they prepare to enter their credit card information on the checkout page, it's not at the very bottom. Hence, security badges enhance conversions to a great extent when the customer is in the last leg of the sales funnel, i.e., making payments on the eCommerce site. Guarantee Badges like free shipping guarantee, same-day delivery or next-day delivery badges also drive more sales & cart conversions by showcasing fast Shipping Tags – dynamic 1, and 2-day delivery promises based on the location of the customer. A few points to note in this regard are: Conversion rates were lower in control tests conducted on eCommerce sites that did not display a trust badge.Conversion rates can be reduced by trust badges from lesser-known online security brands.Conversions are most likely to increase when trust badges from well-known brands are used. Conclusion: Using WareIQ’s Shipping Tags To Increase Sales Conversions As we have discussed all of the benefits and requirements of using trust badges to increase eCommerce sales on your website, it can help you build trust among your visitors while also increasing your sales conversion. And if you have an online store, you should opt for using trust badges to increase eCommerce sales. It is beneficial to use trust badges because if your visitors find your website safe and secure, they will undoubtedly convert into potential customers, assisting you in increasing your sales. Using a Trust Badge on your website can significantly increase your conversion rates and ROI, allowing you to generate more revenue from your website. An easy way to implement trust badges is by partnering with a 3PL company like WareIQ, which will implement trust badges on your website, on your behalf. WareIQ has found that trust badges that are displayed on your website and product pages assist customers in finding out serviceable pin codes and estimated delivery dates for products listed on the site. You can make quick and transparent delivery timelines your competitive advantage with our custom engine which identifies if products are available in inventory, smartly chooses the closest warehouses and identifies the fastest possible route to enable the fastest and smoothest delivery experience to customers. Speed Up the Sales Conversion Rates of Your Business Through WareIQ's Well-Communicated Shipping Timelines Provides reassurance to customers by adding Prime-like badges to your websiteHelps you utilise our fast delivery tags on your product pagesEnhances your add-to-cart conversion rate by displaying estimated timeframes for every product Why Should You Use WareIQ’s Post Shipping Badges? Assists in gaining knowledge about serviceable pin codes and estimated delivery dates for productsHelps to enhance the trustability of your company in the eyes of customers Benefits of Using WareIQ’s Fast Delivery Badges Assists in using trust badges to increase eCommerce sales of your productsSpecifies the tentative delivery time for each orderGains the trust of customers by providing prime-like shipping tags on your web page How do WareIQ Shipping Tags Work? Checks the availability of products in the inventory in real-timeShortlists the closest warehouseIdentifies the quickest delivery timeline throughout our entire logistics network Trust Badges to Increase eCommerce Sales: FAQs How do I add trust badges to a WooCommerce product page?1. Create a seal in TrustLock or find an image to place beneath your purchase button on Woocommerce Product Pages.2. Copy the iFrame code or the HTML code for the Free Trust Badge.3. The Hooks plugin make it simple to insert the code.4. Insert your code into WordPress without using Hooks. Where can I get trust badges?If you are looking for a trust badges and shipping tags provider in India, WareIQ can be of assistance. We help users to avail of trust badges and shipping tags through our Shipping Badges App. Why are trust seals important?Numerous studies have demonstrated that trust seals have a significant impact on consumer behavior. According to a study conducted by Actual Insights, trust logos increased the perceived trustworthiness of a brand in 75% of respondents. How can WareIQ shipping tags benefit your business?Our shipping tags help in instantly checking if a product is available in stores, ascertain the closest warehouse, and identify the quickest possible routes to assist in providing the fastest and most efficient delivery experience.

June 16, 2022

What is Inventory Analytics? Types, Inventory Analytics Metrics, 5 Benefits of Inventory Data Analysis

What is Inventory Analytics? Types, Inventory Analytics Metrics, 5 Benefits of Inventory Data Analysis

It is supremely important for every eCommerce business to have an idea about their previous performance, whether it was strong or weak, to understand the factors that contributed to those results so they can either replicate it or mitigate it in the future. The main way to do this is through inventory analytics which helps retailers analyse a variety of metrics such as high demand products, low demand products, storage costs and much more. In this article, we will go into depth about inventory analytics and understand the types, metrics and benefits. What is Inventory Analytics? Inventory analytics studies inventory to estimate the quantity of a product a company should have on hand. Companies may decrease expenditures and enhance operational efficiency by managing inventory levels. Inventory analytics provides crucial insights into product management, allowing organizations to implement cost-effective solutions and improve operations. Companies cannot track items efficiently as they move through the supply chain without a robust inventory data analysis. This can lead to inconsistencies, low supply levels, and backorders.Inventory analytics aims to quantify essential performance metrics, allowing businesses to monitor and adapt management approaches in real-time.Managers may enhance their decision-making by incorporating inventory data into their daily activities.Inventory analysis ensures that you have the proper quantity of inventory on hand, lowers your operating expenses and encourages improved demand forecasts. Types of Inventory Analytics Thanks to inventory data analysis, inventory management has become more advanced and demand forecasting can be done in an efficient manner. Inventory analytics may also reveal information about client behaviour, product performance and channel performance. There are different types of inventory analytics, depending on the values provided by the data. These are classified as below: Descriptive Inventory Analytics Descriptive inventory analytics reveal the status of inventory in a descriptive way. This method is the simplest to implement, with major inventory management platforms supplying predefined descriptive statistics straight away. Analytics include system information, such as the number of items in stock and price per unit. The descriptive analytics stage provides visibility into inventory levels across the supply chain.End-to-end reports reveal the location of inventory in the supply chain.They can demonstrate how the stockpiles of raw materials, intermediate products and final products cover sales.People learn to think in terms of value rather than just units. And they begin to realise how stocks at all levels pile up to satisfy the same levels of demand. Diagnostic Inventory Analytics Diagnostic inventory analytics explain the reason behind a trend that is occurring. Principle cause analysis is a diagnostic process, which is necessary when presenting information to make decisions.  For example, simply knowing that a firm grew month on month is not useful. Leaders must understand why there was this increase, in order to apply the lessons learned to other operations or products. Diagnostic analytics assists in identifying and understanding shortages and overstocks.It urges managers to look beyond overall inventory value. It distinguishes between healthy and unhealthy inventory by displaying the inventory quality.To do this, the organisation needs comprehensive inventory objectives but these targets do not need to be accurate.Simple procedures are generally adequate to establish the appropriate minimum and maximum stock levels. Predictive Inventory Analytics Predictive inventory analytics attempt to forecast the future pattern of inventory. You can use these tools to plan ahead of time and make changes as needed.  For example, machine learning is all about leveraging automation to learn from historical data and predict future patterns. Professionals can employ predictive analytics to look at seasonal needs from the prior year or they can use past knowledge of why something occurred.Predictive analytics can alert you to potential shortages and hazards associated with slow-moving or outdated stocks.Algorithms can inform planners if stockpiles are approaching the end of their shelf life by combining data on inventory and demand.They can issue alerts if inventory levels go dangerously low, resulting in lost sales very quickly. Prescriptive Inventory Analytics Prescriptive inventory analytics is a highly sophisticated approach to inventory data analysis. These numbers will tell you precisely what should be done. A correct prescriptive analysis with relevant data may be able to help you determine the different stock levels to meet different sizes of orders. With the relevant data, inventory management analysis systems may estimate the quantities of an item necessary to meet 90% of requests in three days. Prescriptive analytics can give suggestions for methods to improve inventory efficiency.Such a suggestion should originate from the planning system.Inventory analytics should be able to suggest solutions that a standard planning system cannot, such as "move additional products from location A to location B to reduce the risk of expiration."  [contactus_lilgoodness] Important Inventory Data Analytics to Keep Track of Once you’ve been acquainted with various inventory measurements, you need to understand how to get value out of them. It's critical to keep track of your inventory statistics on a regular basis so that you can include them in making appropriate decisions. There are various measures that should be utilised to assess performance and find opportunities for improvement. They are listed below: Gross Margin Returns on Investment (GMROI) GMROI is a straightforward ratio used to assess the profitability of your inventory over a certain time period. It calculates a retailer's gross profit for every dollar of goods acquired. The formula for figuring out your GMROI is: Gross Margin / Average Inventory Cost Any GMROI ratio less than 1.0 indicates that a firm is losing money for every dollar invested in inventory. Anything above 1.0 indicates that a company is selling things for more than they cost the company to acquire. It should be noted that this is not a measure of bottom-line profitability, because only COGS is included as a cost, not total spending. However, this provides a clear indicator of how lucrative your inventory is, based on current pricing points and purchasing practices. Average Fulfillment Cost Per Order Average fulfillment cost per order tells you how much it costs to choose, pack and ship each order. There are numerous costs to consider when looking at the full retail fulfillment process. Examine the following expenses to determine overall fulfillment costs: Receiving, storing and controlling inventoryStandard or customised packagingPick and pack labourPostage and shipping labels Shipping supplies and expensesOutfitting and assembly (if applicable)Returns management procedure The cost of fulfillment varies depending on whether you complete processes in-house or work with a 3PL according to their pricing model. Total Units in Storage Real-time monitoring of inventory analytics accounts for all of your items across all fulfillment locations and can assist you in calculating total units in storage or total inventory. This number is continuously changing, as you sell and reorder units, add new goods and process returns. The more SKUs you have, the more careful you need to be about storage expenses, overstocking and the amount of capital locked up in inventory. Many organisations overpay for storage they don't need, raising their inventory holding expenses needlessly. Inventory Reconciliation A procedure for inventory reconciliation can help you eliminate stock inconsistencies and better understand why they exist in the first place. Inventory reconciliations should be performed on a regular basis to verify that you are tracking and documenting value fluctuations due to outdated inventory or shifts in product demand. Here's a quick rundown of the processes to correctly reconcile inventory: Examine your physical inventoryContrast the physical count with the inventory recordsExamine the most recent inventory deliveries and shipmentsDetermine if there are any inconsistencies Inventory reconciliations must be scheduled at regular, preset periods to ensure consistency and accuracy. Backorder Rate A backorder occurs when a sale is made but the merchandise for the order is not yet available. This slows down order fulfillment and shipment, as well as last-mile delivery. The item is then supplied to the client at a later date since it is not in stock. Backorders can arise for high-demand items. However, frequent back-ordering might result in poor consumer satisfaction. The backorder rate of a corporation is the percentage of orders made that will be delivered at a later date owing to a lack of available inventory.  It is calculated as follows: (Number of Undeliverable Orders/ Total Number of Orders) x 100 A high backorder rate can indicate an unusual shift in demand, a lack of safety stock or manufacturing delays. Inventory Turnover Ratio The inventory turnover ratio calculates how many times a corporation sold and replenished (i.e., turned over) its inventory during a certain time period. Because a high turnover rate is related to selling a lot of items, inventory turnover may really confirm the efficiency of your organisation. The following formula is used to determine turnover: Inventory turnover ratio = [cost of goods sold average inventory] A benchmark inventory turnover ratio of 2 to 4 is good for analysing the findings but keep in mind that it might vary depending on your business. A ratio within this range indicates: Your logistics, both incoming and outgoing, are optimised.You are replenishing inventory that corresponds to your sales cycle.You are receiving new goods on schedule, based on manufacturing and warehouse receiving lead times. Inventory Shrinkage When actual inventory levels do not match inventory records, it is referred to as inventory shrinkage. This might be due to a variety of circumstances, such as theft, shipment damage or inventory accounting problems. Shrinkage is an inherent challenge for retailers but understanding the scope of the problem can help them gain better control over their inventory. Choosing and sticking to an inventory valuation system may promote consistency and accuracy, saving a lot of hassles during tax season. Here is a formula for calculating the rate of inventory shrinkage: {(Recorded Inventory – Actual Inventory) / Recorded} x 100 Inventory Carrying Costs Carrying costs encompass all charges that are connected with retaining or storing acquired and unsold finished items. Common carrying costs include storage, labour and insurance but they can also include opportunity and inventory depreciation costs. Carrying costs account for around 30% of overall inventory expenses and the exact costs vary depending on a variety of factors, including the number of total SKUs being stored and your typical inventory turnover rate. To get an understanding of how carrying costs are calculated, sum up all of your inventory expenditures and divide the total by your current inventory value to obtain a percentage of how much you're really spending to keep inventory. The formula is as follows: (Storage Costs + Employee Salaries + Opportunity Costs + Depreciation Costs) / Total Value of Annual Inventory Benefits of Inventory Data Analysis Achieve Optimum Levels of Inventory Stock visibility increases when you do frequent checks of inventory levels and other related indicators like total units in demand, cost of storage, etc. A comprehensive picture of stocks generated from these systems can help you in determining the number of stocks that are required to be ordered currently and the approximate time for reordering. You gain better control over your firm by retaining just enough inventory to fulfill client demand while avoiding excess or stale products. Reduce Wastage of Inventory To create a supply network that can be regarded as continual, you must account for all the purchases and sales occurring in your setup. Reduce writing off and writing down inventory in order to boost a company's inventory value and revenue. Consider establishing programs and checks that will assist you in tracking critical inventory data and making better inventory optimisation decisions by utilising automation. Reduce Costs Associated with Inventory As your inventory is likely to hold 30-50% of your working capital, a lot of money is invested in it. A proper analysis can help to judge the reasons for high costs at different levels with respect to inventory. Based on the facts, you may take corrective action to improve your bottom line. Reduce the Amount of Backorders Too many backorders reflect negatively on your company. To ensure an optimal stock level, you will need data and clarity on your inventory levels at all times, to make informed and calculated decisions based on real-time data. For example, studying patterns such as previous season data might help you forecast future demand and thus, stocks to be maintained based on seasonality factors. It will also cut stockout expenses and backorders. Accurate Forecasting of Inventory Levels Dead stock is frequently the consequence of incorrect inventory forecasting, which is why an inventory analysis system is essential. Reliable inventory analysis and reporting plan will collect data on all of your SKUs, which will ultimately increase forecasting and reordering accuracy. Furthermore, this information can be utilised to modify prices and increase revenue. What Inventory Analytics Services Does a 3PL Company Like WareIQ Provide? Third-party logistics (3PL) firms like WareIQ work with eCommerce businesses ranging from startups to Fortune 500 corporations to handle everything from storage and inventory management to swiftly, effectively and precisely delivering consumer orders. We have a custom Warehouse Management System (WMS) which is a WMS software system that monitors and handles practically all warehouse activities, such as: Physical inventory administrationPicking, packing and processing of productsOptimisation of warehouse picking patternsOrder labelling, shipment and trackingCustomer Returns ManagementAutomation of inventory management processes A 3PL inventory system can track each client's inventory conveniently, including stock availability, pallet ID numbers, serial numbers and expiration dates. eCommerce clients of WareIQ can access this data in real-time, allowing them to manage their warehouse, inventory and shipping operations in a hassle-free and convenient way. A 3PL inventory system boosts warehouse productivity and efficiency by speeding up operational processes such as picking, packaging, shipping and reverse logistics, thus making it the best fit for all your business needs. Our software also provides measurable inventory analytics that will help in demand forecasting and can help you ascertain how much inventory you need to keep of each product during a certain time period. Inventory Analytics: FAQs How can inventory analytics be used for inventory management?Since inventory analytics provide insights into measurable and quantifiable data, it helps businesses better determine inventory levels needed for the future, based on past performance of supply and demand. They can also analyse the highs and lows of previous periods and what caused them. How can you efficiently keep track of inventory levels?- Prioritizing inventory- Tracking product information- Auditing inventory- Analyzing supplier performance- Practising the 80/20 inventory rule- Being consistent in how the stock is received- Tracking sales- Ordering restocks yourself What is the 80/20 rule in inventory management?It is an unofficial rule that suggests that 80% of a company's profits should be met by 20% of their products How can WareIQ help keep track of your inventory analytics?WareIQ’s custom WMS keeps track of every important metric of your inventory grouped by product type, manufacturer, age and much more to help give you an insight into every aspect of every product in your inventory catalogue to help you make more informed decisions.

June 16, 2022

10 Best Shiprocket Alternatives for eCommerce Businesses in 2022

10 Best Shiprocket Alternatives for eCommerce Businesses in 2022

The eCommerce space is rife with competition, both in terms of retailers pining for business from customers and 3PL companies battling it out to be the fulfillment partners for these retailers.  Shiprocket has become synonymous with providing third-party fulfillment services to eCommerce sellers. It is primarily a shipping aggregation firm that was founded in India and is currently based in Delhi. Since its inception in 2012, it has given retailers access to multiple carriers, has allowed them to automate a significant portion of their operations and allows them to tailor services according to their users’ preferences. The company currently has partners in more than 200 countries and processes upwards of 200,000 orders a day. However, there is often a case to be made for retailers to seek Shiprocket alternatives based on their requirements, financial resources and locations they operate in. Each 3PL company often performs better than its competitors in different segments of the eCommerce fulfillment chain so it is up to companies to decide which one is the best fit for their precise requirements. In this article, we will take a look at the reasons that companies search for Shiprocket alternatives, the top 10 Shiprocket alternatives and a feature comparison of each. Top 5 Reasons Companies Search for Shiprocket Alternatives Additional Service Requirements While Shiprocket may be known for its shipping services, it isn’t always the best option for transporting high-end commodities such as jewellery or expensive electronics and bulky products such as furniture and large appliances because its operations are centred around standardized packaging which is best suited towards non-perishable items such as clothing and smaller electronic items. If a retailer deals in expensive or perishable products that require special packaging and careful handling, in addition to other services that might be required by specialized goods, it can pay dividends to opt for Shiprocket alternatives that offer these services. Specific Industry-Related Services Shiprocket is responsible for transporting a large number of items that span many industries such as clothing, electronics, consumer goods and much more. However, the company does not offer services that are required by specific industries such as cold storage facilities and ultra-fast delivery. If the nature of the industry a retailer operates in is such that their products need to be refrigerated or stored in a specific way such as groceries, food & beverages, and breakable items, it may be prudent for them to seek Shiprocket alternatives that offer these industry-specific services. Growing Number of Operations It would benefit retailers to look for Shiprocket alternatives if their business is growing and expanding its services and product range rapidly. While Shiprocket commands a relatively low cost for initial setup, prices can quickly rise as retailers need to take advantage of more services and have more orders to fulfill. There are many Shiprocket alternatives that offer more competitive rates and faster shipping services. Quicker and More Frequent Delivery Services There are many Shiprocket alternatives that provide ultra-fast shipping and distribution services at lower rates than Shiprocket. With customers getting accustomed to next-day, same-day and even 10-minute delivery, retailers who require rapid delivery speeds would be better suited to partner with a company that offers these services. Additionally, it would greatly benefit retailers who sell their products across the country, to take advantage of services such as micro fulfillment centers and a nationwide network of warehouses so they can place their inventory in close proximity to areas of high demand and transportation facilities. All these factors will greatly aid retailers to increase the speed at which their customers receive orders and in turn, will increase their overall satisfaction. Enhanced Customer Satisfaction There are many Shiprocket alternatives that offer advanced customer support facilities such as 24/7 customer care, automated chatbots and branded tracking pages with contact information, in addition to many others. Retailers who require heightened customer support services would be better off by partnering with a company that offers all these facilities so that their customers would always receive priority and would never be left wanting in regards to queries, issues or company-related communication. [contactus_uth] 10 Best Shiprocket Alternatives & Competitors WareIQ Source WareIQ is one of India’s most rapidly expanding eCommerce fulfillment companies that uses technology as a central pillar to enable multiple eCommerce services such as order fulfillment, inventory management, ultra-fast delivery services, customer care, reverse logistics and much more. The company is Y-Combinator backed and was founded with the aim of bringing ultra-fast delivery to every pin codes in India by building a vast infrastructure of fulfillment centers and dark stores across India that enables eCommerce sellers to store inventory closer to their customers. The company has many unique features such as a custom WMS that can integrate with multiple eCommerce selling platforms, an app store where users can download various apps to enhance their experience, and an RTO shield to protect retailers from incurring the cost of returns management and much more. A few features of WareIQ that make it one of the best Shiprocket alternatives are: Does not have any minimum order requirementsOffers a pan-India network of warehouses and fulfillment centersOffers cost-effective and transparent pricingProvides customisable branded tracking facilitiesOffers customisable packaging services Vertically integrated fulfillment platform to unify OMS & WMS FedEx Source FedEx is a global conglomerate that focuses on providing eCommerce fulfillment, supply chain and shipping solutions across multiple sectors such as retail, consumer goods, electronics and healthcare. Currently based in Memphis, Tennessee, FedEx currently provides shipping services to more than 220 countries across the world and equips retailers with the ability to synchronize their orders across multiple platforms in a single location in addition to warehouse and inventory management. A few features of FedEx that make it one of the best Shiprocket alternatives are: Provides a global network of servicesOffers a variety of integrations with multiple selling platformsHas an intuitive and easy-to-operate platformOffers a comprehensive delivery networkProvides fast delivery and reverse logistics services DHL Source DHL, which is an acronym for Dalsey, Hillblom and Lynn, is a courier and shipping solutions provider that was pioneered in and is currently based in Germany. The company is renowned around the world for its courier services and warehousing solutions and it currently operates in more than 220 countries. Its distribution arm provides door-to-door delivery and freight forwarding services through air and sea. A big advantage that DHL provides to eCommerce retailers is its ability to seamlessly clear customs and other challenges that may arise during international distribution and also provides insurance on every package. A few features of DHL that make it one of the best Shiprocket alternatives are: Offers a centralised technology platform for order fulfillment, inventory management and other eCommerce operationsProvides next-day delivery services in more than 80 cities in IndiaHas a wide variety of B2C & B2B eCommerce servicesOffers efficient logistics managementProvides integration and optimisation of inventory across sales channels Vamaship Source Vamaship is primarily a shipping aggregation and logistics company that was founded in 2016 and is currently headquartered in Mumbai, Maharashtra. It currently operates in more than 200 countries across the world and helps businesses ship their goods at the cheapest possible rates through air, land and sea and also enables them to automate many of their shipping processes to make them faster and more efficient. It also provides users with a consolidated platform to manage shipping partners and shipping-related tools. A few features of Vamaship that make it one of the best Shiprocket alternatives are: Offers a choice of multiple shipping partnersOffers integrations with multiple online selling platforms such as Magento, Shopify, Amazon and many more Provides a centralised platform for tracking inventory and order details Provides a tool to instantly compare prices of multiple shipping aggregators to help retailers choose the cheapest oneHas a document manager that consolidates shipping documents in a searchable format Aramex Source Aramex is a worldwide courier, logistics and shipping provider that is currently based in Dubai, UAE. Founded in 1982, Aramex operates in many countries globally and provides order fulfillment services to eCommerce companies. In addition to this, it also offers marketplace integrations with platforms such as Shopify, Martjack, ShopGo and many others, warehouse and inventory management and many other specialized services such as label stitching and creation of price tags for clothing companies and packaging and kitting services, that can be purchased for an additional price. A few features of Aramex that make it one of the best Shiprocket alternatives are: Offers integrations with multiple platformsOperates in more than 58 countries worldwideProvides customer care to more than 370 locations in IndiaOffers same-day delivery servicesProvides management of facilities ShipKaro Source Since ShipKaro’s inception in 2017, it has offered shipping aggregation services for eCommerce retailers who need efficient order management. Headquartered in Gurgaon, the company also enables businesses to automate and tailor shipping processes according to their desired outcomes. It also provides services such as label printing, bulk upload or orders, customizable delivery timings and much more. A few features of ShipKaro that make it one of the best Shiprocket alternatives are:  Offers partnerships with more than 14 local and international shipping servicesProvides integrations with multiple eCommerce selling platforms such as eBay and FlipkartEnables users to avail of discounted shipping prices and provides a tool for comparing them to other servicesSyncs order information from multiple order management platforms for seamless order processingOffers detailed tracking of orders Rakuten Source Rakuten is a multinational eCommerce fulfillment company that was founded in Tokyo in 1997 and is also currently headquartered there. Often called the “Amazon of Japan”, the company offers a variety of services including shipping, packaging, kitting, reverse logistics and much more. It also offers tracking of shipping analytics for firms to be able to analyse and improve shipping practices to increase profit margins and reduce delivery timelines. They also operate a service specifically meant for small and medium-sized businesses known as XParcel. A few features of Rakuten that make it one of the best Shiprocket alternatives are: Provides customized services for eCommerce companiesOffers synchronized marketing solutionsProvides same-day and next-day shipping in the USOperates specialised fulfillment centersProvides kitting and subscription box services Shipyaari Source Shipyaari is an Indian eCommerce logistics service and shipping aggregator that was founded in 2013 and is currently headquartered in Mumbai, Maharashtra. One of its unique features is its ability to handle high-volume orders from large companies. The company offers a choice of multiple shipping partners and eCommerce integrations in addition to providing detailed cash-back guarantee schemes. A few features of ShipKaro that make it one of the best Shiprocket alternatives are:  Offers partnerships with 10 courier services that cover more than 25,000 pin codesProvides integrations to eCommerce selling platforms such as WooCommerce, Shopify and MagentoOffers a software solution that takes care of inventory management, order fulfillment and delivery servicesEnables customers to track orders through API integrationsOffers additional facilities such as RTO reduction, data analytics and NDR management ShipMonk Source ShipMonk was founded in 2014 and is currently headquartered in Fort Lauderdale, Florida, United States. With its central focus being on making technology-based eCommerce solutions as accessible as possible, the company also offers services such as pick and pack solutions, packaging facilities, inventory and warehouse management, customer care and much more. It operates more than 100 virtual stores and also provides dedicated managers to each customer to assist them with the onboarding process. A few features of ShipMonk that make it one of the best Shiprocket alternatives are: Provides an online billing portal for customersAssists in automating warehouse processesConsists of a vast number of customisation & branding optionsOffers tax benefits and reduced pricing for bulk importersDoes not have a setup or inventory receiving fee Fulfillment by Amazon (FBA) Source Amazon is synonymous with eCommerce retail and fulfillment. Its first-party fulfillment services, known as Fulfillment by Amazon (FBA) pioneered the order fulfillment revolution when it was launched in 2006. Amazon uses it status to provide the best facilities it can such as operating a vast number of fulfillment centers worldwide, offering free shipping to customers, picking and packing services, returns management and much more. It also enables retailers to limit their expenses by providing free warehousing, free order processing and much more. However, retailers have to keep in mind that it can only be used to fulfill orders that are placed on Amazon and a few other select eCommerce selling platforms. A few features of Fulfillment by Amazon (FBA) that make it one of the best Shiprocket alternatives are: Has no minimum order requirementsTakes care of all customer inquiries, refunds and returnsCan fulfill orders on select external selling channelsUtilises inventory pooling to group similar products from different retailersOffers free shipping to customers Feature Comparison Table of Competitors of Shiprocket [table id=29 /] Conclusion: Why is WareIQ the Best Shiprocket Alternative in India? The sheer competitiveness due to the number of companies providing 3PL eCommerce fulfillment services is enormous. These companies constantly seek to provide new and improved services at lower prices to differentiate themselves from their competitors. This greatly benefits existing and aspiring eCommerce retailers because they can take their choice of companies that perfectly align with their values and requirements. Although Shiprocket is one of the biggest shipping aggregators in India, there are many areas where it is surpassed by the competition. If you are looking for Shiprocket alternatives, you don’t need to look beyond WareIQ.  WareIQ seeks to differentiate itself through the use of technology by providing innovative solutions to the various eCommerce challenges that retailers face, at the most cost-effective and transparent pricing in the industry. WareIQ not only acts like a shipping aggregator like Shiprocket, but also provides end-to-end fulfillment services to eCommerce sellers & D2C brands in India, so that businesses can focus only on their core revenue metrics while WareIQ takes care of their entire operations & logistics. The major differentiator from Shiprocket is WareIQ's vertically integrated fulfillment platform that unifies OMS & WMS and syncs inventory in real-time. eCommerce sellers don't have to face the issue of a lag of 12-14 hours for their inventory status to sync from OMS to WMS if they choose WareIQ as their 3PL fulfillment partner. Some of the other important and distinct features of WareIQ include: Nationwide Network of Fulfillment Centers and Dark stores Provides a simple plug & play setup with no minimums requirementsOffers integrations with Amazon Seller Flex, Myntra, Flipkart Assured & other eCommerce selling platformsProvides regional sourcing hubs to reduce first-mile expensesProvides in-house warehouse management Enhanced Inventory Management and Network Planning Offers best-in-class AI models for sales forecasting and thresholds for auto-replenishmentProvides grouping of products based on type (regular, non-regular, seasonal etc.) to improve sales conversions Vertically Integrated Technology Fulfillment Stack Offers integrations with 20+ top selling channels and D2C platformsOffers integrations with hyperlocal, regional and national courier services, encompassing more than 27,000 pin codesProvides a single unified tech stack for WMS and OMS App Store With Downloadable Applications to Increase Productivity Enables RTO Shield which provides 100% protection RTOsEnhances the post-purchase experience through customised branded trackingProvides notifications on order status to customers through email, SMS and WhatsappAssists in generating customer feedback  Ultra-Fast Delivery With WareIQ Rush Provides same-day delivery with no distance-based billing or minimum order requirements Increases revenue conversion by up to 30%Provides near-zero RTO%Offers NDR & COD verification via WhatsappReduces Cost per Shipment (CPS) Shiprocket Alternatives: FAQs What is Shiprocket?Shiprocket is a shipping aggregation company that was founded in 2012 and is headquartered in Delhi. Its main offering is providing a choice of multiple shipping companies to retailers, who can choose which one they want to partner with based on their own circumstances.  What is the main goal of 3PL fulfillment companies?The primary objective of 3PL fulfillment companies is to provide a range of eCommerce services including order fulfillment, inventory management, shipping and distribution at more cost-effective prices than their competitors in order to attract customers. What factors should retailers consider before making a decision?There are multiple factors that retailers should consider before partnering with a 3PL fulfillment company which have been listed below:- Business requirements- Financial capabilities- Services offered by the company- Pricing offered by the company- Reviews from prior customers Why is ultra-fast delivery important?Providing ultra-fast delivery such as same-day and next-day delivery can enable companies to offer a unique selling point (USP) to their customers. Consumers have become accustomed to fast delivery and if a company doesn’t offer it, they could lose out on customers to their competitors. What sets WareIQ apart from Shiprocket & other 3PL companies?WareIQ’s core business is eCommerce fulfillment for enabling same & next day delivery for eCommerce & D2C brands who sell online. It provides end to end fulfillment services with its pan India network of fulfillment centers & dark stores and partnership with all the major shipping/courier through which eCommerce sellers can store inventory closest to their customers in any of WareIQ’s FCs & reach their customers faster through their preferred shipping/last mile delivery partner.WareIQ emphasises the implementation of technology at every step of the fulfillment process. Our custom WMS, app store and integrations with multiple selling platforms enable users to automate and enhance their operations to make them faster and more efficient. WareIQ enhances post purchase experience through its features & solutions like branded tracking, RTO shield, shipping/fast delivery badges, customer feedback etc. which are all accessible by customers in 1 location called WareIQ’s app store.

June 15, 2022

10 Ways to Prepare eCommerce Stores for Peak Season Shipping in 2022

10 Ways to Prepare eCommerce Stores for Peak Season Shipping in 2022

Businesses often wait for peak season to expand their operations, launch new products, open new branches and more. The peak season has a lot of potential to generate sales and revenue. Businesses see it as an opportunity to populate their brand, clear stock, generate leads and store data.  Peak season sale is a familiar term for everyone who shops online but the people involved in setting it up know that it is a complex task and requires perfection in terms of planning and execution. Initiating the fulfillment process after getting multiple orders during peak season becomes more of a challenge than an opportunity. Learn the ins and outs of peak season shipping including the challenges, opportunities, planning and factors to be taken care of before a big event. What is Peak Season Shipping? Peak season shipping or peak season fulfillment is the term that refers to fulfilling eCommerce orders during peak season when there are a high number of orders. The time of the year may differ depending upon location, season, festival, culture, celebratory events, etc. During peak season shipping, retailers have a large number of orders to fulfill due to growing customer demand during that period. At this time, sales velocity is at its highest. It is a testing time for supply chain efficiency, inventory planning & management, 3PL fulfillment partners and a seller's skills in order management. Any disruption can result in late delivery, damages, lower revenue margins, bad customer experiences and ultimately downgrades a seller's ratings. [contactus_lilgoodness] Peak Season Shipping Challenges When you have a high number of orders, you have more chances of making mistakes during peak season shipping so let's look at some challenges that retailers face: Fulfilling Orders at a Fast Pace Fulfillment companies and sellers usually provide same-day and next-day delivery as one of their USPs which is quite a difficult task to achieve when you have high sales velocity. Peak season fulfillment is a trying time for retailers because every department will be struggling to meet its quotas due to the increased demand. On the other hand, customers continue to demand ultra-fast peak season shipping to take full advantage of the season. Lack of Staff During Holidays As the name suggests, seasonal sales occur during special times of the year so a large part of the workforce may want to take leaves which puts extra strain on retailers. This is not just limited to supply-chain staff but also employees that handle picking, packing, inventory management and other processes. To counter this, a seller can ask their staff to work reduced shifts, provide incentives on orders and give their staff a bonus post-sale, based on their performance. High Expectations From Customers During peak season, customers expect to receive their orders before a specified time period. In India, peak season shipping needs to meet customers' expectations as they often plan ahead and expect to receive their orders before the start of a holiday season or festival. Risk of Product Damage Damage can occur during peak season fulfillment while storing, picking, packing, shipping, delivering and managing returns. When retailers need to provide peak season shipping for a large number of orders, they cannot provide personalized care to each item because it will take extra time. They are under pressure to provide delivery services at the same pace while having to fulfill a much larger number of orders than any other time of the year, which leads to more careless handling of products and thus, there is more scope for mishaps to occur. Limited Amount of Warehouse Space While providing peak season shipping, you have more items to deliver which means that the sales velocity is high and you need to have an appropriate amount of inventory and enough space in the warehouse to store it. Keeping only a few items in stock can result in product shortages and storing more items than the warehouse capacity allows can result in product damage and deterioration. Incompetent Supply Chain Processes An incompetent supply chain could be your biggest challenge during peak season fulfillment. An order that is not fulfilled properly leads to customer dissatisfaction. If a logistics company does not deliver on time or damages the product in transit, there is a high chance of the customer returning the product and giving negative feedback to your business. The customer may never think of ordering from your business again which could result in other customers not giving it a chance.  10 Ways to Prepare Online Stores for Peak Season Plan in Advance To plan ahead of time and prepare online stores for peak season, arrange all of the data, create and implement planned promotions and figure out how you will handle the surge in demand. You can optimize stock levels and make smarter decisions about when and how much to reorder for each SKU by estimating demand. Though inventory forecasting may never be 100% precise, there are things you can do to bring your projections closer to reality such as by analysing seasonal historical data, considering upcoming promotions and expected demands and tracking fast-moving vs. slow-moving products to optimize stock levels. In the case of a stockout, you will have to set up a mechanism that immediately identifies products that have a low level of stock and that are out-of-stock in your store, so both you and your consumers are aware of the current availability of stock. If you have dead stock, you can launch a promotion or a flash sale to clear it out and create space for in-demand products. Use Dropshipping & Direct Fulfillment Dropshipping, also known as direct fulfillment, is a business strategy in which online retailers, with the help of their merchants, distribute products directly to customers, without assistance from 3PL fulfillment services. Here, an eCommerce seller does not purchase or store inventory with them. They list it on their websites, generate sales and take care of peak season shipping directly to the customer from their supplier or supply chain network. The dropshipping fulfillment process involves: eCommerce sellers listing items on their website or other selling channelsBuyers ordering a product from the any of the platformsThe buyer is informed about the order placement and if there is an additional shipping feeSeller replicating the order with the supply chain network and keeps the vendor in the loopVendor or fulfillment companies pick & packing the order and ship it directly to the buyer Utilise Technology A simplified tech stack can increase peak season shipping speed while improving order accuracy. It also delivers accurate data in real-time that can be integrated across multiple platforms. Before you begin peak season shipping, add the following technological elements to your supply chain: Warehouse Management System (WMS)Inventory Management Software (IMS)Order managementSupply chain managementAutomated order processingRTOs and Returns management Partner With a Trusted 3PL Provider It's difficult to meet seasonal demand on your own and leasing your own warehouse can be costly and time-consuming. From inventory planning to returns management, working with a 3PL like WareIQ gives you access to premium technology and direct connections with major eCommerce systems. It's never too late to include technology in your supply chain if you want to optimize it before peak season fulfillment. Partnering with a 3PL can make the hectic season a lot easier to handle by providing the following: Ability to focus more on core business operationsFulfills orders on behalf of youTakes care of multi-channel sales orders Gives you multiple warehouses and intelligent inventory placementProviding technological benefits and monitoring of your business from a single platformTake care of COD orders and settles transactions within a weekEnsures same-day and next-day delivery Utilize Multiple Shipping Carriers You can increase your peak season shipping flexibility by using different shipping companies. However, collaborating with various shipping carriers can be time-consuming and it may cause you to fall below the minimum shipping threshold required to receive discounted shipping prices. Fortunately, a 3PL like WareIQ can assist you by giving you the choice of a variety of logistics firms like BlueDart, DTDC, DHL, etc. This will allow you to optimize your shipping strategy without having to manage things on your own. WareIQ also negotiates bulk shipping costs so that you can benefit from the savings. Use Multiple Warehouses Across Different Locations If you work with a third-party logistics company, you will be able to distribute inventory across different fulfillment centers, lowering shipping costs and shortening transit times in the process. WareIQ has locations all across the nation. It gains access to data tools and helps you determine which regions are generating the most sales, so you can improve your inventory allocation plan accordingly because every location is driven by the same technology. You can match consumer expectations by using a distributed inventory technique to offer competitive, rapid and economical delivery choices such as same-day or next-day delivery with a minimum spending threshold that exceeds your average order value (AOV). Calculate MOQs and EOQs During peak season shipping, you need to have a good amount of inventory to fulfill the orders of all your buyers. Also, you must take care not to buy more inventory than is necessary to avoid your money being held up. To provide the ideal peak season fulfillment, you need to calculate the number of items you need to keep. There are two major ways to do so: Economic Order Quantity (EOQ) The economic order quantity (EOQ) is a method used to determine the actual inventory quantity to order. It is calculated after taking into account product demand, unit pricing and holding costs to assist sellers in figuring out the order quantity.  The purpose of EOQ is to help sellers figure out how many products they need to meet demand without overordering and raising their holding costs. A seller must have a good grip of the following to make this method work: Order costs – Cost per merchandise orderDemand rate – Sold units during a certain periodHolding costs – Expense for holding the product The EOQ formula is : EOQ = Square Root of [{ 2 (Order Costs) X (Remand Rate)} / Holding Costs ] Source Minimum Order Quantity (MOQ)  The minimum order quantity (MOQ) is a method used for calculating the amount of inventory a seller should order at any given time. This is for the sellers who wish to be careful with their ordering habits or want to maximize their cash on hand while avoiding excessive inventory storing and spending. There isn’t a set formula to calculate MOQ but a seller can calculate the right MOQ for their business by: Calculating DemandBeing Aware of Holding CostsKnowing the Breakeven PointDetermining MOQ Prioritize Your Peak Freight Shipments Shipments can get delayed during peak season shipping. You need to inform your freight partner about boxes or containers that consist of higher-priority items. Before a shipment is rolled out, the relevant teams will be notified and they can help guarantee that higher priority boxes or containers will be given extra importance. You can prioritize using a variety of factors such as securing prepaid orders first and then others. If you sell laptops and other peripherals, try to deliver the laptop primarily and other related products after that so that there will be fewer chances of order cancellation, RTOs and unhealthy feedback. The idea is that your key product should be delivered first. Establish Reverse Logistics By making the returns procedure as simple as possible for the customer, you can enhance brand loyalty and retain customers. A positive returns experience may also inspire your clients to exchange their items, allowing you to avoid losing a transaction. To ensure you are not losing money, make necessary changes to your return policy. Examine which products are getting the most returns, figure out why and make modifications to the products and/or product descriptions to better meet expectations. Also, make sure you have a well-defined return and exchange policy in place that is easy to comprehend and accessible on your online store or product listings page at all times of the year. Opt for Damage & RTO Insurance A recent report from April 21 to April 22 shows that Indian buyers had returned 73% of products after buying them online. Damage and returns can be more painful than having few or no sales. Here, the seller pays delivery costs and risks product damage in transit twice and in the end, they do not achieve the sale and no revenue is generated. So these days, online sellers not only have an option of taking insurance on the product but also on RTOs.  In RTO insurance, sellers are paid a specific amount of money if the product gets returned. WareIQ’s RTO Meter shows the RTO requests of individual buyers. If any buyer in the past had not received a product then it would reflect on the RTO Meter. A buyer with high RTOs is not preferred and insurance companies do not cover them in the policy. How Can WareIQ Help You in Peak Season Shipping? Ensuring that every component of your supply chain is synchronized is the best approach to preparing for peak season shipping and satisfying consumer expectations. You can outsource fulfillment to a 3PL expert like WareIQ instead of operating a warehouse, investing in your own fulfillment software and shipping orders yourself. Leave it to the experts and save time and money to utilize it in the long run. WareIQ does not just provide multiple warehouses and logistics. It is a full-stack eCommerce fulfillment service provider that operates across India. It empowers you to ensure your customers receive same-day or next-day delivery. WareIQ provides warehouse management, inventory planning and management, logistics management and much more, with full transparency in terms of operations and supplying real-time inventory information. Our custom WMS integrates with leading eCommerce selling channels allowing sellers to have all of their order and shipping data in one place. WareIQ also assists you with your item purchasing list by determining the right quantity and the right time to procure it. [signup] Peak Season Shipping: FAQs How do peak seasons affect the supply chain?Demand and supply in the market have a direct impact on supply chains. This is true not only for seasonal items but also for peaks and falls in sales throughout the year, like a rise in sales during holidays and a fall during off-seasons. What are peak season charges?Peak season charges or surcharges are a temporary increase in the base shipment rate that major shipping carriers impose to cover additional operational costs during periods of high demand. The majority of surcharges are in the form of a flat price per package that varies between carriers. What peak season shipping facilities does WareIQ provide?When you are busy selling products on multi-channels and managing your eCommerce shop, WareIQ assists you by taking care of order fulfillment, shipping services, sending order confirmation mail/messages and taking delivery feedback from buyers. It also includes product warehousing, picking and packing as well as reverse logistics. How do holidays affect the supply chain?A chunk of the labour force could be on leave or if your supply chain is on schedule for the holidays, your vendors' supply chains with their manufacturers may be severely disrupted. Can a seller outsource to WareIQ during peak shipping season?Yes, a seller can outsource WareIQ during peak shipping season and any other time of the year. It's never too late to get partnered with WareIQ as a fulfillment partner.

June 15, 2022

What is Lead Time in Inventory Management? 8 Important Strategies to Minimise Lead Time

What is Lead Time in Inventory Management? 8 Important Strategies to Minimise Lead Time

Next-day delivery has become a standard expectation among online customers. As a result, consumers' willingness to wait for their orders has decreased dramatically in the last half-decade. You'll lose business if your eCommerce fulfilment procedure takes too long. Reduced lead timings are one of the most effective strategies to decrease your delivery window. Businesses calculate and shorten lead timings to match customer expectations and sustain their market position. It also improves manufacturing efficiency and increases sales income. Extended lead timings can be caused by various issues, including supply, production, and delivery delays, which can impair manufacturing and sales. Many people confuse it with throughput or cycle time, which is the time it takes to complete a procedure or order from start to finish until the product reaches the consumer. A better grasp of lead time, what it entails, and how cutting it may help your company develop. In this article, you'll learn all you need to know about this and how to utilize it to improve order fulfilment. What is Lead Time in Inventory Management? Time taken from when a purchase order is made to when it is received in the warehouse is referred to as lead time in inventory management. The definition of the term lead time, also known as a lead period, on the other hand, varies depending on the situation. It is also used in the following contexts: Customer Lead Time The time it takes for a client's order to be accepted and fulfilled is referred to as the customer lead period. The order fulfilment on the selected delivery date might be either a doorstep delivery or a pickup from an accessible area. Material Lead Time The time it takes to place an order with a supplier and receive the cargo is known as a material lead period. These are often large orders of raw materials needed in the production process or as inventories. So, whereas customer lead time refers to the time it takes for a product to reach its final destination, material lead time is primarily concerned with the production process. Production Lead Time The production lead period is the time it takes to make and send a product to the target destination, assuming the essential raw material is available, and there is no supply or logistical delay. Cumulative Lead Time The total of material and manufacturing lead timings is the cumulative lead period. Overall, it takes from when an order is confirmed to when it is sent, assuming that a raw material order must be placed. The overall lead time in inventory management for creating and delivering items comprises all of these aspects. For eCommerce fulfillment services, the customer lead period is the most crucial satisfaction metric. Customers anticipate quick delivery. Therefore cutting the time between consumer order and delivery will help you improve revenue. Your inventory planning and cash flow are affected by the time it takes to complete each part of your supply chain. For example, assume you wish to reduce client wait times by adhering to lean business management concepts and utilizing just-in-time inventory management. You'll need to lower your material and manufacturer lead times in such a situation. Components Of Lead Time The components of the lead period may be broken down into six categories. These elements are all essential and are given in chronological sequence. The following are the specifics: Preprocessing Time Receiving the request, interpreting it, and then converting it to a purchase order takes time. The word is also known as planning time, which refers to placing an order for a product or item one desires to purchase. Processing Time The time it takes to obtain or generate an order based on a prior request is known as processing time after preprocessing. Waiting Time The time it takes to get essential products or raw materials before the production process begins is called waiting time. Storage Time The time it takes for things to sit in a warehouse waiting to be delivered is called storage time. Transportation Time The time it takes for an object to reach its final destination is known as transportation time. Inspection Time The third component is inspection time, which refers to checking items for defects or flaws before delivering them to clients. [contactus_uth] Importance of Lead Time In Inventory Management Businesses must be able to manage timelines. For example, stock can run out, and customers' orders can't be fulfilled if lead timings aren't controlled properly. When lead periods become unmanageable, a vicious cycle might emerge, with lead times deteriorating as demand rises. This lag between customer orders and manufacturing may result in additional delays, causing the lead period to worsen. As a result, lousy order management may cost a company a lot of money by costing its valued clients and damaging its brand. Mention below are the points which show the importance of lead time in inventory management- Customers expect high-quality items delivered as fast as possible. Therefore a shorter lead period aids in customer satisfaction. Customers prefer to purchase from vendors that bring meals in the shortest amount of time as a result of this.To retain the inventory, the lead period is crucial. For example, suppose a corporation knows how long it will take to manufacture a product. In that case, it may order additional material in advance, reducing the possibilities of a material shortage or surplus in inventory.To attract clients, eCommerce businesses use lead time in inventory management as a USP. This is because customers are increasingly demanding high-quality items as quickly as feasible.A company's lead timings estimate how many items will be made and delivered at a given period. Therefore, they can boost their money creation by improving the pace.The lead period is beneficial in decreasing inventory waste. Instead of holding surplus goods in storage, the management will order merchandise as needed at a particular time. Lead Time Is Central To Inventory Control Regarding inventory management, you can state that lead time is required to keep your inventory running correctly. It's an essential hallmark of a well-functioning inventory management system. This isn't the only reason, though. To have a better understanding of the subject, examine the following factors: To understand why Lead Time is regarded as an essential aspect of Inventory Management, consider the following: Demand Estimation and Forecast You will be able to assess demand straight from the market and predict the product's requirements in a planned manner with lead time. As a result, you will be able to establish high standards without allowing inefficiencies to creep in. Order Management Order fulfilment is one of the most challenging aspects of inventory management. You may control your inventory in warehouses and take it out for distribution on time with the aid of lead time. You can also benefit from the ability to automate orders, reducing time and effort spent manually. Suppliers Management You may cooperate with your suppliers on needs and meetings linked to the supply of goods using lead time. Using this capability, you may contact your suppliers on a timely basis, avoiding any inventory gaps. As a result, the importance of Lead Time for good Inventory Management is evident. Factors Affecting Lead Time Manufacturers must be aware of the elements that influence the lead period. If the lead period is small, you are on the right track, but if it is large, you must document, control, and optimize the process to achieve superior growth and development. The following are the elements that influence lead time: Delayed Shipment  Shipment delays are one of the most typical causes of lead time extensions. However, the cause is unknown owing to weather conditions or other unforeseeable circumstances. However, by accepting many orders that can be handled efficiently, efforts may be taken to lessen shipment delays. For example, due to procedures, delivery and orders were delayed during epidemic periods. It impacted the whole distribution industry, which caused issues in the beginning but was eventually alleviated due to the simplicity of processes. Unnecessary and Protracted Procedure Due to redundant processes needed in assembling raw materials to final goods, lead times can often be extended. As a result, order completion may take longer than usual, reducing production. It is critical to optimize the process so that no needless motions occur. In addition, it will allow you to save time and effectively manage your production. Stockout Situation When a manufacturer runs out of stock, it signifies that the firm cannot produce new products due to a lack of resources. Not only will the scenario harm the loads, but it will also result in disgruntled consumers. The issue might deteriorate, resulting in a loss of revenue, reputation, and clients, which could have long-term consequences for you. Variability in Lead Time Variable aspects connected to delivery, such as communication and coordination, impact lead time. If there are any delays, you should collaborate with your suppliers to guarantee that the manufacturing is completed on time. It can assist you in making your manufacturing process more accessible and efficient. How Lead Time Affects Inventory Control Stockouts are common in companies that keep inventory for use in manufacturing. This happens when the stock on hand runs out without fresh stock arriving. Stockouts typically inconvenience customers because they must wait for orders to be met, while the firm incurs costs since it may be compelled to halt operations. In addition, employees and manufacturing machinery will be idle for a while during stockouts. Still, the firm continues to pay utility expenditures such as power, water, gas and administrative costs. Lead period delays, which vary by supplier, are the most common source of stock shortages. Natural catastrophes, human error, raw material shortages, inadequate inventory management systems, and other issues are all significant causes of lead time delays. A vendor-management inventory tool that automates the stock ordering process can help businesses decrease stockouts. The application saves supplier information for each component, making it simple to order them as they near completion. By making inventory requests early enough to avoid stockouts, automatic ordering shortens lead timings and lowers delivery costs. In addition, the firm can keep a database of backup suppliers for the most crucial components to supply inventories if the primary source is unavailable or out of stock. Impact of Shorter Lead Time The primary logistical objectives are to get the right items to the right place at the right time, in the right amounts, and under the right conditions. The lead period is a temporal factor in the logistics equation that is directly tied to service quality but significantly impacts stock control and demand planning. Let's look at the reasons why having a short lead time is critical to your business: More accurate demand forecasting: Short-term demand forecasting allows for more precision. One of the fundamental rules of thumb in demand management is that the further into the future you plan, the more unpredictability there will be. Shorter delivery periods can alleviate this problem by allowing for more reliable and accurate forecasting.The ability to carry less inventory: a short lead time implies you can fulfil client demand with a lesser inventory level. The fundamental purpose of warehouse management is to bridge the time gap between when a customer puts order and when the supplier delivers the order to the client. The impact of supply delays on inventory policy is linear: the longer the lead time, the more stock is kept on hand, and vice versa.Customers want high-quality service in a short amount of time, with little effort, and at a fair cost. You may provide consumers precisely what they want if you have a shorter lead period, such as quickly responding to changing client demand, completing the specified order quantity in less time, repairing damaged items in less time, and lowering expenses throughout the process.A shorter lead period will save you money and allow you to deliver on schedule. Furthermore, a shorter lead period results in more order fulfilment, which equals more cash flow.You don't need to purchase in bulk if your lead period is minimal since your complete processing procedure is rapid. This keeps your inventory at the proper level, allowing your business to function smoothly without the stress of having too little or too much stock.Last-minute modifications can only be implemented when lead periods are short since you can swiftly update items without delaying the purchase and jeopardizing client happiness. Furthermore, short lead times allow you to adjust to changes in market trends swiftly. All without the risk of losing money. Impact of Longer Lead Time To preserve the effectiveness of their operations, manufacturers and suppliers rely significantly on factory direct and authorized distributors to fulfil orders and satisfy business expectations. When lead period unpredictability becomes a problem for supply chain management, distributors and providers may experience longer lead periods and lower productivity. Some of the more frequent, longer lead period variability issues that wreak havoc on supply chain operations are listed below. Stoppages in the Production Line A long lead period might stop production if engineers don't have the components they need to finish the project. Preventing the production line causes suppliers to fall behind on client demands, resulting in another issue of low supplies. If a market expands and authorized distributors cannot meet demand, original equipment makers will fall behind on their manufacturing demands for clients. To guarantee that planned orders are delivered on time and to the buyer's satisfaction, authorized distributors must use a highly effective in house or third party logistics management system. Stockouts and inventory shortages might result from lead time variability difficulties, prompting you to either find a more dependable parts supplier or place a one-time purchase with an independent distributor. Revenue Generation The more significant the impact on a company's bottom line, the more manufacturing deadlines must be stretched. They could even wind up paying extra money to get parts from an unvetted independent distributor so that manufacturing projects can be completed and client orders can be delivered, bringing in much-needed income. Conversely, if a company cannot fulfil order demands for its clients, lead time variability severely threatens its earnings. How to Calculate Lead Time Lead time (LT) = Order Delivery Date – Order Request Date is the most straightforward fundamental formula. This method, however, allows for a reordering delay in the context of inventory management. Supply Delay (SD) + Reordering Delay = Lead Time (LT) (RD) The time a supplier takes to fulfil a client order after it has been placed is known as supply delay. The period between a completed order and placing the following order is known as the reordering delay. It is also necessary to account for reordering delays. Some vendors may only take orders once or twice a week or once a month. This means shops must plan for this delivery delay to keep a safety supply or buffer stock on hand. While waiting for your supplier to replace your supply, you can satisfy orders using your safety stock. Let's imagine you sell 500 shirts every day on average. Supplier A, on the other hand, only takes orders for shirts every five days. This signifies that your shirt supplier's reordering time is five days. Let's pretend that A delivers shirts to your warehouse in 2 days. This results in a two-day supply delay. In this instance, The lead time is calculated as follows: supply delay (5 days) + reordering delay (2 days) = Seven days. It should be simple to stock up for seven days. But what if you were selling something valuable and uncommon, such as exotic plants or fancy home decor? Such items are likely to be slower-moving than apparel and eatables, with significant supply and reordering delays. This implies you'll have to prepare for their acquisition, stock, and sale months ahead of time. But how can you figure out how much stock you'll need and when you should restock? The answer resides in the reorder point and safety stock. How much of a safety stock should be kept on hand? Safety stock is the amount of inventory you must have on hand in case of a supply or reordering delay. Its calculation accounts for lead time and demand variability (possible demand variations). Customer demand for items might fluctuate owing to various factors such as vacations, weekends, wholesale price fluctuations, special offers, and so on. Besides that, managers must prepare for unpredictably fluctuating demand, such as unexpected shortages, weather disruptions, and so on, because supply and demand are inextricably linked. The formula for safety stock is as follows: (Maximum daily sales*Maximum lead period) – (Average daily sales*Average lead time) = Safety Stock    When is it time to restock? The level of inventory that signals that you need to restock are known as your reorder point. The reorder point calculation influences your choice to replenish as inventory management, and the formula denotes it: (Lead time * Average daily sales) + Safety stock = reorder point It's time to pick up the phone and shop for some goods every time your stock reaches the reorder mark! Your reordering quantity will correspond to the amount of safety stock you have on hand. Additional factors to consider while determining lead time ARO Lead Time The point at which the supplier gets an order is known as the after receipt of the order (ARO). The overall period between ARO and order delivery makes up the lead period. Thus this is the first thing to consider when calculating the lead period. Lead Time in Manufacturing The manufacturing lead period is known as the time it takes for a merchant to place an order and for the product manufacturer to complete it. It comprises the time spent acquiring, manufacturing, and shipping items. 8 Best Strategies to Reduce Lead Time Remove Unreliable Vendors From Your Supply Chain. Do you get late delivery from particular vendors regularly? Keeping them in your supply chain might be more expensive than switching vendors. Even when considering the possible cost of a change, research conducted by NC State University reveals that supplier assessment nearly always has a favourable influence on a company's financial performance. If you decide to switch suppliers to shorten your lead time, ensure you have adequate inventory to carry you through the transition. Additionally, be sure that your new supplier is ready to begin shipping you things straight immediately. Select Vendors Who Are Near Your Warehouse You have access to more sellers than ever in today's global economy. Unfortunately, while searching for the most significant rates worldwide, you may find yourself waiting weeks for things to arrive from another country. This extends your lead period and makes returning broken or undesired items more difficult. Giving attention to local vendors to your warehouse or manufacturing site is one of the simplest lead time reduction methods for suppliers. If a local supplier can't compete on price, consider placing larger (but less regular) orders from foreign vendors and maintaining a more extensive inventory. Share Your Demand Forecasts With Your Suppliers Your orders may differ monthly if you work in a naturally fluctuating business. To keep your suppliers prepared for larger-than-normal purchases, let them know that you foresee an increase in demand as soon as possible. This ensures that they are not only capable of handling a huge order but also capable of doing it as rapidly as feasible. Internalize External Processes Do you manage most of your manufacturing processes in-house, but not all of them? Consider expanding your capabilities so you don't have to outsource the finishing of your items to a third party. This demands a considerable initial expenditure, but the long-term savings make it a financially viable choice in most cases. Furthermore, you'll be laying the groundwork for future expansion, allowing you to expand once your revenues rise quickly. Workflows for Order Processing Can Be Automated Ensure your internal procedures are up to standard after you have your raw materials and are ready to begin manufacturing. Consider: When it comes to consumer purchase orders, how long does it take you to enter them into your system?How long does it take you to get them through production and quality assurance when it comes to engineering change orders?How frequently does the process become stalled due to internal miscommunication?How frequently do orders go missing completely? Your lead times will most certainly deteriorate due to poor performance in any of these areas. However, automated order processing procedures might help you get your final items out the door faster. Complete Many Processes at the Same Time They were not getting past the fact that specific procedures must be finished before others can begin. However, if you can find strategies that many people can execute simultaneously, you can boost productivity and shorten lead times even more. Internal Communications Need to Improve Order processing necessitates the participation of all members of the team. Internally, if you're not cooperating correctly, you might be causing unnecessary delays. Suppose your process has numerous phases requiring input from multiple individuals. You may be wasting time you don't have. This is especially true if you're working with non-trackable paper. Paper-based projects on someone's desk lengthen your lead time and raise the risk of misplaced paperwork. Even though poor communication is a complex problem, manufacturers have numerous alternatives for removing bottlenecks.  Communicate With Your Customers More Effortlessly So while this doesn't help you cut your lead time in half, it does keep your clients informed as they wait for their orders. In addition, in several studies, communication has been proven to be a significant predictor of customer loyalty. Therefore it's a crucial factor to consider. Consider investing in a system that will send out order alerts if you aren't already doing so. (There are dozens of tools that automatically handle notifications, so automation is a significant time-saver here.) However, it's a simple – and relatively straightforward – technique to boost satisfaction and set expectations. Conclusion Staying on top of your business necessitates short lead times. In addition, they assist you in enhancing your cash flow and client satisfaction by allowing you to adapt to shifting market patterns. You may utilize it to optimize and reorganize your supply chain and production process now that you know how to calculate it. While understanding the lead time formula is a fantastic start, you can't keep calculating things by hand all the time. It's all about saving time, remember? Businesses should obtain everything they need to improve their supply chain and manufacturing process, from workflow automation and customized widgets to project planning and resource allocation. Allow WareIQ to Assist You in Reducing The Lead Period. We at WareIQ know how important it is for you to keep your business operating correctly, and we're here to assist you. We've given hundreds of businesses the tools they need to automate their order processing. So what's the result? Less time spent on inefficient back-office operations means more time for sales and product development. You may even cut the lead period by partnering with WareIQ for inventory management and eCommerce fulfilment. [signup] Frequently Asked Questions Is inventory a factor in lead time?Lead times can be influenced by production processes and inventory management. Building all aspects of a finished product on-site may take longer than finishing some items off-site in terms of manufacturing. What impact does lead time have on the supply chain?The influence of lead time on inventory management is depicted in this image. Lower lead times are preferred. However, obtaining shorter lead times from suppliers is difficult. Longer lead times, on the other hand, result in more goods on hand and in transit. Longer lead periods can limit the supply chain's capacity to respond to shifting demand, unpredictability, and uncertainty. What is the connection between inventory management and supply chain management?The supply chain manager will oversee inventory and flow management, taking into consideration any capacity or productivity concerns that arise along the way. The inventory manager will focus on his local inventory and arrange orders with suppliers, taking into consideration lead times and tariffs. What does a lead time look like in real?A lead time is a time it takes for a process to start and finish. For example, depending on numerous factors, the period between placing an order and receiving new automobiles from a certain manufacturer might range from 2 to 6 months. What is the delivery lead time?The number of days between the date the Order is acknowledged by the Supplier and the date the material is sent by the Supplier is referred to as the Delivery Lead Time.

June 15, 2022

Finished Goods Inventory: Definition, Examples, Importance & 3 Easy Steps to Calculate Finish Goods Inventory

Finished Goods Inventory: Definition, Examples, Importance & 3 Easy Steps to Calculate Finish Goods Inventory

All inventory follows a life cycle. It begins as different raw materials being combined together, grows to be work-in-progress, and finally emerges as finished goods. But finished goods are more than just the last stage of the inventory maturation cycle. They are the key component of being able to participate in the selling of products on eCommerce platforms. Let's take a look at examples, calculations, and why they are important. What is Finished Goods Inventory? Finished goods inventory is the number of goods available for a company to be able to sell to customers and fulfill orders. However, finished goods is a relative term, as a seller's finished goods could be the raw material for a manufacturer. Therefore, it could mean the inventory lying with a seller that is ready for dispatch to be sold or stock with the company that is prepared to be sent to a customer. Briefly, finished goods inventory is the stock of a wholly manufactured set of goods. Therefore, it is also called finished product inventory.  Finished Goods Examples  Finished goods are the everyday items surrounding us. Here are some examples of finished goods: You come across all kinds of food and grocery items in a supermarket. These perishables are ready for sale. Similarly, the gadgets or outfits that you adorn are customer-ready in an online or offline electronic store and clothing store. Finished goods examples include every product available for sales such as fruits and vegetables, processed and canned foods, clothing items, electronics, eggs and packaged meats, toys, petrol and gas, vehicles, and everything else that is available for purchase by consumers in a ready-to-use function. [contactus_uth] What is the Finished Goods Inventory Formula and Why is it Important? Once you know what elements are needed to calculate the finished goods inventory, you can understand why it is critical for you. Here's the formula: Finished Goods Inventory Formula Finished Goods Inventory depends on the expenses incurred for manufacturing the complete stock of goods, the cost of goods sold off, and the value of finished goods inventory from the previous period. This duration could be a month, a quarter, or a year. Finished Goods inventory = [Cost of Goods Manufactured – COGS] + Previous Finished Goods Inventory Value There are many reasons why it is a crucial calculation for everyone involved in the supply chain. Importance of Calculating Finished Goods Inventory Verifies Gross Profit For every manufacturer or seller, knowing the value of their inventory helps them to determine their gross revenue and profit margins. In addition, this tally helps in future operational and financial budgeting. You get to establish the expenses on goods manufactured and sold and the value of inventory in your warehouse. Documents the Current Assets Volume Finished goods inventory is counted as current assets in the balance sheet, which means they are short-term assets intended to generate revenue for you within a year. Your production strategy may be based on a 'Build to Order' or 'Build to Stock' plan. But it determines how many assets you hold at a time. To calculate the finished goods inventory level, you need to confirm the number and value of current assets lying with you after all the sales are made. Minimizes Material Wastage The formula helps you understand the finished goods inventory turnover rate. It is the rate at which your finished goods inventory is sold and replenished within a set period of time. When you know the worth of the finished goods remaining versus goods sold by the end of the month, you can ascertain how much inventory was ultimately utilized. Keeping a tab on the finished goods inventory can help you monitor and minimize its wastage. Streamlines Inventory Management  Many factors affect your inventory management decisions such as the economic, fiscal, and geopolitical scenario of the country, annual budgets, and other contingencies like war or natural disturbances, industrial dynamics, and price fluctuations. All these factors affect the finished goods inventory level you need to maintain. The formula helps you ascertain the costs you incur on manufactured and sold goods and how much inventory you need to preserve, from the date of your previous performance. This formula also helps you differentiate between goods that are hot-selling products versus the goods that stay in your warehouse longer. It also enables you to separate high-value goods from others and store them in a more protected space. 3 Easy Steps to Calculate Finished Goods Inventory Step 1: Check Finished Goods Inventory of Prior Years Determine the value of finished goods for the previous period. You reach this figure in the last duration, which could be a month, quarter, or year using the same formula for finished goods as mentioned previously which is: Finished Goods inventory = [Cost of Goods Manufactured – COGS] + Previous Finished Goods Inventory Value Step 2: Subtract the Current COGS From the Cost of Goods Manufactured This step involves the below calculations: Cost of Goods Manufactured (COGM) refers to the money spent on manufacturing every unit of the finished good. For instance, if you made 400 candles worth ₹200 per piece, your COGM would be: 400 x ₹200 = ₹80,000. COGM = [Raw materials used + direct labour employed + all manufacturing overheads + beginning WIP inventory] - the ending WIP inventory. Cost of Goods Sold (COGS): The money spent on manufacturing the products sold is referred to as COGS. So in the above example, if you sold 300 of the 400 candles made, your COGS would be: 300 x ₹200 = ₹60,000. COGS = [Beginning Inventory + Received Inventory] – Ending or Remaining Inventory Now deduct the COGS value from the COGM figure: COGM - COGS Step 3: Add the Prior Finished Goods Inventory Value to the Answer Combine the figure you have reached above with the value of finished goods inventory for the last period. Adding the overall value of assets available gives you the finished goods inventory for the current period. You can procure this data from past inventory records. [COGM – COGS] + Previous Period Finished Goods Inventory The period considered for the calculation must remain consistent throughout to avoid any discrepancies. How Do 3PL Fulfillment Companies like WareIQ Help to Efficiently Manage Finished Goods Inventory? 3PL companies assist businesses at every stage of the supply chain. Inventory management is crucial to your logistical success. An experienced 3PL service provider like WareIQ can help you efficiently manage your finished goods inventory.  Here's how it can be achieved: Real-time Data WareIQ offers advanced real-time data collection and analysis technology throughout the inventory life cycle. This means that you are continuously updated about your inventory levels and whereabouts, across multiple platforms, the moment a change is made. This is necessary to know what inventory is available to you and when. For example, to determine your inventory level, you need to see the number of finished goods ready for sale and the stock already sold and delivered. Real-time updates affect your decision-making and budgeting capabilities and enable you to make faster and more well-informed decisions. Quality Control A promising 3PL partner like WareIQ assures you of quality checks throughout the inventory lifecycle, so you know if and when any product has gone bad or has expired and needs replacing. This prudence comes in handy, especially if you are dealing with perishables. Additionally, the way products are stored in the warehouse, picked and packaged when an order is confirmed and shipped to the customer, meets rigorous quality control standards to ensure that everything is done in the most careful and efficient manner. Automated Systems The superior inventory management software gives you access to essential data like inventory levels, orders, and billing cycles and can integrate with multiple eCommerce platforms. This data helps you trace the previous and current inventory levels and the goods sold. These automated reports can be triggered at pre-set intervals such as daily, weekly or bi-weekly, to be sent via email or directly to your system via API integration. So all the information you need to know about the finished goods inventory is available at your fingertips. Superior tech also guides you on scaling up or reducing the manufacturing dependence on seasonality and demand. Inventory Tracking WareIQ's advanced dashboard triggers punctual updates via texts and emails. Further, it creates your company's branded, fully customizable tracking page. You can track your inventory in any of WareIQ's pan-India warehouses from a single dashboard. So you can keep a tab on all the raw materials from Pune, Guwahati, and Hyderabad that you need in Gurugram in the current week, from a single webpage. Conclusion Finished goods inventory is responsible for bringing in revenue for your eCommerce business. Hence, it must be regularly monitored and tracked. The preparation you need to do this is a simple calculation that ensures you gather data on all the necessary elements. Along with a capable 3PL partner who provides the data collection and analysis on your behalf, you have fewer things to worry about. WareIQ is one of India’s fastest-growing eCommerce logistics companies that uses a centralized technology platform to provide every service that is associated with fulfilling eCommerce requirements. Finished Goods Inventory: FAQs How is finished goods inventory recorded?In the balance sheet, you need to credit finished goods inventory while debiting COGS. This means that the items are transferred from inventory to expenses. When an item is sold, it would be listed as a transaction while the sales revenue account is credited with the sale. Can inventory be classified as finished goods?Inventory is generally classified into 3 categories:1. Raw materials2. Work-in-progress items3. Finished goodsFor accounting purposes, inventory is classified as a current asset because of the firm’s plan to sell it within a year. Why is it necessary to have an optimum level of finished goods inventory?Finished goods inventory assists a company in ascertaining the value of each unit produced of a good based on the raw materials consumed, labour used, and overhead expenses. What types of companies use finished goods inventory?Finished goods inventory can either be used by a manufacturer or supplier who uses raw materials and other components in order to manufacture products. These products are then sold directly to consumers or retailers, who sell them to customers eventually.

June 13, 2022

Inventory Allocation: Definition, Pros and Cons & 4 Factors to Consider While Allocating Inventory

Inventory Allocation: Definition, Pros and Cons & 4 Factors to Consider While Allocating Inventory

Inventory is the key asset of any eCommerce company to be able to transform an order into a delivery. One of the main ways to ensure that this process is carried out efficiently is proper inventory allocation. This enables companies to place the appropriate amount of inventory at every step of the supply chain process, to mitigate shortages and unforeseen circumstances. We will be discussing what inventory allocation is, inventory allocation methods, reasons for companies to employ an inventory allocation strategy and factors to consider when making that decision.  What is Inventory Allocation? The process of strategically optimising and tracking the levels of inventory that an eCommerce company maintains across its entire distribution network (including multiple sales channels and fulfillment centers is called inventory allocation. Let us look at a typical, growing eCommerce company that sells its products across multiple online channels, including Flipkart, Amazon, Shopify (etc.), and needs to allocate its inventory to each channel based on the volume of orders received. To achieve the shortest possible delivery time, the eCommerce firm will use multiple fulfillment centers and warehouses to fulfill orders. Given this scenario, the firm must utilise various inventory allocation methods to fulfill orders based on the optimal mix of products, customer orders, and warehouse locations. An optimised inventory allocation exercise ensures that the correct inventory levels are maintained at each fulfillment location, so customers’ orders are delivered at the earliest possible time. Sudden increases in demand such as during a flash sale, are also built into the calculations. Inventory Allocation Methods Let us look at the two most prominent inventory allocation methods that are used: Manual Inventory Allocation As the name suggests, if an eCommerce firm uses physical spreadsheets, and inventory ledgers and analyses data manually for inventory allocation, it is referred to as manual inventory allocation. Unfortunately, not only is this method time-consuming but it is also prone to miscalculations, errors and other inefficiencies. A primary concern is that when a business grows, the problems multiply rapidly and manual inventory allocation can often compound those problems by creating more mistakes which can have disastrous consequences.‍ Tech-Enabled Inventory Allocation Most modern inventory allocation methods are enabled by eCommerce firms investing in the latest technologies that seamlessly manage and track their inventory and its movement across their entire distribution network. By using electronically-captured data and the deep insights they offer, this method of inventory allocation is done in real-time and maintains high levels of accuracy and efficiency while being easy enough to use. Businesses primarily employ inventory management software that consists of all the above features which help businesses automate their inventory allocation procedures.  Advantages and Disadvantages of Inventory Allocation Advantages of Inventory Allocation Avoids Overstocking The perils of overstocking are many, often with disastrous results which can be especially pronounced for eCommerce startups or small firms. To begin with, overstocking causes overutilisation of warehouse space, clogs up invaluable cash flow and increases carrying costs. Additional problems include high insurance premiums, rent and labour. Problems of expiry dates, damage and pilferage/theft also start cropping up for inventory that stays on the shelves for long periods of time without being shipped out. Inventory allocation helps prevent overstocking by making businesses aware of the optimum amounts of inventory they require. Helps in Order Fulfillment Conversely, very low stock levels cause their share of problems. Firms would run short of inventory and be unable to capitalise on customer demand. Even worse would be the issues of sudden stock-outs, especially when you may have already confirmed customer orders. All this would drive your customers to your most feared result, i.e. you would lose them to competitors who provide more efficient service.  About 3/4th of today’s online customers would be unlikely to return unless their orders are fulfilled within 2-days. Efficient inventory allocation would eliminate such problems by helping firms ascertain the exact amount of inventory they would need. Assists in Understanding Buyer Behaviour A huge benefit of efficient inventory allocation is that it helps to understand the buying behaviour of your customers. By tracking data, clustering them into ACV-cohorts and analysing stock movement across important parameters, firms can learn much about their customers' buying habits and preferences. Ultimately, this enables management to make better business decisions. Disadvantages of Inventory allocation Lack of Proper Usage Poor inventory allocation methods that are not tailored specifically to your business can set you up for failure. Therefore, the goal is to make the correct and informed decisions to be able to efficiently manage and allocate inventory, not just to simply adopt an inventory allocation process to be up to speed with the rest of the industry. Struggles to Adapt Oftentimes, companies are led by pure profitability and only maintain high-profit and high-demand items. If customers decide to change their preference suddenly, you could be left with dead stock. You would be precariously placed since you would not have left enough warehouse space or invested in SKUs for other customers (that offer less profitability). 4 Reasons for eCommerce Companies to Have an Inventory Allocation Strategy We live in an age of information and as you would have heard, knowledge is power. Awareness about your inventory requirements, broken down by locations, nature of products and other factors, the type of SKUs, customer clusters and their preferences, and a deep understanding of buyer behaviour gives you this knowledge. With it, you can improve your decision-making through timely and informed decisions while also forming the bedrock of optimising your supply chain.  Modern eCommerce firms are prone to fluctuating inventory levels which is an underlying result of selling across multiple channels and different locations. Using modern inventory management software and technology enables eCommerce management teams to stay ahead of the curve and maintain close working relationships with their 3PL partners and fulfillment teams. After all, an effective inventory allocation strategy will reduce operating costs, maximise inventory ROI and successfully satisfy customer demand. Let’s look at the 4 key reasons to have an inventory allocation strategy: Prevents Overstocking Firms often adopt the easy way, i.e. to stock more inventory than they expect, just in case they fall short. However, that is often counterproductive to company profitability and cost-efficiency. On the contrary, overstocking drives up inventory carrying costs, requires larger warehousing facilities, requires more labour and higher insurance and creates problems of pilferage and dead-stock – the list is endless.  Optimising your stock levels by following a robust inventory allocation strategy based on comprehensive data analysis, demand trends and SKU movement is the way to go to prevent overstocking. Avoids Overselling A robust order pipeline is an aim for all eCommerce companies. However, it requires significant study and projections based on analysing the correct parameters. Overselling leads to backorders and results in a poor customer experience, delayed shipping, price fluctuations, etc. The correct inventory allocation strategy to prevent overselling is for it to stem from your demand analysis. Therefore, it becomes imperative to maintain data about seasonality, promotions or sudden changes in the ecosystem (e.g. a competitor going bust and their orders suddenly shifting over to you). This prepares firms to stock the correct inventory levels (with requisite safety buffers) based on past trends and future growth projections. Optimises Management of Multiple Channels Modern retailers have adopted an omnichannel strategy to satisfy changing customer preferences and demands. However, along with its advantages, it also needs an efficient omnichannel inventory allocation strategy to tackle stock level oversight, order returns, reorders and stock forecasting problems.   Using inventory management systems that track the demand and supply of stock across an omnichannel network is of great help. Popular eCommerce platforms offer direct, API integrations with your MIS to help you track inventory movement from a centralised dashboard, across multiple platforms, which makes the entire inventory allocation process faster and more efficient. Assists in Scaling Business Operations Extending the point above, it will become impossible to scale if eCommerce firms don’t implement modern tech stacks and processes that enable better decision-making to run the business. However, this can be daunting, given its costs, knowledge requirements and time constraints. Therefore, eCommerce firms can partner with 3PLs (third-party logistics companies) to take care of the rising need for order fulfillment and inventory management. A 3PL brings significant capabilities across an extensive network of fulfillment locations, logistics capabilities and technology – these are must-have features as a firm begins its journey of growing its customer base and expanding its services. 4 Factors to Consider While Using Inventory Allocation You may sell hundreds of SKUs via an omnichannel sales network or use multiple warehouses for order fulfillment. You could be a niche brand selling to a limited number of customers or an eCommerce startup just getting started with limited monthly orders. You may even be a behemoth fulfilling thousands of daily transactions across the globe. Establishing a solid inventory allocation policy is the cornerstone of achieving supply-chain efficiency and successfully servicing your customers, regardless of your status. Let’s look at the key factors to consider during inventory allocation: Demand for Inventory Perhaps, the most important tool for an eCommerce business, especially a growing one, is the demand forecasting function. It creates a ripple effect throughout the organisation whereby you can make well-informed decisions around production, promotion, labour and much more. While it is true that you will unlikely ever achieve 100% accuracy with demand prediction, if you set up the correct procedures and use advanced tools and technology that are available, you should have an accurate enough handle on your sales patterns. Adopting a data-driven methodology will enable firms to make sound inventory allocation decisions and accurately predict the amount of inventory required to be stored across their warehouse locations and how much must be allocated to different sales channels, depending on demand. Strong demand-forecasting techniques also consider promotion-led demand, flash sales, seasonality and other temporary peaks and valleys in demand that will directly impact inventory allocation. Availability of Inventory Evolving customer preferences have meant that delivery times are an increasingly important element for a business to differentiate itself from the competition. Studies show that customers rarely return to an online platform if their order fulfillment experience isn’t satisfactory.  A crucial part of this is achieved by ensuring that the correct mix of inventory and supply is maintained at shipping destinations closest to the customers’ addresses.  Modern inventory tracking software is a useful tool that ensures accuracy and visibility. These highly sophisticated systems allow you to aggregate demand patterns across channels and locations, thereby allowing you to aggregate the appropriate inventory levels that must be maintained at every warehouse location. In turn, this helps in setting reorder levels, organising transportation, hiring labour (both full-time and part-time) and negotiating rates with suppliers, to name a few.  Additional benefits include not having to urgently fulfill orders from warehouses further away from the delivery address due to a stock-out at the nearest one. eCommerce firms typically use automated stock-tracking systems that let them seamlessly connect to vendors, suppliers and other supply-chain stakeholders via a centralised cloud-based system. Therefore, all critical data points like SKUs, channel throughput, inventory availability at fulfillment centers and customer details are available holistically and easily.  Availability of Warehouse Space Another important factor to keep in mind while planning your inventory allocation is the available warehouse space, the cost of renting it and operating costs.  eCommerce firms partner with 3PL firms so that they have access to their vast network and resources of warehouses, on-site teams, transport fleets and modern operating systems. Based on your requirement, storage fees will vary from a fixed fee per pallet, square metres allocated, according to SKU, the transaction (etc.) Simplicity of Order Fulfillment As mentioned earlier, an efficient inventory allocation process shortens order delivery times; it simplifies logistics and saves costs.  To ensure the shortest possible delivery times, you must minimise the shipping zones a parcel needs to travel to reduce last-mile delivery costs and the time taken to deliver it. This is achieved by maintaining sufficient stock levels at all warehouse locations across the entire network of warehouse/fulfillment centers that you operate. For example, suppose you anticipate an uptick in sweaters and warm clothes in northern India just before the onset of winter in November, you should allocate additional inventory there so that they can be delivered faster and with minimal distances travelled. How Can an eCommerce Fulfillment Company Like WareIQ Help With Inventory Allocation? 3PL fulfillment companies like WareIQ can assist clients with inventory allocation by deploying their significant capabilities in the field. Let’s look at some leading ones: Automating Inventory Allocation ‍With its modern automated technology, WareIQ provides its users with a centralised dashboard that gives clients a bird’s-eye view of the entire operation, across all platforms. This provides a detailed and accurate view of inventory movement, including tracking at the SKU level, cluster viewing broken down by sales channels, unit type, storage locations (etc.). This is a critical tool in managing your inventory allocation.  Streamlining Inventory Management Today’s eCommerce firms adopt a multi-channel sales approach – this naturally includes multiple fulfillment centers, on-site teams and various vehicular fleets. This could get tricky and result in disastrous consequences if not handled properly. Challenges like stock fluctuation, intra-network movement, re-order levels, etc., are naturally amplified due to this multi-channel sales network. The levels of automation that today’s 3PLs such as WareIQ can bring, thereby reducing human error and ensuring real-time visibility and communication, which have become a strong tool for clients. Forecasting Sales Patterns 3PLs use highly sophisticated data-analytics systems that can record and mine massive amounts of data every second. This comprehensive data analysis generates deep levels of insight that enable management teams to make more informed and effective business decisions. Detailed reports that provide in-depth information at both the macro and micro levels of client operations and metrics that outline the best practices of sales-based inventory allocation help clients immensely. Channel throughput and efficiency, stock turnover, fast/slow-moving products, etc., are some key data points in determining sales patterns. Advantages of an Elaborate Fulfillment Network Today’s eCommerce firms mostly use an omnichannel sales strategy. With its elaborate and extensive network of fulfillment centers, WareIQ allows clients to leverage the strength and resources of this network in fulfilling their orders. Reduced shipping costs, faster delivery times and inventory-splitting are some of the associated benefits. Conclusion Today’s eCommerce companies operate in a fast-paced, highly competitive and complex eco-system that spans international borders. They deploy an omnichannel sales and distribution network and several fulfillment centers and employ huge teams to manage their inventory. Therefore, firms must use a data-led and technology-enabled inventory allocation system that considers all the numerous variables that affect it to come up with a winning one. WareIQ provides commercially certified solutions, professional services, barcode scanning and technology such as an advanced WMS to assist businesses in better understanding and controlling their assets, inventory management in the supply chain and industrial processes. These solutions are quickly implementable and cost-effective, saving your time, money and effort. We offer extensive knowledge and capabilities in all eCommerce-related requirements, from inventory allocation to order distribution.  Inventory Allocation: FAQs What is the goal of inventory allocation?The main objective of inventory allocation is to ensure that the optimum amount of inventory is available to fulfill orders across every channel. This is done by determining the demand and the amount of inventory needed to fulfill it. Why is it important for businesses to allocate inventory?It is important for businesses to allocate inventory so that they can avoid stock-out or overstock situations and they can efficiently manage storage space and operating costs. What factors can affect inventory allocation?The factors that can effect inventory allocation include:- Inventory demand- Inventory availability- Warehouse space How can WareIQ help with inventory allocation?WareIQ has a custom WMS that can group and organize your inventory in any way that you need, across fulfillment center locations and sales channels. We also assist in demand forecasting to determine how much inventory is needed for each sales channel.

June 13, 2022

What is Inventory Days on Hand? Definition, Inventory Days on Hand Formula, Importance & 5 Strategies for Improvement

What is Inventory Days on Hand? Definition, Inventory Days on Hand Formula, Importance & 5 Strategies for Improvement

When you buy or replenish inventory in your warehouse, it doesn't leave immediately. It lies there for a period of time before being shipped or transferred. It is important for a business to refine its inventory management processes so that the duration of inventory lying idle is limited as this can lead to obsolescence or expiry. However, it is also suitable for a business to have inventory on hand in case there is an emergency or urgent requirement. Businesses need to find the sweet spot of having just the right amount of inventory in storage. In this article, we take a look at the meaning of inventory days on hand, how to calculate it using the inventory days on hand formula, its importance, and ways to improve it.  What is Inventory Days on Hand (DOH)? Inventory Days on Hand (DOH) is the number of days that inventory stays in your warehouse or storage space before being sold. It reveals how many days it takes you to sell your average inventory on hand. It is an accounting ratio that indicates the average number of days that different kinds of inventory, including raw materials, work-in-progress goods, and finished goods, spend in your warehouse before turning into sales. It is also called Days Inventory Outstanding (DIO), Days in Inventory, Inventory Period, or the Inventory Days of Supply. Further, it depicts how soon a company can turn its current assets into cash. This metric is extensively used by analysts and business intelligence to gauge the company's liquidity and financial and operational health. [contactus_gynoveda] What is the Inventory Days on Hand Formula and How to Calculate it? The inventory Days on Hand formula considers the average inventory value in your warehouse compared to the Cost of Goods Sold (COGS) and the number of days in an accounting period such as a week, month, or year. The below equation comes in handy for calculating the inventory in hand: Inventory Days on Hand = [Average Inventory Value / Cost of Goods Sold] x Number of Days in Accounting Period And if you know the inventory turnover ratio for your business, you can use the below inventory on hand Formula: (Number of Days in Accounting Period) / (Inventory Turnover Ratio) = Inventory Days on Hand Importance of Inventory on Hand The inventory days on hand figure reveals much-desired information about your business. Here's why you need to monitor it regularly: Analysis of Operational Performance Inventory days on hand show how long working capital gets frozen in stock. Once you have that data, you can devise ways to shorten the duration by optimizing procurement and sales processes. A lower DOH value indicates that your business is productively utilizing its inventory. On the other hand, a higher number shows the company's poor investment decisions and inefficient stock utilization. However, a high inventory quantity doesn't always showcase unproductive business practices. For example, you may have a higher DOH value if you store stock for around-the-corner peak season sales or a lockdown-like contingency. Either way, this analysis helps calculate and enhance your business's operational performance. Prevents Stockouts and Overstocking While companies keep adequate stock to shield them from demand fluctuations and variable market dynamics, inadequate inventory management can hurt business operations and revenue. Stockouts or overstocking occurs due to poor demand forecasting or incorrect analysis and reporting. That is when inventory days on hand come to your rescue. DOH clearly tells you how far you are from a stockout or when you need to stop further ordering of inventory. Keeping a tab on it warns you before a crisis unfolds in your warehouse and can help prevent the crisis from occurring. Improves Efficiency Inventory on hand is an indicator of business efficiency. A lower DOH indicates better cash flow and higher productivity. A smoother cash flow also gives you the leverage to pump more capital into the business for expansion, promotion, research and development, and other activities. Attracts Potential Investors DOH helps you gauge the inventory conversion rate of your business. A higher stock conversion or liquidity means that you can frequently replace or refill your merchandise, thus keeping your product offerings refreshed for your customers. It is an indication of an agile and flexible business. This practice tends to lure more customers to your stores and attract larger amounts of attention from potential investors. Similarly, lower liquidity indicates poor business performance. It shows that you cannot sell the stock you buy and cannot replace it with fresh supply on time. Forecasts Storage Costs  Inventory days on hand show how much inventory you need to order and when. It indicates the amount of stock turnover which tells you how frequently you need to replace or replenish the stock of a particular commodity, within a specified time period. It also highlights areas in your inventory management process where there is scope for improvement. Thus, you can use the inventory on hand figure to forecast storage costs for your inventory. Mitigates Operating Costs Where and how long you store your inventory affects your storage and operating costs. The lesser stock you have on hand, the lesser you need to spend on ecommerce warehousing and other operations. Therefore, knowing the storage period of your stock enables you to plan your finances in advance and mitigate expenses to the largest extent possible. Of course, having a competent 3PL partner like WareIQ allows you to leverage a nationwide presence of warehouses closer to customer locations. This type of service helps further reduce cost overheads. Increases Profit Margins Inventory is a current asset and affects a company's cash flow and profit margins. The inventory days on hand ratio shows how much time and money must be invested in a stockpile before they turn into sales. Therefore, better and regular monitoring of the inventory on hand can safeguard you against loss-making decisions related to unwanted stockpiling or a lack of adequate volume. Top 5 Strategies to Improve Inventory Days on Hand If you regularly deal with inventory days on hand, you might want to improve it wherever possible. Here's how you can do that: Utilizing Inventory Management Software Your 3PL partner's superior inventory management software can track and trace inventory and keep inventory records actively updated. This software can be coupled with devices such as hand-held scanners that scan merchandise in the warehouse and sends data directly to the system for accounting and record-keeping purposes. In addition, these systems can trigger alerts when some stock needs replenishing, when you have overstocked or when it needs to be replaced with a fresh supply, especially in the case of perishable items. Such robust tech can remove the burden of keeping accurate inventory records and renewing them regularly. Furthermore, they essentially guide you on how to improve your inventory management efficiency. Improving Relationships With Manufacturers Better inventory management by the business causes less hassle for the manufacturers and sellers of products. In addition, accurately telling them when you need to stock up or replace the old inventory strengthens your relationship with them. Logistical pace and associations affect the relationship between sellers and manufacturers. For example, if a retailer needs a small quantity of stock urgently, the supplier can utilize existing stock to deliver it to their doorstep on time. In such a scenario, their relationship will grow and become stronger. If, on the other hand, the logistics speed is slow, the supplier will have to keep extra merchandise, thus increasing their inventory days on hand. Strong alliances with suppliers will push you to keep adequate inventory days on hand, thus improving inventory management and business performance. Providing Markdowns and Bundles You can bundle slow-moving stock in pre-determined groups with further discounts. Products experiencing low sales can be combined with a similar category of other products that have a higher rate of demand. For instance, you can combine poorly selling plates with fast-moving coffee mugs. A markdown on their prices can further attract the attention of customers. Clean-ups, closeouts, or flash sales are common ways to mark down your inventory and push it out to improve the inventory days on hand. Making Use of Unsold Inventory If markdowns don't work for your unsold inventory, there might not be a way out of storing it indefinitely. The stock in your warehouse costs you the storage, maintenance, labour, and other overheads. Hence, it is better to put it to use in whatever way it can. If you cannot sell it, you can always donate it and count it as a CSR initiative, recycle it to make new products, or refurbish it to attract new demand. Even if you cannot sell it, it will be less of a loss if it is involved in another business process rather than just wasting your storage space and the money spent on renting it. Streamlining Operational Processes Unclear and poorly strategized operational processes cause trouble in inventory management. Your warehouse and supply chain operations need to be streamlined to avoid an excess burden on the existing inventory. Ensure seamless communication and a smooth flow of information to avoid logistics chain disruptions. Combined with a skilled workforce to operate the systems and man the merchandise on the ground, this can help to improve your inventory days on hand ratio. How Can a Fulfillment Company like WareIQ Help Improve Inventory Days on Hand? A strong 3PL partner like WareIQ can change the way you manage inventory. We can provide three things you will need the most to monitor your stock effectively: State-of-the-art WMS to assist in inventory management and forecasting inventory days on hand of your current inventory.Advanced technology to record and monitor the inventory days on hand and provide solutions for improving it.Nationwide network of fulfillment centers so you can store inventory near areas of high demand or near shipping and distribution hubs. Most importantly, a trustworthy logistics partner can empower you with all the tools, technology, and knowledge to control your inventory on hand in the most intelligent manner. Inventory Days on Hand: FAQs What is the difference between inventory days on hand and inventory turnover?Inventory days on hand refers to the average time it takes for a retailer to turn its inventory into sales whereas inventory turnover indicates how fast a retailer can sell its inventory. During calculations, DOH is the inverse of inventory turnover. What is considered a normal number of inventory days on hand?The ideal inventory days on hand ratio for an eCommerce business can be between 2 and 4. If it is lower than this, it could indicate weak sales or a decline in the demand for your products. What causes increases in inventory days on hand?Inventory days on hand can increase for a multitude of reasons but mainly because of economic, global, and competitive factors that result in a sudden fall in demand and sales levels. How to calculate the inventory days on hand?While ideal inventory on hand differs depending on the nature, price point, and type of products that a business deals with, it can be found out by dividing the average stock by the cost of goods sold and then multiplying the figure by the number of days in that accounting period.

June 13, 2022

Stock Discrepancy: Definition, 5 Main Causes and Top 7 Methods to Avoid Inventory Discrepancy in 2022 in eCommerce

Stock Discrepancy: Definition, 5 Main Causes and Top 7 Methods to Avoid Inventory Discrepancy in 2022 in eCommerce

The fast-evolving business trends and technologies bring new challenges to every organization. To mitigate the issues of the end-to-end supply chain and cope with customer expectations, organizations are constantly focusing on reducing the delivery lead time. And one of the essential steps to reduce the lead time is to manage inventories in every form like raw material, semi-finished products, and final products. Experts define inventory as a necessary evil. It is essential to run the business, but it blocks the business capital in the form of materials. Therefore, it is essential to manage accurate inventory. The stock discrepancy is one of the major challenges in inventory management, especially in the eCommerce business. This article will take you through a brief definition of a stock discrepancy, its primary reasons, and the best practices to avoid inventory discrepancy. What is Stock Discrepancy? Stock discrepancy refers to the variety of physical available stock or inventory of items with respect to the current inventory in records or systems. To run a successful business of any size, maintaining accurate stock is vital. But inventory variation is a common scenario in a practical situation. In the case of industries like e-commerce, where you need to deal with a massive number of different SKUs, quick and error-free product transfer, and handling hundreds of last-mile deliveries, the chances of inventory mismatch increases. Minor inventory discrepancies can be managed easily, but major inventory discrepancies can lead to considerable losses to your organization. Therefore, you must have a robust system to check inventories, find loopholes and implement best practices to avoid any untoward situations.  [contactus_gynoveda] 5 Main Causes of Inventory Discrepancy Managing inventory throughout an eCommerce supply chain may sound easy, but it is a complicated task. You need to deal with thousands and lakhs of inward receipts and outward delivery day in and day out. Tracking every material movement, delivering the right product to the right place at the right quantity, and above all, managing inventory accuracy is nothing short of a nightmare. But the task becomes easy if you know the probable causes of inventory discrepancy and how to avoid them. Here are some major causes of Inventory Discrepancy. Inventory shrinkage As the name suggests, when there is a shortage in the actual inventory compared to the stock in the records, it is known as inventory shrinkage. Simply put, it refers to when the physical stock of any item is less than the system stock. There are some probable reasons behind such discrepancies:  Pilferage or Theft: Here are two possibilities:If a person involved in operations may pilferage items. Or,Some outsiders may steal.Administrative errors: There may be a chance of error in the accounting system, which eventually decreases the item's quantity. Vendor Fraud: Manufacturers/suppliers may have sent you fewer number items than they billed for it. Misplaced inventory There is a place for every material in modern warehouses, and it is described in the inventory management system. Whenever the warehouse team receives an item, it is labelled first and then goes to its exact location. The same activity happens in the case of goods for delivery. In most industries, this activity is done by humans whereas, in some advanced warehouses, automated robots perform the task. Discrepancies in inventory are primarily due to human errors like wrong material receipt or issuance, putting materials in wrong locations or incorrect labeling. Many times, suppliers also send the wrong materials unintentionally. Any of these mistakes can lead to a stock disrepancy. Human error One of the major causes of inventory discrepancy is human error. Apart from using highly advanced e-commerce warehouse management systems, some of the eCommerce end-to-end supply chain is driven by humans. And if your employees are not appropriately trained on how to receive, store, track and manage stocks, inventory discrepancy is unavoidable. An inventory management system can assist people in managing the inventory efficiently, but they are the people who run the system. Firstly, to avoid human errors, you need to make sure that people understand the consequences of inventory variations. Keeping a standard operating procedure in place, displaying visual instructions, regular training, and frequent inventory audits are some of the best practices to avoid such errors. Mismanaged returns Return management does not add value to the business directly, but it has an impact on the balance sheet and revenue of the organization. Reverse logistics is as important as last-mile delivery. Poor return management can generate significant stock discrepancies and damages. As there are several ways to treat the returned materials (restocked, refurbished, bad-quality-disposed, or scrapped), it is important to perform every activity carefully. If a bad-quality material is not stored back in the warehouse, it will create a stock discrepancy. Similarly, if a returned material is coded wrongly and placed in the location, it will show the wrong information in the system. Effective return management not only helps you to avoid inventory discrepancies but also helps you to improve revenue. Glitches in Inventory Management Software Inventory management software must connect with the existing softwares/platforms businesses use in order to scale to accommodate advanced logistics. Choosing from hundreds of inventory management software solutions and understanding a slew of its features that necessitate training and continuous assistance is a difficult task. Choosing a wrong inventory management software can give further rise to stock discrepancy due to incorrect inventory counting, inventory forecasting etc. 7 Methods to Avoid Stock Discrepancy Having a healthy inventory with accuracy is the key to delivering products on time. On the one hand, it improves customer satisfaction, and on the other, you can book more orders due to better visibility of your inventory status. Stock accuracy is beneficial in mitigating supply chain risks by avoiding incorrect customer orders, material shortages, theft, and damages.  Here are some best practices which can help you to avoid stock discrepancy. Double Check During Counting of Stock Physical inventory counting is a common process to identify and avoid inventory discrepancies. In this process, every item is checked physically, and then the stock is matched with the inventory records. Double counting can minimize errors. In case of a large inventory pool, you can use the ABC analysis method to identify high-value items and perform a double check on those items especially.  You can decide the frequency of physical counting on the basis of ABC and FMR strategy, and decide on a quarterly or annually sales velocity audit (for fast-moving items and slow-moving items).  Identify the Location of Stock In a running eCommerce or production environment, the pace of materials movement is very fast, and there is a tendency to keep the same items in different locations. It is also important to check whether similar items are mixed with each other or not. With a slight change in design, the item code changes, but identifying the difference between such items becomes challenging. While performing physical inventory counting, you must check all the locations thoroughly and avoid the mixing of similar materials.  Check the levels of Inwards & Outwards Stock To improve the inventory accuracy of your warehouse, you must ensure a strict inward and outward process. During the inwards process, checking every item along with their vendor invoices can help avoid major inventory mismatches. Often suppliers inadvertently send similar items with different item codes, leading to stock variation. Communicate with Manufacturers Suppliers play a significant role in an efficient inventory management process. You should establish strong communication with your vendors so that any issues, especially inventory variations, can be communicated immediately. If you inform your supplier about any stock discrepancies during the inward process, they can also check at their end and resolve the problem at the moment. Moreover, training the supplier’s staff can also make a big difference and help run your business smoothly. Strong and transparent communication with your vendors not only helps you to manage inventory discrepancies but also helps avoid a stock-out situation or overstocking and reduces the cost of poor quality (COPQ). Opt for an Inventory Management System In this dynamic eCommerce environment, it is inevitable to have a smart inventory management system in place. It can help you to manage the stock levels, indicate the possible errors, and even help you to locate the item quickly. The advanced inventory management software is beneficial in significantly reducing the inventory counting time, which is a huge saving for any eCommerce business. Train Employees To make a big change, it is essential to increase awareness. As the technology in every field changes, new tools and techniques get introduced into the market every day. Adopting new technologies and training people on the fundamentals is essential. Employees need to know the correct method of inventory counting and its benefits and drawbacks for efficient inventory management. Partner with a 3PL Another best practice to avoid inventory variations is partnering with a 3PL like WareIQ. Being an experienced organization, WareIQ knows every nitty-gritty of inventory management and how to prevent stock discrepancies effectively. It offers stringent control and saves your time and money. Through the latest digitized tools, the overall inventory forecasting process is performed quickly and with high levels of transparency. Conclusion Technological advancement has increased buyers' expectations in terms of competitive price, better material quality, and quick delivery. Poor inventory management with many discrepancies can hamper your revenue and result in customer dissatisfaction. Human errors and inefficient systems are the root cause of a stock discrepancy. By implementing best practices, you can eliminate all bottlenecks and establish a healthy inventory system in your organization. Adopting intelligent inventory management software and partnering with an efficient 3PL like WareIQ can help manage your inventory better. We at WareIQ give you full transparency of your inventory with real-time tracking features that make you monitor your product levels & status across our multiple warehouses from anywhere. As we know, return and reverse logistic is the major cause of the stock discrepancy, we provide RTO and logistics insurance to save your time, money, and other resources. If you keep the listed items on your website in our fulfillment centers, then you do not have to worry about inventory management and stock discrepancy. We are solely responsible for any discrepancy. If in case, it comes from your vendor's side, you will be informed immediately. [signup] Stock Discrepancy FAQs What is the reason for stock discrepancies?Reasons for stock disparities are:i) Theft of stockii) Incorrect recording of dataiii) Misplaced stock and can't be trackediv) Mis-handling of damaged and returned stockv) Human error while the stocktake process like wrong counting What are the necessary actions businesses should take if there is a discrepancy in stock?i) Confirm the discrepancy by double-checking recordsii) Make necessary changes in the records if there is a discrepancyiii) Remove any extra items that have been detected as a discrepancyiv) While arranging replenishment orders, make sure you have enough stock to cover the difference How does WareIQ ensure low to zero inventory discrepancies?WareIQ does inventory tracking for sellers through its own warehouse management system software where WareIQ operations experts handle the process of managing inventory that ensures low to zero inventory discrepancy. How can companies minimize stock variances?To minimize stock variances:i) Inspect incoming inventory and label itii) Separate customer-owned inventory from the restiii) Standardize Inventory Picking Recordkeepingiv) Audit the Bill of Materials and sign for every inventory removed from the warehousev) Extra Requisitions and Returns should be tracked

June 11, 2022

4 Techniques and Importance of Inventory Management in Supply Chain

4 Techniques and Importance of Inventory Management in Supply Chain

Inventory management affects the movement of items along the supply chain. An effective inventory control system ensures that the corporation retains just enough stock or raw materials to maintain good manufacturing and market supply of completed products. As a result, a company with a well-functioning supply chain management system can stay competitive in its field. Information technology has benefited inventory management. For example, IT systems can monitor inventory to guarantee that no excess or insufficient stock is stored, improving the firm's efficiency and lowering operating costs.  Manufacturing companies manage their inventory levels to keep track of raw materials and then manufacture just enough goods for the market to avoid the costs of generating and maintaining surplus inventory.  That is why inventory management in supply chain management is essential for the efficient working of eCommerce fulfilment organizations. Inventory Management in Supply Chain Inventory management is one of the most crucial components of any organization. It is essentially the management of items or stock, which refers to the goods that a company organization produces at any particular time for selling or manufacturing. The administration must ensure that the commodities are kept at a cost-effective level and that stock is always available. If an organization has too much inventory at any particular time, it will be unprofitable since the cost of holding it will be too high, reducing profitability. Inventory control is crucial in the supply chain since it is the key to long-term success. Inventory may play the most crucial function in supply networks by balancing demand and supply characteristics. The size of the firm determines how well inventory is managed. The actions taken put a corporation in the position of attempting to strike a balance between meeting client needs, which are frequently impossible to foresee precisely, and keeping an adequate supply of resources and commodities. Strategic plans are commonly used to attain balance in managing inventory. Carrying cost or holding cost of inventory, replenishment lead time, inventory valuation, asset management, inventory quality management, price forecasting, inventory forecasting, the physical state of the stock, ordering cost of inventory, and the physical condition of the list are all areas of concern for inventory management in supply chain management. One of the goals of managing inventory is to guarantee that the merchant has the information to manage and maintain proper merchandise when placing orders, shipping items, handling them in a variety of warehouses, and keeping other costs in check. [contactus_lilgoodness] Relationship between Inventory management and Supply Chain Management Inventory control is one of the most critical aspects of supply chain management because it significantly impacts the company's profitability. Because one of the main goals of a company is to make money, inventory management in supply chain management is critical because it leads to higher revenues. In addition, this centralized management aims to maximize customer value and provide a competitive edge. The merchant must first determine inventory requirements before establishing organizational goals. After that, he should be able to maintain a supply chain management system and a report on the inventory status at the end of a financial quarter. The inventory should be compared between actual and expected levels. Furthermore, the management should be able to track inventory movement to guarantee no losses. Finally, using the various reports, the manager should be able to reconcile the inventory balances at regular intervals. 7 Objectives of Inventory Management In Supply Chain Management System The technique of coordinating the movement of items and services across several processes and locations is known as supply chain management, or SCM. Raw material storage and transportation, work-in-process inventories, finished objects, and end-to-end order fulfilment from origin to consumption are all included. All business activities linked with a company's procurement, production, distribution, and sales order fulfilment functions are included in SCM. As a result, it entails managing supply and demand, sourcing raw materials and components, manufacturing and assembly, warehousing and inventory tracking, order processing and management, distribution across all channels, and ultimate customer delivery. Supply chain managers are in charge of creating effective plans and strategies to guarantee that the supply chain is running smoothly. They develop well-defined action plans based on detailed analysis and forecasts, enhancing overall performance. The backbone of today's business organizations is the ultimate integration of inventory management in the supply chain system. Suppliers who follow SCM principles are anticipated to provide more value to their customers than those who do not.  The seven most important goals of inventory management in supply chain management are listed below. Improve Operational efficiency Efficiency is one of the most important goals of Supply Chain Management. Waste minimization is synonymous with efficiency. Waste can take many forms, including squandered materials, squandered funds, person-hours, delivery time, and so on. Therefore, waste minimization is an essential aspect of managing the supply chain. What role can SCM play in waste reduction? First, it manages manufacturing, inventory, transportation, and logistics to reduce waste. This is accomplished by exploring ways to improve systems to reduce waste. If your organization, for example, exchanges inventory data with a supplier and keeps it updated in real-time using ERP software, inventory may be replenished quickly to meet demand. It might be tough to master the process of efficiently managing these operations, but knowing how to do so can be incredibly valuable to your company's overall performance. Improve Quality Waste reduction is only one aspect of inventory management in supply chain management. Another important goal is ensuring the product is of the most excellent quality possible. Quality Assurance is the observance of numerous customer-specified quality parameters, ranging from performance to particular features. This involves following food safety rules, displaying ethical and sustainable business practices, and taking other comparable steps. Establishing exact criteria and including supplier partners from the beginning is crucial. To keep things moving through the supply chain, you must be nimble in real-time handling modification and variation to that specification. The quality of a company's goods, as well as its total profitability, are directly influenced by SCM. Quality management in the supply chain is critical for gaining a competitive advantage while minimizing operational costs. Optimized Logistics The better the inventory management, the better would be the supply chain. However, the purpose of logistics management is to optimize transportation and the supply chain. Each company is responsible for its part in ordering, shipping, and delivering goods in an autonomous commercial environment. Due to bad timing and coordination, the costs of this company model are substantially greater. Supply Chain Management guarantees that your operations run smoothly and that all stakeholders, including suppliers, manufacturers, wholesalers, and retailers, are on the same page. With SCM, you may optimize transportation and logistics processes with any vendors or buyers you work with. Orders are automatically recorded into a system, alerting other facilities that more resources are needed to complete the request. This ensures that the entire procedure runs smoothly and flawlessly. Reducing Logistics Costs Efficient supply chain management inventory helps cut off the company's operational costs. Building an optimized flow of goods reduces the cost of all forms of company costs, including acquiring, manufacturing, and shipping items. In addition, by facilitating a seamless flow of raw materials between a supplier and a firm and the movement of finished goods between a company and its consumers, the holding period of both raw materials and finished goods may be reduced—this aids in the reduction of losses and the minimization of total operating costs. Enhancing Customer Services One of the essential aims of supply chain management is customer happiness. By far, the most efficient method of client service is through your supply chain. It directly impacts two of the most critical aspects of customer satisfaction: price and delivery. You can surpass your competitors in terms of retail price and profitability if you have a well-functioning supply chain. Having high-performing operations also aids you in meeting or exceeding your consumers' product delivery expectations. It's vital to keep your consumers happy by giving them what they want, when they want it, and at the lowest price feasible. That's precisely what good Supply Chain Management allows you to achieve. You can give the excellent service, transparency, and visibility that your consumers want by choosing the suitable systems, processes, and partners for your supply chain. By building strategies that minimize mistakes and maximize inventory management efficiency, you keep total control over the lifespan of your items, from conception to delivery. The stronger your supply chain is, the better the customer experience will be, the happy your customers will be, and the more likely they will buy from you again. Streamlining Distribution Supply Chain Management benefits businesses by streamlining the distribution process. Creating adequate coordination between various transportation routes and warehouses is vital to promote faster goods flow. Also, Logistics Management allows companies to reduce logistics costs while delivering goods more rapidly. Consequently, the whole distribution system has been upgraded, allowing items to be delivered at the right time and place. As a result, it's a good idea to invest in technology that allows you to efficient inventory management, provide detailed data, automate delivery, give real-time tracking, and conduct other distribution duties. Established Coordination The purpose of supply chain management is to improve coordination among the different stakeholders in an organization. Employees, customers, and suppliers will be able to connect with the firm more efficiently thanks to establishing a channel. In the case of an emergency, managers may immediately lead their workforce, and employees can contact their supervisors via the established channel. Customers can also access relevant information through self-portals as part of the customer support system. It promotes information exchange among all stakeholders and aids in the creation of a well-coordinated organization. 5 Reasons for Inventory Control To Be The Initial Step in Supply Chain Management Systems Even in our increasingly competitive economy, keeping track of inventory is a virtual necessity because inventory is often a business' most vital and costly asset for maintaining a centralized supply chain management system. Yet, according to U.S. Small Business Administration, 46% of small firms either don't track inventories or do so using a manual technique. For five reasons, inventory control should be the initial step in fine-tuning your supply chain management systems. Inventory Turnover One of the essential criteria for centralized management is the inventory turnover ratio, which is the cost of items sold divided by average inventory. A balanced ratio is critical for keeping your inventory profitable rather than squandering money on overstocking, stocking obsolete products, or rushing shipments to satisfy consumer demand. For example, a low inventory turnover ratio (low cost of goods, high average inventory) means you're spending too much on items that should have already shipped to customers or were never manufactured in the first place because of the cost of keeping them on the shelves while their value depreciates is counterproductive. High inventory turnover, on the other side (high price of products, low average inventory), suggests you won't be able to satisfy demand fast if the market shifts. Allows Capital to be Released Once you've paid for the supplies you'll need to make your inventory, that money won't be available until you've received payment from a buyer — in other words, your capital is tied to the prospect of a sale. This may restrict you from using that money to put back into your firm or recruit new personnel, among other common tactics for improving revenue development, unless your organization has a quick cash conversion cycle. Inventory control includes making sure that inventory isn't put into production until you know it will sell rapidly. Improved Customer Service Customers should be satisfied with a well-made and rapidly delivered product, which is the expected outcome of a lean and efficient supply chain. An optimized inventory and supply chain results in fewer shipments to complete orders, real-time tracking of orders from the warehouse to the customer's front door, accurate inventory that prevents charges from being placed on out-of-stock items, and a lower return rate because customers have fewer issues with their product. Swiftly and adequately resolving a customer's concern will go a long way toward boosting your reputation and assuring future business. Advanced Technology Inventory control used to entail spreadsheets and manual audits, which were prone to human error and left businesses vulnerable to accounting errors that put them in financial and legal jeopardy. Across many industries, automated and integrated technologies are becoming the norm. For example, financial data, such as accounts receivable, is increasingly combined with sales information, including client histories. The idea is to keep inventory under control from quarter to quarter so that it does not affect the bottom line. That type of real-time data integration wasn't conceivable until recently. Still, inventory control solutions are now built from the ground up to handle these functions, which helps centralized supply chain management systems run more efficiently. Encourages Growth Trends in Optimizing Supply Chain Processes Future trends are increasingly becoming a reality for organizations of all sizes, from cloud computing to real-time tracking. Automated inventory control is the ideal approach to connecting with technologies that will keep you one step ahead of your rivals. "Just-in-time" inventory, for example, can help improve turnover rates by allowing you to retain inventory levels just high enough to meet demand. Businesses require strong ties with suppliers via common software databases to execute "just-in-time" operations like supplying customizable packaging. This will allow order fulfilment to your locations as needed. Many interrelated yet separate pieces work together to generate customer happiness and higher income in a complex supply chain. Our supply chain is exposed to several variables out of our control in today's often-disrupted business environment, including fluctuating market demand and new competitors. Our inventory is the one thing we can control: where it is, where it is going, and what we need to do to keep it at growth-friendly levels. Inventory control is the first stage in maintaining an effective supply chain. It may also be the most crucial step, given that poor management and lack of planning are two primary reasons small businesses fail. How Can I Improve Inventory Management in Supply Chain Management? Technology is at the heart of effective supply chain management. Traditional, frequently manual procedures are eliminated, saving time and lowering the chance of mistaken addition. In addition, any information captured becomes easier to communicate throughout a complete supply chain when activities are managed digitally. You're halfway to comprehensive supply chain optimization if your organization has installed a transportation management system (TMS). Transportation and inventory management are two critical components of a successful supply chain. Transportation management systems handle product movement along the supply chain and offer a robust communication platform for carriers, shippers, and manufacturers. The amount and kind of items in an eCommerce warehouse or other storage facility are the subjects of inventory management platforms. These pieces of technology, when combined, establish the foundation for businesses to get their products into the hands of customers as quickly as feasible. When a corporation uses a centralized supply chain management system to respond promptly to a customer's order, for example, merchandise travels quickly out of the warehouse and no longer occupies inventory space. That space is then freed up for newer goods to take their place. Quick shipments may be handled via inventory management systems, guaranteeing that the oldest product is dispatched first. When inventory and supply chain management operate together, tracking ruined or damaged inventory is more accessible. Products may be tracked down to the SKU level and readily traced as they leave the warehouse. When a product is recalled, inventory management teams have the information they need to locate and isolate faulty merchandise. Specific transportation management systems, such as Microsoft Dynamics, can link directly with ERPs. When these technologies are combined, logistics professionals benefit from enhanced shipping accuracy, considerable time savings, and access to valuable data for SKU-level cost allocation. Additionally, by exchanging data between systems, integrations between a TMS and an ERP may assist bridge the gap between inventory management and transportation management, ensuring that all parties involved have reliable, real-time inventory information. Inventory Management Techniques to Overcome Supply Chain Problems From the procurement of raw materials to the delivery of the item to the ultimate consumer, the supply chain tracks products. As a result, supply chain management encompasses various components and factors, including logistics for moving resources and goods from point A to point B. Inventory management may be considered part of a more extensive supply chain system. Ordering, storing, and distributing goods are all aspects of inventory management. Inventory management, when done correctly, may have a substantial positive impact on a company's bottom line. On the other hand, poor inventory management decisions, such as over-or under-ordering, may be costly and detrimental to a company's long-term health. If a company does not spend on learning and adopting the best inventory management practices, supply chain interruptions will increase dramatically.  There are vital concerns that have led to supply chain challenges. One is the worldwide supply chain crisis linked to the COVID-19 outbreak has received the most significant attention. Worldwide, suppliers have been impacted by safety limitations, labour shortages, and shutdowns. Some supply chains have only had minor glitches, while others have yet to recover and return to routine fully. The good news is that you and your firm can overcome these supply chain disruptions by employing a few proven, contemporary inventory management solutions. Utilization of Automation, Artificial Intelligence, and Machine Learning Automation is a fantastic technique for improving inventory management efficiency. Warehouse automation, for example, may increase productivity by directing robots to discover or transport products using cloud-based technologies. As a result, individuals no longer need to locate and package products. Essentially, these robots may support human employees by acting as assistants and increasing the overall pace of operations within a company. Automation technologies powered by AI and machine learning can also help with supply chain difficulties. The programme may gather and interpret data to make the supply chain as a whole more visible. Inventory Control Applications The more inventory management you have, the less disruption and stress the rest of the supply chain will give you and your company. While achieving the appropriate degree of inventory control isn't always simple, many businesses use inventory management methods like the ABC analysis to make the process go more smoothly. All goods are designated as A, B, or C in an ABC analysis. The highest demand or value is for A-level items. C-level items, on the other hand, sell slowly and are counted seldom. B-level things fall midway in the middle. Inventory and supply chain managers can better assess whether to purchase replacement stock once goods have been categorized this way. Utilization of Both Passive and Active Demand Forecasting Techniques. It makes economic and logistical sense to know how much of a product to have on hand each quarter. However, predicting demand for a particular product may be challenging, which is why many people divide demand forecasting into passive and active demand forecasting approaches. Active demand forecasting entails keeping a close eye on what's going on in the market. It's a combination of intuition, trend data, and historical data. Because they have limited historical data to evaluate, startups often rely on active demand forecasts for advice. Historical patterns are used in passive demand forecasting to predict future requirements. Companies can choose between passive and active demand forecasting or a combination. Employing Inventory and Warehouse Management Software Must If you go into any company for inventory control and good supply chain management techniques, you'll see a lot of technology. The warehouse management software system has been a game-changer for smoothing out the creases of inventory management. The majority of warehouse management systems collect significant amounts of data. They also indicate what's going on in the warehouse and the whole supply chain. This makes them essential in identifying possible supply chain disruptions and pain areas. There are several other advantages to using warehouse management software. Many work in tandem with other business systems, such as customer relationship management software. That implies that when a customer cares professional answers the phone, they may leverage warehouse management information to give excellent service. It's hard to outsmart every supply chain snag, especially in the face of uncontrolled occurrences like a worldwide epidemic. Nonetheless, inventory management best practices and tools can help mitigate the impact of interruptions. Conclusion Supply chain management is an integral part of every business's operations. It is critical to assist a company in gaining a competitive edge and maximizing customer satisfaction. Because of the increased degree of competitiveness, a company's supply chain management function has grown increasingly significant in today's corporate environment. As a result, there is a more critical requirement for businesses to assure consumer satisfaction. Inventory management, the backbone of supply chain management, is vital to customer satisfaction. Inventory management, through EOQ and JIT, aids in the reduction of supply chain management expenses as well as the forecasting of inventory levels. Furthermore, inventory management is a valuable strategy for managing risk in an organization by ensuring that safety stock is maintained. Supply chain management can fulfil its most fundamental goals through inventory management. As a result, it may be claimed that inventory management lies at the heart of supply chain management and that organizations must embrace it if supply chain management is to be successful. In other words, without inventory management, businesses will struggle to prosper in the supply chain. It serves as the foundation for all other supply chain operations, including transportation, production, and distribution. WareIQ- The Most Efficient Inventory Management System WareIQ is a leading fulfilment company in India, specialising in managing the supply chain of eCommerce businesses through effective inventory management. Through automatic replenishment suggestions, WareIQ's inventory planner aids in demand forecasting and maintaining precise stock levels across SKUs in warehouses in appropriate locations.Checklist-based Quality Checks are also conducted by WareIQ's operations professionals, guaranteeing that the QC process is complete and dependable.WareIQ adheres to the two points listed below to avoid mispicking:1. Using handling units to convey merchandise and scanning bar codes for pick and pack fulfilment services.2. Design and implementation of a process for tracking and tracing mis-picked merchandise [signup] FAQs Why is inventory management so crucial in the supply chain?Because a corporation must balance client demand with storage space and cash constraints, inventory management is critical in the supply chain. Inventory management gives you a clear picture of your supply chain like procurement, production, delivery, etc. What is the impact of excellent inventory management on the supply chain?By maintaining a consistent inventory flow, good inventory management may promote profitability, improve supply chain visibility, and improve operations. For today's supply chain management, inventory optimization is the gold standard. What is the definition of inventory supply?MRO inventory is often referred to as supplies or supply inventory. It's made up of consumable materials, equipment, and supplies that are utilised in the manufacturing process but aren't included in the final product. What role does inventory play in the supply chain?What role does inventory play in the supply chain?Inventory facilitates the balance of demand and supply, which is perhaps the most essential role it performs in supply networks. Firms must deal with upstream supplier exchanges and downstream consumer needs to efficiently manage forward and reverse flows in the supply chain. Is inventory control an element of operations control?As a result, inventory management is an important aspect of operations management. When it comes to inventory, the most important factors are when to refresh stock and how large orders should be. An inventory policy is what it's called. The basic considerations of when and how much to order are addressed by an inventory policy.

June 11, 2022