Ecommerce is a sector that is growing and expanding significantly, especially during the Covid-19 pandemic. With the ease and convenience it provides, online shopping has become the new norm for millions of consumers around the world. This article discusses several techniques that are essential in managing the e-commerce inventory, which includes but is not limited to, optimal economic order, restocking, techniques on inventory control, real time visibility and seasonality of businesses. With these techniques, inventories are easier to control as well as avoiding the possibility of overstocking or understocking. This will also help the company to satisfy the supply and demand of a competitive market.
Table of Contents
The Reorder Point Formula
Market demand refers to the quantity demanded across the consumer’s market. Market demand can fluctuates over time and stocking strategies are required to handle ever changing demands from consumers. The fluctuation may be due to various factors such as season, natural disasters, predictable or even a pandemic. The importance of understanding and considering market demand for business is to lower the investment capital on products without demand and increase profit over consumer demand. Trending countries in specific cities, by searching potential products give an insight information over the distribution interest where focus of marketing effort over demand requirement before deciding to move towards. Many tools allow targeting of specific geographic locations and pulling of summarized analytics reports along with a combination of various data. By applying different functions tools works differently but gather various information when it comes to researching over market demand.
Utilising Real-Time Data
A precise inventory forecast is essential, especially when supply networks and consumer demand are continually changing. To be able to forecast correctly involves a combination of statistical and quantitative data analysis, company expertise, customer insights, and a little foresight to identify variables that may trigger a drop or spike in future demand.
Trend forecasting, using historical sales and growth data, forecasts possible trends while excluding seasonal impacts and inconsistencies. This forecasting methodology is aided by more precise sales data, which shows how certain consumer and types of consumers will likely purchase in future.
In contrast, graphical forecasting, the same data that a trend forecaster examines statistically can be graphed to depict sales peaks and valleys. Because it is visual, some forecasters favour the graphical method. They can deduce patterns from a set of data points and use sloped trend lines to investigate potential orientations that would otherwise go unnoticed on graphs.
Qualitative forecasting, when they don’t have access to previous data, some businesses turn to their customers. Complex data collection methods, such as focus groups and market research, are frequently used in qualitative forecasting. Forecasters then use this information to build models.
In contrast, Qualitative forecasting uses prior numerical data, numerical data is thought to be more accurate than qualitative research alone. The more historical data a corporation has, the more accurate its projection will be. Time-series forecasting, which employs temporal quantitative data to create a model, is one example of quantitative forecasting. This model aids in the forecasting of future trends.
Developing an Inventory Management System
It takes time and effort to build an effective inventory replenishment strategy. Restocking level also depends on their company model, monthly order volume and products. Each retailer focuses on different internet retailers using different replenishment strategies, catering to different needs of supply and demand. Implementing the right technology and having the right tech stack in place can aid the supply chain optimization.
Inventory replenishment is only one aspect of the overall inventory management process. It will be difficult to decide when to reorder inventory without a proper inventory management process. Regular inventory audits, standard warehouse receiving procedures, and best practices in warehousing can help to track inventory more efficiently into a model analysed.
Inventory Management Software
Inventory management is the process of tracking inventory and stock quantities as they enter and exit the warehouse. An inventory management system, as opposed to an ERP system, focuses on a single supply chain process. They frequently include the ability to integrate with other software systems point of sale, channel management, and shipping to build a customized integration stack to meet the needs of the specific business.
Inventory management software assists businesses in reducing costs by reducing the number of obsolete components and items in storage. It also aids businesses in minimizing missed sales by ensuring that sufficient stock is on hand to satisfy demand. Companies can regulate inventory levels and maximize the usage of warehouse space by analysing such data. Software can gather data, do computations, and produce records automatically. This not only saves time and money, but it also improves the efficiency of the company.
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References
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Sunil Hegde, DLSM (2020). “Six Inventory Control Techniques for the Printing Industry”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/six-inventory-control-techniques-printing-industry/ accessed 21/06/21.
Yong Kah Keong, DLSM (2021). “Best Practices for E-Commerce Warehousing”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/best-practices-e-commerce-warehousing/, accessed 21/06/21.