To be truly effective and successful, your order fulfillment operation must have a clear and accurate understanding of your inventory. What products do you have available (quantity by SKU)? Where does it fit into your supply chain? Is this data correctly reflected in your systems? Stockouts, overstocks, and unaccounted-for shrink are all issues that warehouses and distribution centers must address if they are to remain profitable. This is where inventory visibility comes into play.
While inventory visibility has always been an important aspect of any retail operation, it has become even more so as many businesses have moved to an omni-channel order fulfillment and distribution model. Today’s order fulfillment and material handling operations stand to benefit greatly from implementing a more accurate inventory visibility system throughout their supply chain. The following are just a few of the many advantages that inventory visibility provides.
- Enhanced predictability
To be successful in order fulfillment in the long run, a company must become adept at forecasting its inventory requirements. How much of each product is typically required during a typical business cycle? When is the busiest time for you? Is there any seasonality in your business?
An operation can constantly reconcile current inventory levels against expected demands by ensuring accurate inventory visibility, allowing for smarter replenishment and fewer stockouts. Without a clear understanding of the inventory in your operation, it is far too easy to order too much or too little product, impairing your ability to fulfill orders. - Increased Security and Quality Control
While inventory visibility is primarily concerned with determining how much inventory is present at each stage of the supply chain, it also provides an important benefit to highly regulated industries: The ability to track specific products/orders from one location to another.
Operations involved in the production and transportation of goods in the bio-medical supplies, pharmaceuticals, food, and chemicals industries, for example, must generally keep a closer eye on exactly what product (in terms of lots or batches) is delivered where. - More Efficient Use of Time
Manual inventory tracking is a time-consuming and labor-intensive process that can end up costing a lot of money. This is especially true for operations that operate within a complex supply chain, with the product being shipped between multiple warehouses, distribution centers, and stores on a regular basis. Manually tracking inventory from node to node along the supply chain can add up to a lot of wasted man-hours, which is why many retail operations don’t do it nearly enough. - Reduce supply chain costs
Inefficient inventory storage, poor geographic locations, high shipping costs, and inefficient labor and operations can all add up over time and kill your margins.
Having a comprehensive view of inventory on hand across your supply chain ensures that you’re not overpaying for logistics or warehousing fees, accumulating dead stock that is unsellable, and/or storing too much inventory in locations where demand for your products is low. - Improve order accuracy rate
A lack of visibility into your inventory can also have an impact on your fulfillment process and order accuracy rate. Customers, for example, expect to receive multiple items in the same delivery if they place an order with multiple items.
However, with poor inventory management, you run the risk of one item from the order selling out, resulting in a backorder and/or a split shipment (or shipping multiple items from a single order out separately). With greater visibility, you can ensure that you have an optimal amount of stock in every location to accurately and on time fill orders (or backups in other locations so customers don’t have to wait).
With greater visibility comes reduction in the inventory carrying costs. Take a minute to watch how we helped California Design Den to reduce their inventory carrying costs by 50% - Boost demand forecasting
With increased visibility, you can collect historical order data to assist you in making better inventory decisions related to forecasting demand across all channels.
Knowing the time and date of orders, the SKU(s) ordered, their destinations, and the sales channel used will allow you to forecast growth and trend projections on a more granular level (plus, you can look back to see how your forecasts matched up to reality). While forecasting demand will never be completely accurate, having visibility provides greater accuracy, which could also help you build production lead times and increase operational efficiencies. - Improved customer experience
The greater your inventory visibility, the easier it is to monitor stock levels across channels and keep enough inventory on hand to meet customer demand. With increased visibility, you will be able to:
– Optimize your network’s stock levels. – Save money on logistics to offset the cost of shipping or any promotional incentives such as free shipping.
– Calculate your safety stock in order to avoid stockouts.
– By storing inventory close to your customers, you can cut down on last-mile delivery.
Pluto7 is a tech-enabled solutions company, igniting digital transformation across Supply Chains using AI/ML. Having worked with numerous customers across the globe we have mastered the outcome centric approach of looking at a problem. We don’t just solve your issues, rather customize the solution in such a way that can save you from other related challenges. Knowing your inventory carrying costs can help you save money in more ways than one. Understanding your holding costs gives you a better picture of your overall business. Pluto7 can help you measure this metric, along with other important analytics, which is critical to understanding, improving, and growing your business.
To know how you can reduce your inventory carrying costs BOOK A FREE WORKSHOP
Write to us at contact@pluto7.com
