Gearing up for the holiday shopping season means it's time to start analyzing past sales trends and performance in addition to assessing stock levels for the upcoming season. With online shopping expected to continue on its upward trajectory as the way people prefer to shop, e-commerce vendors, as well as click and mortar retailers, need to take appropriate steps to make sure you have enough inventory for a busy holiday season. Here are some practical steps from pre-orders to how your fulfillment provider’s technology plays a role in providing the data you need to make informed decisions and better predictions for the inventory levels you'll need to make the upcoming holiday shopping season a success. Consider these tips for analyzing past sales data, current inventory levels, and sales trends, and how to prepare to avoid backorders and missed sales due to poorly optimized inventory levels.
Backorders are bad business
One of the major stumbling blocks of supply chains and order fulfillment, back in the day, backorders meant consumers would just have to wait longer than expected for an order to be fulfilled and shipped to them. This was an accepted practice until Amazon and other large online operators began offering shoppers shorter delivery times and shoppers started to expect two-day deliveries, with no waiting tolerance for backorders. For today’s online shopper, backorder and out of stock messages not only negatively affect your credibility in your customer experience rankings but can cost you that customer. Online shoppers, tending to steer clear of any delays and complications with online vendors, will simply click on a competitor’s site to order the products they want if they can be delivered when they want them. This is why it’s essential to take stock of your stock and devise a system that will help you maintain stock levels to avoid backorders.
Working with your 3PL provider’s technology
During the holiday season, every aspect of your fulfillment operations needs to perform at its best to meet customer expectations. Working with you, your 3PL provider can help you align your supply chain to move as smoothly as possible during this most hectic of seasons. Your fulfillment provider’s warehouse management system (WMS) should track inventory levels, as well as item velocity to avoid backorders and out of stock messages. Setting up actions through predictive algorithms, automation, and other warehouse management tools, you can effectively eliminate backorders and out of stock issues. How do you devise a plan that works?
The first rule of inventory is to have enough inventory on hand
A fairly straightforward directive but for today’s online vendors with multiple sales channels, there are a lot of moving parts to consider. So, where do you start? The first step in inventory management involves implementing technology that can give you real-time data about your inventory. A reliable and data-forward 3PL provider, such as Phase V, will have systems in place that you can customize to ensure you will have the adequate inventory for your orders to be fulfilled.
Real-time stock level data
Real-time data about your stock levels is a crucial element in predictive needs planning for your inventory. Receiving real-time alerts about your inventory levels will help you avoid out of stock and backorder issues. The added emotional element involved in gift-giving and accurate delivery times during the holiday season makes it all that more important to take steps to ensure you will be able to meet customer expectations during this time when accelerated sales can lead to inaccuracies across the board. Real-time data about stock levels is important but you also need to know how fast your SKUs are moving, to predict your needs for the holiday season.
Real-time data – item velocity
Some SKUs move faster than others. For those slower movers, you may not need to restock, even though you only have 25% of that product in the warehouse. On the other hand, it’s important to restock faster movers when you still have more than 25% on hand to make sure you don't deplete your inventory before your restock arrives. In effect, velocity matters even more than stock levels.
After determining the velocity of your inventory products, you should be able to make predictions about when to reorder your products in time to restock to avoid backorders. Factoring in how long it takes to restock each item from your supplier, plus the time it takes for the fulfillment center’s warehouse personnel to process it, you can arrive at an appropriate interval that will determine when to use your 3PLs technology to trigger an automatic low stock alert. For example, say an item takes three weeks from the time you send a purchase order to your supplier until it arrives at your 3PL provider’s warehouses. Setting up an automatic alert when you have a month’s supply on hand usually will cover sales for that item with no disruption in your supply chain such as those that backorders can cause.
New product needs projection
Sometimes it’s difficult to know how a new item will sell. Researching trends and other companies with similar products will help give you an idea of how much inventory for that product you'll need in your warehouse, to set up a proper trigger for your new products. Your mainstay products are easier to predict, as past season analysis can give you the numbers you will need for the upcoming season.
Automating other aspects of your reordering process
Just determining when to reorder stock helps automate your inventory management operations but you can do more to ensure your supply chain runs as smoothly as possible. You can build in an alert that triggers a reorder from a vendor or an internal work order. Tracking actions can also trigger an alert if your reorders aren’t received within a designated time frame. Your 3PL’s WMS should keep all of your inventory levels across your various shopping carts updated in real-time. Additionally, you can set up alerts for your customers with the appropriate channel integration technology that instill a sense of urgency to purchase items, such as “Only 6 left in stock.”
The holiday season is hectic enough without issues that can be avoided by implementing a backup plan. As an e-commerce retailer, the 2021 holiday season might present issues with your suppliers. The after-effects of the pandemic are apparent, showing up as shortages in supply chains on a global level. To make sure you have enough inventory on hand, you should have more than one supplier for your products. Everyone is aware of shortages as many products that we once took for granted are in short supply. From fashion to cars, to campers, to components for electronic products, and some other consumer goods, it pays to plan for the surprises of the 2021 holiday season. One thing you can do to expedite your fulfillment processes involves setting up a “back in stock” alert to let you know your products have been restocked.
Phase V offers streamlined fulfillment with data-powered solutions that can make your 2021 holiday season a success. From clicked to shipped, contact Phase V for all of your order fulfillment needs this holiday season.