What Is Safety Stock?
A strategic supply management system is crucial for any business’s success. It ensures reduced operational costs, increased customer satisfaction, and steady cash flow. However, it’s not easy to main a successful execution of supply chain management. There is a need to roll the technology, processes, and people together in the right quantity, to get the right product, at the right time, to the right customer. That’s why the safety stock be used to mitigate the supply chain risks. It helps businesses stay ahead and prevent any potential stock-out situation. What is safety stock? Safety stock is the extra quantity of items held by a company to reduce the risk of being out of stock. It works as a buffer when a supplier is unable to deliver expected additional units of an item. This strategy is often used in case of stocking out caused by: Changes in consumer demand Raw materials variability in lead times Forecasting incorrect stocks Why should you use safety stock? Being out of stock during high seasons results in a negative brand image. There are two main reasons why you should ensure your safety stock: lead time uncertainty and demand uncertainty. Lead time uncertainty For companies whose products contain several components, lead time refers to the time needed to assemble pieces into a complete item. It is crucial to determine safety stock requirements and minimum inventory. For example, automobile manufacturers often experience engines and other components arrive at the factory just a few hours before the production. This delay, if not addressed well, might cause the whole system to shut down. Demand uncertainty Every manufacturer and retailer has products selling throughout the year. If the demand and supply are consistent, it does not require a large amount of safety stock. Nevertheless, there’re always seasons when the demand is higher than others. For instance, products like desk fans often experience high demands during the summer. It’s not easy to calculate the expected demands, hence, you need safety stock. Safety stock formula You can calculate the amount of stock needed by looking at the sales volume in the previous year. The formula is: Safety stock = (Maximum daily usage x maximum lead time in days) – (average daily usage x average lead time in days) For example, it takes 40 days for a retailer in New York to receive the tea sets made in Russia. The company sells nearly 15 sets a day, which can be considered the average daily usage. Meanwhile, a sale of 25 on good days can be taken as the maximum daily usage. In Russia, unfortunately, snowstorms and traffic jam result in delays up to 55 days and it may be taken as the maximum lead time in days. Taking the calculation: (25 x 55) – (15 x 40) = 775 It means 775 tea sets must be carried at all times as safety stock, particularly when the winter season is coming in Russia. Final note All in all, knowing the stock holding formula helps businesses in navigating safely through demand and fluctuations. Without safety stocks, businesses risk failing customers’ expectations, hence negatively impacting the sales revenue. However, note that this is only one solution for inventory management. You should also look at your KPI, assistant tools, identify trends and issues.
How To Start An Online Video Game Store
The online video game industry is booming with the increased popularity of console-less and single-player games among millennials. Entrepreneurs willing to capture this lucrative trend should follow these tips on how to start an online video game store on the right note. Conduct detailed market research The process of building an online video game store starts with researching the market carefully. This will provide you with valuable insights into your target audience and factors that influence their decision, your competitors as well as current and upcoming trends in the video game industry. Market research helps you: create concrete customer personas identify your USP and differentiate yourself from competitors gather information to devise your marketing strategy An easy way to do market research is using keywords to get information about the games people are looking for. You can filter the search volume according to regions to gain better insights. Find Supplier Before you start your store, you need to find suppliers for your business. There are many types of video games that you can sell in your online store. Decide on your product and whether you will specialize in one category or offer a broad spectrum of games. It will help you to find suitable suppliers with attractive pricing and a stable supply. Create Potential Sales Channel How to start an online video game store without customers? So, after having the infrastructure in place, the next step is to find customers for your store. The online video games market is enormous, but there are some key traffic drivers that can pull customers to your store, including social media platforms, websites, e-commerce sites. Divide Your Budget To divide your budget effectively, you can use the zero-budgeting method. That means marketers start from scratch and build a budget that fits the strategy. This method is very effective if you want to gain online video game market share, build brand awareness or win customers. You can also use a goal-driven method using benchmarks as targets. It would require a deep analysis of where your competitors are spending and how much money are they spending so á to evaluate your proper budget. Create Suitable Marketing Strategy A suitable marketing strategy is a combination of paid and unpaid methods. Social media and paid advertisements help you increase your following and accelerate sales. Gamers often hang out on Facebook, Instagram, Reddit, etc., so you can use the social commerce function to approach your audience. Improving PPC, SEO, and SEM is another effective way to attract new customers. You can also tie up with influencers to promote your online video game store. Wrap Up The online gaming industry is becoming popular and has increased demand. Thus finding the right niche will help you start a successful online video game store.
Types of eCommerce Inventory Management Systems
Are you figuring out costs, making plans to set up your shop? Or are you already running an eCommerce business? Either way, effective inventory management systems are indispensable to make the best business. What is inventory management? Inventory management refers to storing, sourcing, and selling stock. It is about knowing the stock you have, where to store it, how much to sell, and how long to keep it. Understanding inventory management is crucial for businesses of all sizes. Preventing waste helps save time and cost, but even the biggest firms collapse failing to employ the appropriate systems. The types of inventory management systems Adopting the inventory management systems is helpful. The system offers data visibility as well as useful metrics, assisting in making business decisions in the future. Barcode Systems One of the most popular inventory management systems is the barcode system. It improves stock organization, boosts efficiency and accuracy. Barcode allows for instant product scanning, keeping the inventory levels updated automatically. The mobile barcode scanners also help further the scanning process speed. Some of the advantages are: Automatic inventory updates Speedy scanning Efficient stock movement between and within warehouses Fewer mistakes Quick transfers from packing, picking, and shipping Optimized documentation and reporting Radio Frequency Identification Systems (RFID) RFID tagging is one of the best ways to increase operation accuracy. The RFID system is active, covering a range of 300 feet, and works the same as a barcode system. Meanwhile, the passive systems are hand-held devices covering 40 feet scanning range. However, there are some downsides worth knowing: More expensive than a barcode system RFID tags carry more data that unprepared servers bog down Transitioning into RFID is expensive and requires specialized equipment Cloud-based systems Another effective solution is a cloud-based inventory management system. The app uses a subscription-based payment plan, thus lowering the entry cost. It also goes on with the updates, while you‘re continuing with your regular work. It is much better than an on-premise system which requires shutting down the whole program for any update. Furthermore, security is a big win. There is no need to worry about loss or corruption since you can recall information quickly at any time. The operation-critical documents are also easy to store. System Selection Choosing suitable inventory management systems is a daunting task. However, before setting for barcode, RFID or a cloud-based platform, ask yourself: What is the inventory type to work with? How big is the business? What is the deployment strategy to adopt? How much is the budget and do you need a new management system?
Tips To Sell Car Parts Online
A well-designed website with modern design elements enhances the user experience. It is capable of capturing the attention of visitors and increases functionality, especially for stores that sell car parts online. Key elements that increase visitor engagement include: Have Filter by Vehicles Effective product filters help the visitor find the products more easily. Without a filter for vehicles, there would be a long list of products that might not match the user’s requirements. The best website to sell car parts offers filters by vehicles so that only selected products appear in the search result. The visitor will have a better experience, and chances are higher that they will return for another purchase. Have Chatbots A chatbot is a virtual assistant that helps solve your customers’ concerns during their shopping. It is an essential element of the best website to sell car parts because they can easily manage customer requests and engage with them. Bots make it quick and easy for consumers to find car parts by quick response and recommendations, thereby turning visitors into leads. It can also collect and store data in your CRM, from which to derive valuable and actionable insights. In other words, Chatbots are of paramount importance for a company also. Have Loyalty Programs A loyalty program is a reward to the customer for his contribution to your business. This is a chance to win repeated purchases from your customers. Some tactics to entice customers are personalized discounts, rewards, free merchandise, coupons, etc. Have Various Payment Gateways Having multiple payment gateways makes the check-out process hassle-free and convenient. Buyers often have a preference for specific payment methods. If a website fails to provide the payment getaway customers want to use, chances are high that they will eventually cancel the purchase. Several payment methods are beneficial for the business also as they can rely on one method of payment in case the other fails or encounters any problem. Have Professional Images High-quality product images are essential for websites that sell car parts online. Having professional photos can easily make or break your online website. Product images capture users’ attention and help them understand the products better. What’s more, images can improve SEO ranking. Good pictures which are shareable can help generate positive brand awareness. Have Detailed Descriptions Writing compelling and detailed descriptions help to educate the visitor about the product and enables them to make informed decisions. Detailed descriptions, including features and users guideline, allow you to build trust with your shoppers and increase conversion rates. It’s also an important part of improving your SEO. In contrast, a poor product description can potentially turn someone away from a sale. Wrap Up The best website to sell car parts will have custom functionalities needed for the automobile industry to make searching and purchasing much easier.
