Adopting a Stockless Inventory System for Your eCommerce Business
In almost all inventory delivery programs, vendor-customer alignment is necessary to ensure that goods get to where they are supposed to. By moving critical distribution tasks from the facility to the distributor, alternative eCommerce stockless inventory systems enable suppliers to cut on-hand supplies. What is a stockless inventory system? A stockless inventory system is an inventory system where the business does not carry any physical inventory. All inventory is managed and tracked through computerized systems. This type of inventory system is often used in eCommerce businesses. There are many benefits to using a stockless inventory system for your eCommerce business. First, it can save you a lot of money. You will not have to pay for inventory storage or shipping inventory to your customers. Second, it can manage your inventory more efficiently. You will be able to track inventory levels and order more inventory when it is needed. An eCommerce stockless inventory system can help to prevent stockouts and ensure that your customers always have access to the products they want. Adopting a Stockless Inventory System: The setup If you are considering adopting a stockless inventory system for your eCommerce business, there are a few things that you should keep in mind. Every eCommerce stockless inventory system should aim to reduce on-hand inventory while enhancing product availability without generating more replenishment activity than is necessary to offset the cost savings. Clients that attempt to pack supplies into areas where their replenishment levels or procedures are arbitrarily defined are frequently the best candidates for stock-out situations. Stockless merchants demonstrate how spaces may be used for commercial benefit using this old inventory procedure as a teaching tool. To estimate the optimum replenishment levels, suppliers must first collaborate closely with providers to understand the items consumed and their intended uses. You have to work together straight away from the outset. Instead of lecturing clients on what they are doing incorrectly, it is more important to teach them how to hit par levels and comprehend what is truly in stock at any particular time. For this reason, provider storeroom reports—which indicate what is distributed onto the floor and might provide more useful product use information than vendors can gather from bulk shipping records—might be the most useful for setting up stockless operations. Using an eCommerce stockless inventory system will pay off in the long run All stockless delivery methods have a few advantages that can save asset costs and boost efficiency for providers: Enhancing Inventory Visibility and Planning Maintaining accurate inventory visibility is essential in a stockless inventory system to prevent stockouts and overstock situations. BackOrder integrates seamlessly with your existing inventory management systems, providing real-time updates on inventory levels and backorder quantities. With precise inventory data at your fingertips, you can optimize inventory planning, minimize stockouts, and maximize the efficiency of your stockless inventory approach. Improving Operational Efficiency Managing stockouts and manual inventory adjustments can be time-consuming and prone to errors in a stockless inventory system. BackOrder automates the backorder process, reducing the need for manual intervention and freeing up valuable time for other business tasks. By streamlining inventory management processes, BackOrder helps you operate more efficiently and focus on growing your ecommerce business. Addressing Stockouts with BackOrder While a stockless inventory system aims to minimize on-hand inventory, it also increases the risk of stockouts, where popular items run out of stock unexpectedly. This can lead to lost sales and frustrated customers. By implementing BackOrder, you can seamlessly manage stockouts by automatically switching products to backorder status when inventory levels hit zero. This ensures you never miss a sale and maintain customer satisfaction, even with minimal on-hand inventory. In Conclusion, Although stockless conversions initially demand high levels of cooperation and confidence between vendor partners, after the model develops and achieves a certain comfort level, it no longer requires such high levels of collaboration and trust. Indeed, all required is proper account management and frequent client business evaluations to fulfill demands. Contact us today to learn more about how to adopt an eCommerce stockless inventory system for your eCommerce business.
Calculating Inventory Holding Cost for Your eCommerce Store
Businesses frequently pay inventory holding costs when keeping items at a warehouse. Learn how to determine your eCommerce inventory holding cost as well as the typical cost of holding expenses in this post. What are inventory holding costs? The total expense of keeping unsold goods on hand is referred to as inventory holding costs. Inventory holding costs are calculated as a percentage of total inventory costs within a particular supply chain. There include expenses for storage, insurance, labor, transportation, depreciation, inventory shrinkage, damaged or spoilt goods, obsolescence, and opportunity costs. How to calculate your eCommerce inventory holding cost Determine your storage, personnel salaries, inventory depreciation, and opportunity expenses before calculating your eCommerce inventory holding cost. Divide the total of these sums by the yearly inventory value to obtain the total. Your inventory holding cost is the resulting value stated as a percentage. Simple storage costs The simplest definition of inventory holding costs is that they are just the expenses of keeping stock. Although this is oversimplified and doesn’t fully explain the situation, it offers retailers a helpful place to start and may inspire fresh ideas for approaching inventory costs. Detailed holding costs A method that considers storage, personnel, opportunity, and depreciation expenses provides a more thorough way to determine the eCommerce inventory holding cost. The holding cost formula is ultimately stated as a percentage of the overall worth of your inventory. It is as follows: Inventory Holding Cost = (Storage costs + Employee salaries + Opportunity costs + Depreciation costs) / Total value of annual inventory. Subtotals should be calculated, totaled, and the result divided by the value of your annual inventory (the combined average value of all inventory you move in a year). How much are holding costs on average? Typically, holding costs account for 20% to 30% of a company’s overall cost of inventory, with the cost of goods sold and ordering expenses accounting for the remaining 70% to 80%. eCommerce inventory holding cost can vary significantly based on a number of variables, including: In Conclusion, The long-term success of your company depends on finding an inventory storage solution with reasonable holding costs, yet the cheapest storage option isn’t necessarily the greatest option for your company. In other words, what works well for one company won’t always work for another. Contact us today to work with our experts in the eCommerce inventory holding cost and storage in general, and find the best solution for your business.
