• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Inventory Strategy Is the Key to Profitable E-Commerce

Inventory Strategy Is the Key to Profitable E-Commerce

April 3, 2017
SupplyChainBrain

One of the primary benefits of omnichannel fulfillment is improved inventory performance and capital expense reduction from reducing safety stock. Market leaders are investing in order management and planning systems to make better use of inventory and working capital. But many companies are still struggling with the up-front work of establishing a good inventory system of record and processes that support inventory accuracy across all nodes.

The “which channel gets credit for the sale” debate must be settled and primary focus given to the customer. If not provided the proper incentive, store associates will often resort to protecting inventory for walk-in customers without fully understanding the impacts to overall cost and profitability. A balance is needed between maintaining store inventory for the walk-in customer and maintaining reserve stock for both e-commerce orders and retail replenishment.

Using stores for e-commerce fulfillment requires real-time inventory visibility, which is a challenge at the store or branch level where systems and processes have not historically been designed for that level of accuracy. Taking advantage of software tools, such as distributed order management (DOM) and enterprise order management (EOM) to optimize inventory, reduce costs and improve service, requires point-of-sale and inventory systems of record that support real-time visibility and accuracy.

Many companies initially outsourced e-commerce fulfillment to 3PLs, but now that online sales are growing by double digits, they are considering bringing e-commerce fulfillment in-house. This often creates difficulty in obtaining full visibility to accurate inventory and historical data on which to base inventory planning decisions. Even where historical data is available, omnichannel behaviors have shifted demand patterns such that history is only one of several indicators of future demand.

Inventory analysis may help identify the root cause of problems and determine whether a simple process change or a larger alignment effort is required. Are you being pushed by customers to shorten lead times? Are suppliers/partners pushing inventory up or down the supply chain in your direction? Do store processes and point-of-sale systems support inventory accuracy? Which omnichannel flows are customers using? Which ones do they want to use more? Any attempt at an omnichannel inventory strategy will fail until you understand what’s causing inventory to fall out of alignment with the business.

Over the next three years, companies should strive toward putting an accurate inventory system of record in place (ERP and WMS), achieving greater visibility and accuracy across the network and defining their omnichannel strategy. As part of the overall strategy, business leaders must decide whether the customer promise will be best cost or service leader. Rules for inventory deployment should flow from that. With these building blocks in place, you can begin configuring inventory management and planning tools and EOM systems to ensure you optimize inventory and get the most from your working capital.

The Outlook

Beyond 2020, retailers will continue to see volatility from e-commerce growth. This will continue to create uncertainty around where to place inventory and how much to deploy. Companies will need to consider investing now to build systems and processes that support omnichannel inventory visibility and accuracy. With B2B e-commerce growth outpacing B2C, wholesalers in particular need to sharpen their focus on upgrading and/or replacing older systems (WMS, ERP). Inventory can be the single-largest capital investment for the business, and how you choose to harness it will determine success.

RELATED CONTENT

RELATED VIDEOS

Logistics Logistics Outsourcing Inventory Planning/ Optimization Global Supply Chain Management Consumer Packaged Goods E-Commerce/Omni-Channel Retail
KEYWORDS consumer packaged goods E-Commerce/Omni-Channel Global Supply Chain Management Inventory Planning/ Optimization Logistics Logistics Outsourcing Retail Supply Chain Analysis & Consulting
  • Related Articles

    Mobile E-Commerce Is Booming, and eBay Seems to Be the One to Beat So Far

    In E-Commerce, the Race to Own the Last Mile Is Heating Up

    How Retail Is Adapting to the e-Commerce Age

SupplyChainBrain

100 Great Supply Chain Partners Issue 2009

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: Biden Sees Fast Rollout of J&J Vaccine; Astra CEO Defends Delivery Shortfall

    Coronavirus
  • West Coast Port Congestion

    Shippers Need Alternatives to West Coast Port Congestion

    Logistics
  • Mexico

    The Near-Shoring Trend: Will China’s Loss Be Mexico’s Gain?

    Logistics
  • Robotic automation

    Autonomous Supply Chains Are on the Horizon

    Coronavirus
  • Drugmakers

    Research Lays Groundwork for More U.S.-Made Drugs

    Coronavirus

Digital Edition

Scb feb 2021 lg

2021 Supply Chain Management Resource Guide

VIEW THE LATEST ISSUE

Case Studies

  • Remote Implementation: A Dose of the Right Medicine for B2B Pharmacy

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

Visit Our Sponsors

6 River Systems ArcBest Armada
aThingz BluJay Burris Logistics
DSC Logistics DCSA (Digital Container Shipping Association) DHL Resilience360
Genpact Geodis GEP
Honeywell Intelligrated Infor Logility
Magnitude Software MPO Old Dominion
Oliver Wight OpenSky Ports America
Purolator QAD Precision Red Classic
Riskmethods Snapfulfil TGW Systems
Transportation Insights Watson Land Company Westfalia Technologies
Workjam Yang Ming  
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2021 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing