Conquering Omnichannel with Optimized Inventory Management

With the velocity at which digital technology charges ahead, what was the province of massive retailers just a few years ago is mainstream today. Customers have become accustomed to the extreme convenience, immersive shopping experience, and speedy delivery afforded by the likes of Amazon and Target, and they expect the same from businesses of all sizes.

Omnichannel commerce levels the playing field.

As software solutions have emerged and barriers to entry lessened, small and medium-sized eCommerce merchants can now sell wherever their customers are, dramatically expand their fulfillment options, and provide comprehensive customer support. Across all channels.

At SkuNexus, we understand that hurdles lie in how well those same companies can execute, and that at the heart of any successful omnichannel strategy is optimized inventory management. An omnichannel inventory management system (IMS) empowers retailers to synchronize inventory across multiple channels simultaneously and in real time. This includes online stores, brick-and-mortar locations, marketplaces, and social media, et al. 

Benefits of Omnichannel Inventory Management

Managing inventory effectively across multiple channels can be exceedingly challenging for eCommerce merchants. Using manual methods or disconnected digital solutions often leads to inaccurate data, unexpected stock problems, and lost sales. In any successful omnichannel retail operation, the IMS will serve as a centralized single source of truth to help establish order and provide control over your inventory.

Before we discuss the tips, let’s take a quick look at benefits of proper inventory management within an omnichannel model. 

1. Higher Accuracy
Knowing exactly what you have is crucial data both for your customers on eCommerce platforms as well as for demand forecasting and determining reorder points. Knowing where that inventory is stored is necessary for correct order routing and fulfillment.

2. Better Demand Planning
Manual inventory management lacks the ability to perform multiple functions simultaneously. An inventory management software system, however, can process a vast array of information including current orders, seasonal trends, and supply chain data. Armed with this wealth of knowledge, it can predict future demand and make timely purchasing recommendations.

3. Prevention of Backorders/Stockouts/Excess Stock
This lies at the essence of optimized inventory management. While supply chain issues can sometimes be unavoidable, the deep insight provided by accurate inventory data helps merchants greatly reduce the time items are out of stock or being held in excess.

4. Reduced Carrying Costs & Increased Cash Flow
Inventory carrying costs include storage, transportation, and materials handling as well as all labor used to perform those operations. They also include insurance, depreciation, opportunity costs, and of course, taxes. Simply put, stock is a cost until it is sold, and the greater the excess on hand, the greater the carrying costs.

5. Greater Productivity & Improved Fulfillment
One of the inherent benefits of automation is removing burdens from staff, freeing them to do more impactful work. Omnichannel inventory management is no different. Manual processes or spreadsheets are replaced with a technology-driven system that is updated automatically and provides vastly more complete, actionable data.

Organized inventory yields an organized warehouse which helps employees better fulfill orders. Greater accuracy and reduced errors go hand-in-hand and pick/pack/ship operations can function at a greater speed with no dropoff in performance. In addition, strategic distribution of inventory (if multiple fulfillment locations exist) can aid in the reduction of delivery times.

Tips for Optimizing Omnichannel Inventory Management

1. Supply Chain Transparency & Integration
The number of different channels does not stop at sales and fulfillment - it extends to the supply side of the equation as well. A holistic system incorporating accounting, vendor management, inbound shipping, and all other relevant business operations creates a comprehensive platform that works across the entire organization. 

The result is a streamlined, efficient process in which silos are removed and free-flowing inventory data may be used effectively throughout the enterprise.

2. Order Management - Tracking
The challenges of fulfillment across various channels are many - partial fulfillment, dropshipping, and/or split orders from multiple vendors and locations just to name a few. To ensure that orders are delivered accurately and efficiently, it is essential to have a reliable order management system integrated with your other retail operations. This system allows you to track orders at every step of the process, make adjustments as needed, and keep customers informed about their delivery status.

3. Distributed Inventory
As a business grows and demand increases, it must also expand its logistics operations. This does not necessarily just mean the addition of more warehouses. In-house fulfillment may be combined with inventory stored at outsourced 3PLs to extend geographic reach. Dropshipping can also provide options for less popular items a merchant may not keep on hand or, in contrast, a safety valve for extremely popular ones. Whatever the solution(s), in order to effectively manage inventory across multiple locations, a centralized inventory management system is needed to unify all distribution under a single system.

4. Expanded & Streamlined Return Options
Regardless of whether a customer returning purchased products has a dropoff locker in the lobby of their hi-rise building or needs to drive to a regional post office, they should receive return labels within the original packaging. The ability to use the same parcel to return the items with free return shipping has become a de facto eCommerce standard.

Considering how popular a shopping option BOPIS (Buy Online Pickup In Store) has become, it should come as no surprise that more stores now offer BORIS (Buy Online Return In Store) as well. This not only gives customers more choices, but also presents an enormous opportunity to online retailers who have physical locations. The ability to get shoppers into the store can pay dividends with additional sales and face-to-face marketing initiatives.

5. Regular Cycle Counts
Cycle counting is a method of counting certain products on a regular basis to help companies confirm inventory levels reflected in their IMS. Whereas annual (semi-annual, quarterly) physical inventory counts involve shutting down the warehouse, the limited scope of cycle counts allows businesses to save money by performing them during normal working hours.

Several methods of cycle counting exist, but the most common ones involve counting the highest-in-value items to the company (revenue-generating, most frequently ordered, etc.). Other options include conducting counts for random SKUs scattered around the warehouse or focusing on a specific area. Whatever methods a company feels comfortable using is entirely up to them.

Regardless of the strategy used, the ultimate goal of cycle counting is to identify and rectify discrepancies between data and physical products, and above all else, maintain control of inventory.

Managing inventory across multiple channels can be a daunting operation for any business, but it is crucial for any retailer competing in eCommerce. Creating a seamless experience for customers, offering a variety of fulfillment options, and making returns as convenient as possible form the basis of a winning omnichannel playbook. When combined with free-flowing, un-siloed data and rigorous inventory control, the results can be remarkable.

At SkuNexus, we design management software solutions to help online retailers achieve those remarkable results. If you would like to see more about what we can do for your company’s omnichannel aspirations, please schedule a demo.

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