Inventory is closely related to capital, customers, sales, suppliers, procurement, logistics and other activities. In e-commerce operations, the multi-level inventory deployment method is no longer advisable. The warehouse management system (WMS), store system (ERP) and the inventory of the merchant backend of the e-commerce platform should establish a synchronization mechanism. Too much or too little inventory is not optimal. There are several key points in inventory management.
(1) Ensure inventory safety. In theory, when the product inventory is insufficient, the seller cannot apply for delivery. The overseas warehouse must ensure that the process and results are accurate, so the responsibility for the store overselling is not the overseas warehouse. The seller should replenish inventory, set a safety inventory, and prevent the risk of overselling. For example, when the product inventory drops to 0, implement an inventory synchronization mechanism, trigger the ERP to remove the goods from the store backend, or automatically change the product location (Item Location) to the direct mail location to prevent out-of-stock disputes from affecting the performance of the store account. The stocking of best-selling products should take into account the delay in transit. Usually, after a batch of best-selling products enters the warehouse, preparations are made for the next stocking.
There are two important quantifiable indicators for product market competitiveness from the perspective of inventory performance. The specific formula is as follows:
· Inventory turnover rate = (inventory volume – outbound volume) x 100% (amount or quantity). Its reciprocal is the “turnover days”, which is used to measure how many times the inventory can be turned over in a period of time. It can reflect the popularity of the product. The larger the value, the faster the turnover, but fast turnover does not mean less inventory;
· Product sales rate = (number of outbound SKUs ÷ total number of inventory SKUs) x 100%, which reflects the sales activity of the product category. The smaller the value, the more unsalable products there are, but the larger the value does not mean high sales. A value greater than 100% may mean out-of-stock, discontinued sales, or category loss.
(2) Improve inventory performance. Use the ABC classification method and Pareto principle to identify the “critical few” and focus on management. Class A best-selling products with high sales rates are most suitable for overseas warehouses. The inventory of Class C products should be strictly controlled. The principle of First In First Out (FIFO) is applicable to commodities that are easy to become obsolete and whose market prices are generally on a downward trend. The inventory balance at the end of the period is calculated based on the final purchase price, so that the inventory valuation at the end of the period is close to the market price and reflects the business status more objectively. Strict FIFO operations require batch management. If the SKU is not labeled with a batch number, different batches of goods cannot be mixed. Usually, it is more reasonable to use FEFO (first expired, first out) or FPFO (first produced, first out). ASN forecasts are required or relevant dates are collected when the goods are put into storage.
(3) Reduce inventory. Controlling inventory is, in a sense, controlling cash flow from operating activities. Professional software should be used to visualize the entire inventory. Otherwise, it will be difficult to uniformly manage the inventory at different links, different platforms, and different warehouses. Before actually placing a purchase order, it is necessary to comprehensively analyze factors such as overseas warehouse inventory, first-leg in transit, domestic warehouse inventory, purchase in transit, sales plan, promotion, and peak and off-peak seasons.
(4) Ensure the accuracy of inventory. Inventory count is an important daily task of the warehouse, including the accuracy of product storage quantity, location and quality, and is also the key point of warehouse quality management. Due to factors such as warehouse conditions, product characteristics, frequent entry and exit, and human operation, the warehouse has uncertain profits and losses during each inventory count. The accuracy of the two links of receiving and shipping is the most important. When the operation is stopped, the warehouse WMS generates an inventory comparison report on a daily basis (depending on the time zone where the warehouse is located), compares the inventory with the store ERP, generates a report on the inventory comparison differences on both sides, or automatically generates an inventory task, and adjusts the inventory after the warehouse inventory count. The inventory count results are synchronized to the merchant ERP and the store backend to update the number of products on the store shelves.
In the daily warehouse and distribution activities of e-commerce enterprises, orders are concentrated on some active SKUs. Afterwards, only these SKUs with changes can be counted and reorganized; or different cycles and proportions of inventory plans can be set for SKUs with different focuses of ABC products, that is, cycle inventory, such as 10% of the rotating inventory every week, and regular full inventory of the entire warehouse on a monthly/quarterly basis. Different inventory methods such as dynamic inventory of incoming goods, key inventory of cargo owners, single product inventory, and regular full inventory can be used to detect abnormalities in time. In order to ensure the accuracy of the remaining goods when returning the warehouse, the inventory of the owner of the returning warehouse must be fully counted so that the return and handover can be made truthfully. The system should support recording dynamic inventory, reproducing the inventory situation in historical periods, and facilitating financial settlement review.
The system automatically compares the actual inventory data with the inventory results. If the account and the goods do not match, and the difference is significant, it is often necessary to re-count and take remedial measures to avoid affecting customer orders. If the difference in inventory quantity and quality is not large, the owner’s understanding can be obtained through adjustment of accounts, replenishment, compensation, etc., to avoid disputes over time. Internally, problems should be reviewed in a timely manner and profits and losses should be calculated. Regular inventory tallying is necessary. The inventory should be cleaned and sorted, and the goods should be placed properly, the goods in adjacent shelves should be distinguished, and overdue and abnormal items should be cleaned up. This can greatly reduce the workload during inventory counting. Tools, materials, gifts, promotional materials and various damaged items should also be centrally stacked and accounted for separately.