Item Management Best Practices in a Multi-Channel Environment

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Doors are opening all over the web for manufacturers, wholesalers and retailers to sell their goods through multiple channels.  In addition to traditional brick-and-mortar stores, many companies are expanding their reach and increasing revenues through online stores and marketplaces like eBay and Amazon. Without a good plan to manage items, the cost of inputting item information to your online sales channels and managing inventory can quickly negate your profits.

To operate a multi-channel strategy that maximizes margins and provides a great shopping experience for buyers, follow these steps:

1.     Designate an item master management system

Many companies jump into eCommerce without realizing that their online store will have different requirements for item information than their brick and mortar store. Careful planning and organization is required to keep item information consistent between sales channels. The best way to organize item information is to create a single location for your item master data. An item master is the primary record of an inventory item that contains detail to help with procurement, planning, forecasting and replenishment. Retailers should designate one system to provide a comprehensive record of all inventory items regardless of which sales channel(s) sells the item. That same system should also maintain the master inventory counts for items. Common item master locations are enterprise resource planning (ERP) and point of sale (POS) systems.

 2.     Integrate your item master data with your sales channels

It’s critical to avoid manually entering item data into the systems that power your various channels. Data errors can mislead buyers and result in order, pricing, or inventory errors – all of which will ultimately discourage customers and negatively impact your reputation. Add to this the cost of correcting errors – which can include everything from time for a resource to manually research data corrections to return shipping and handling fees for items shipped in error – and you can quickly see how one error cuts into your profit margins.

Even if the data is initially entered correctly, ongoing manual changes are a maintenance nightmare.  Not only does the risk for errors escalate as time goes on, but key entry is very slow which affects the accuracy of the item inventory updates on your web store or marketplace. This disconnect results in errors, angry customers and canceled orders.

3.     Automate inventory synchronization

When you add an online store or marketplace, you must also figure out how to handle multiple locations pulling from inventory. If items are loaded manually, it’s likely that inventory will be managed manually as well. Customers who have attempted this complicated feat report that it can take 5-6 hours a day just to track inventory – an impossible pace to maintain especially for small businesses with limited staff.

Not only is manual tracking time consuming, but if inventory information is delayed it’s difficult to know the real inventory count at any given point in time, meaning channels are more likely to sell items that aren’t in stock, disappointing customers and hurting sales. On the other hand, if you over-replenish you could wind up carrying too much inventory and tying up cash that could be better used elsewhere.

A more efficient choice is to automate the synchronization of inventory so when items are purchased/sold, inventory is immediately added/reduced from the item master. As those quantities are updated, inventory counts are automatically pushed to all sales channels.  Automation enables near real-time inventory counts for each sales channel which reduces stock outs and improves customer retention. Feeding real-time, accurate order information to the system where you master your items also helps you monitor product activity and inventory turnover and enables more accurate planning and forecasting.

4.     Manage items with a multi-channel management platform

Many marketplaces and eCommerce platforms can manage item information and track inventory but their vision is typically restricted to data located within that sales channel. Furthermore, they tend to have limited communications to other systems (many times it’s simply email), which still leads to manual key entry once you receive the data. A multi-channel management (MCM) platform, on the other hand, acts like a hub for multiple sales channels by integrating POS, ERP, eCommerce and marketplace solutions together to automate the entire order-to-cash cycle.

From an item and inventory management perspective, an MCM platform collects item data and inventory counts from your item master and pushes it to all of your sales channels using established business rules, and then provides ongoing updates as it detects item or quantity changes. It also provides a management console so you can choose which items to include in which channels and set thresholds for inventory levels so the system can automatically remove items from one or all of your sales channels when inventory counts are low to avoid the threat of stock-outs or canceled orders.

Some MCM platforms can also extend to import item information from third-party suppliers and manage inventory for drop ship items by importing inventory levels directly from suppliers and routing orders to them for fulfillment.

Following these steps to automate your item and inventory management processes offers both external and internal benefits. Externally, customers will have a more consistent, satisfying shopping experience, while internally, you can increase efficiency and free up resources to focus on activities that are more advantageous for your business, like sales and marketing.

by nChannel

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