The growth of e-commerce business demands effective inventory management. With the expansion, it becomes vital to maintain customer satisfaction, streamline operations, and proper cost management. Enterprise Resource Planning (ERP) systems are comprehensive solutions that, when integrated help growing e-commerce businesses to overcome inventory challenges. This blog discusses some strategies to leverage ERP in inventory optimization and growing eCommerce Businesses with ERP.
Utilize the real-time inventory planning capabilities of an ERP system. This data provides accurate insights into stock levels, product availability, and demand across all sales channels and warehouses. As a result, businesses prevent themselves from stockouts and overstocking.
Centralized Inventory Control:
ERP is capable of handling large volume of data from different sources like point of sale , eCommerce store etc. It provides a unified view and a single source of truth for all inventory data, reducing the risk of discrepancies and errors caused by multiple data sources.
ERP has a strong analytical capabilities and available add-ons to forecast demand based on historical data, seasonal trends, and market dynamics. Demand forecasting enables to align and keep the inventory levels up to date.
ERP allows to setup a reordering policy and defining a threshold , safety stock etc. These all combined generates a replenishment alerts/trigger to produce purchase order when an inventory level goes below the mark. This automation saves time and makes processes efficient without manual intervention.
Just-In-Time (JIT) Inventory:
Apart from demand planning according to forecast, ERP allow to implement a JIT inventory strategy or order to order basis in case items are too expensive to stock or have a shorter shelf life. Overall this helps to minimizes carrying costs by ordering or producing only when needed. This process eliminates excess inventory and the associated holding costs as per business requirement.
Batch and Lot Tracking:
ERP facilitates the batch and lot tracking. Particularly if business deals with perishable goods, serialized items, or products with specific manufacturing dates, delivery on time is crucial. Better traceability ensures better control and fulfilment rates.
Safety Stock Management:
ERP allows to setup safety stock levels to cater unexpected demand spikes, supplier delays, or any other unforeseen disruption. Adjust safety stock of each product as per demand based on historical data and achieve excellence in supply chain.
FIFO and LIFO Management:
Implement First-In, First-Out (FIFO) or Last-In, First-Out (LIFO) inventory management strategies using ERP system. This regulates the inventory in a way to sell an older stock first, minimizing the risk of obsolescence.
Returns Management Integration:
Integrate returns in ERP system to update inventory levels and adjust the accounts accordingly. This helps in correct inventory valuation, return rate and their reason.
Data-Driven Decision Making:
Use the analytical capabilities of an ERP to analyze inventory performance, turnover rates, and carrying costs. Data-driven insights helps making informed decisions on optimizing inventory levels and replenishment strategies.