Multi-Channel Inventory Management: A Guide to Assured High Returns

Shefali Vasave | May 18, 2022 | 565 views
MULTI-CHANNEL INVENTORY MANAGEMENT
Multi-channel selling is a significant component of manufacturing. Modern buyers expect more from their buying experience, and one of them is being able to access different touchpoints to make a purchase. It is a challenge that modern businesses must address. And it all starts with prudent warehouse inventory management. But how can businesses stay ahead of the curve with a complex web of retail, wholesale, ecommerce, and logistics? This is precisely where multi-channel inventory management comes in.

Multi-channel inventory management is the process of managing and keeping track of inventory sold from multiple locations through various selling channels. In this article, we will talk about how smart inventory management for a business with multiple sales channel can increase profits when done right.


How C-Suites Can Unravel the Complex Web of Multi-Channel Selling

When it comes to optimizing and addressing challenges in inventory management, warehouse management software is known to do wonders. But, when a business uses multiple channels to reach out to more consumers, generate more sales, and increase brand awareness, it also merits a holistic strategy.

Management at the inventory level is key to fully unlock its revenue potential in a multi-channel marketplace. When C-levels are looking for ways to optimize operations, inventory management presents a massive opportunity. It is possible to solve many bottlenecks using proven strategies and established information and automation best practices.

“Continuous process improvement by definition is ongoing. A static value proposition is hackneyed in no time.”

Thomas R. Cutler, President and CEO, TR Cutler, Inc.


Loss from Overstocking and Phantom Stocks

Unoptimized inventory allocation is one of the costliest and most common challenges faced by multi-channel businesses. According to research commissioned by OrderDynamics, businesses worldwide lose over $471 billion from overstocking and $634 billion from out-of-stock orders.

As a multi-channel seller, you must ensure that each channel has the corresponding inventory. Not doing so can lead to order cancellations or delays, or unsold stock. All of these can significantly reduce your profit margin.


The Solution: Real-time Inventory Visibility

Giving your warehouse managers the clarity they need in manufacturing inventory management can tackle the problem of overstocking. In addition, inventory management tools update inventory levels in real-time, so they don’t have to keep a close eye on inventory at every channel. Additionally, a synchronized inventory storage system can also help boost productivity and improve customer experience.

Whether you use a periodic or continuous inventory management system, adding automation and integration with other tools will only help in providing clarity and flexibility.


Slowdown in Logistics Due to Unoptimized Warehouse Space

Distributed inventory is another aspect of multi-channel inventory management that can be used to create more traction and profit. Warehouse space is valuable for multi-channel businesses.

With scattered locations and fluctuating demands, it can be difficult to forecast the optimal distribution of inventory across all channels as well as warehouse locations.

According to manufacturing.net, about 20 to 30% of the inventory in a warehouse is obsolete. This clearly indicates the need to fully utilize storage and eliminate hurdles in warehouse inventory management.


The Solution: Supply Chain Forecasting

A combination of automation technologies can be used to build a multi-channel inventory management stack. The first is using demand sensing, an automation technology that uses real-time data to identify and anticipate short-term demand patterns. Sporting apparel giant, Nike has used demand sensing to effectively cut down on lead times by weeks.

Another technology to consider in optimizing your warehouse space is Multi-Echelon Inventory Management, or MEIO. It has a holistic approach where it performs planning, optimization and forecasting across the supply chain. MEIO is also the answer to the scalability of modern multi-channel inventory management that offers comprehensive visibility and efficient rebalancing of inventory in real-time.

Considering that 51% of sellers still lack forecasting software, as per a Zentail survey, the opportunity for C-levels is immense.


Final Thoughts: Getting Impressively High Returns

When done right, optimizing all aspects of multi-channel order management can yield impressive returns. The use of technology in automation and data analytics makes it easier to decode the complexities of a multi-channel operation. A storage and inventory management system may not have all the answers to the profitability puzzle. It is assured to lead to reduced inventory costs, improved performance of the supply chain network, and better responsiveness. This inevitably creates a powerful revenue generating multi-channel business.


Frequently Asked Questions


Can my existing ERP work as multichannel inventory management software?

ERPs like SAP, Netsuite, or Oracle are designed to manage back-office processes and lack the specialization required to manage ecommerce and wholesale processes. Although they come with integrated solutions, their quality may not be up to the mark.


What is the cost of multichannel inventory management software?

While inventory management software ranges from free to thousands of dollars, the base price varies as per functionality. Some software services charge extra depending on the scale, volume, and integrations.


What are the primary techniques of inventory management?

Most manufacturers use three primary techniques to address challenges in inventory management: the pull strategy, the push strategy, and the just-in-time (JIT) strategy.

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