The great majority of order-fulfillment discussions today focuses on automation and robotics. With the growth of labor-intensive e-commerce orders, and the challenge of finding enough qualified employees, those topics are certainly justified. But no matter how efficient an operation might be, without access to the products the customer is looking for, there’s no order to fulfill.
A recent survey estimated that 15% of sales are lost due to the retailer not having products in stock. And while most companies find that efficient financial management of inventory will result in some lost sales, stockouts of 1%-2% are generally considered more acceptable. Following are a couple of key points to consider, when seeking to reduce stockouts and gain customer confidence:
- Inventory Management: The recent trade wars and COVID-19 outbreak have resulted in U.S. inventories being reduced to their lowest levels in over five years. Now more than ever, it’s important to make sure you have the right amount of inventory of the right products. Many businesses today use manually manipulated spreadsheets or even a “gut feel” to determine when to order products and how much. There are a variety of inventory-management software packages available that can meet the needs and budgets of most companies, and will greatly improve product availability.
- Inventory Accuracy: In the world of e-commerce, the only thing worse than not having the product a customer wants is first indicating that it’s available, then having to inform the customer that the item in question is in fact not on hand. The customer has now unnecessarily gone through the online purchase process, plus any corrective actions, and will view the experience as unsatisfactory. More than 60% of online customers have had this disappointing experience with an e-commerce service, and are more likely to leave reviews or tell others about their experience than are satisfied customers. To ensure accuracy and success in fulfilling orders, it’s key to have a consistent cycle-counting process that maintains inventoried quantities.
Outlook
By some estimates, e-commerce is expected to make up more than 90% of all retail sales by the year 2024. With thousands of e-commerce sellers being added each year, online retailers need to provide consistent, reliable service to stand out and grab their share of the market. It all starts with having the products the customer is looking for in inventory and in stock.
Greg Kreis is a Principal with Tompkins International.
