The Internet in E-commerce: Inventory planning and order management
-- Anjana Srikanth
This article explains what order tracking and inventory management can
do for any business that indulges in e-commerce. We've assumed that you've
made the decisions about how many plants and warehouses you own, whether
you need to stock inventory and if so, at how many locations and what
Most of the time the job of forecasting demand and replenishing inventory
to suit the demand is not accomplished in a manner that is useful. We'll
tell you how to collaborate over the Internet on order management, inventory
management, and demand forecasting, production scheduling and transportation.
We'll describe how through collaborative planning on the Internet, consumer
behavior can be communicated throughout the organization.
Scenarios: What happens when a customer contacts you and asks
for a product that he wants immediately and you discover that your warehouse
doesn't stock it at that moment? And if this happens after the item has
been logged in as a confirmed order? Are you able to respond in a timeframe
that's suitable to your customer?
What happens if the customer contacts you through telesales, or through
online sales on the web? Is your staff able to respond accurately to the
customer's query? In the process are you really making money in these
deals? What do you need to ensure that you are not in a situation where
you are in the dark about orders and inventories, and maybe even customers?
We know that customer orders drive a supply chain. A primary requisite
for any e-commerce business is that it employs systems that manage orders
and inventory levels efficiently.
When customers demand service through multiple channels, order promising,
tracking and fulfillment become more complex and intensive. Multiple channels
could mean customers calling in through the web; phone, fax or email and
usually different people attend to these calls in an organization.
Disparate order processing can lead to serious gaps in demand and fulfillment.
If order commitments are not honored throughout the enterprise a consolidated
order status at any point of time can be difficult to view and this difficulty
may in turn to be communicated to the customer.
Consolidating orders into a single interface for submission, tracking,
routing, fulfillment, and order status queries, can help all employees
access vital information from a common interface thus ensuring visibility
in the entire process. And if this visibility is in turn communicated
to the customer, it means that the customer has a complete picture of
the status of his order until the final delivery. Customer order history
implies viewing and managing pending orders by status, accessing order
numbers by invoice numbers, tracking number or customer.
Order management services:
Order management services are a critical component of customer service
- enabling internal communications within an organization and facilitating
collaboration among trading partners to ensure that all customer orders
are fulfilled and delivered when promised.
Profitable order management features can afford the following:
- Consolidated order management that lowers costs in turn.
- Advanced order commitment and tracking that can in turn help improve
- Allocation of inventory and products in a profitable manner.
- Automation of workflows through order management processes·
Order visibility (order tracking)·
- Optimized price lists and customer quotes to maximize margins ·
- Consolidation of order data to support enterprise forecasting and
- Significant increase in the visibility of demand and future requirements·
- Elimination of repetitive tasks and physical paper handling ·
- Addition of the value of availability to a product·
- Reduced lead times, reduced administrative workloads and the use
of multi databases·
- Optimization of catalog price lists for profitability.
One of the largest costs to any business is that of inventory or stock
at hand. Whether a manufacturer, retailer or distributor, the amount of
inventory held directly impacts your bottom line in more number of ways
than you can imagine. Having too much cash tied up by not stocking up
on items that customers need, can have a major impact on your business.
A product that is in excessive demand is usually extremely difficult
to manage. Supplying the right amount of products implies that an accurate
demand forecast is essential. This impacts the entire supply chain. A
similar situation exists at the warehouse level and even the manufacturer
Continuous replenishment in a warehouse can become a mammoth task if
consumer response is not studied accurately. To facilitate efficient consumer
response based on consumer demands, warehouse data, sales forecasts, and
inventory planning, it becomes imperative that such companies consider
inventory management seriously. Making accurate demand and supply predictions
is an ideal situation that anyone in the supply chain management arena
could dream off.
Inventory management can remove barriers between manufacturer and retailers
and establish a closer relationship between them. Ideally inventory management
should be easy as the main aim is to reduce inventories. If items wanted
are not at hand or even if merchandize wanted is reordered often, sales
will be lost to competitors. Precise control of inventory is an essential
ingredient for a successful company.
The 3 main aims in inventory management are:
- Improved customer service
- Reduced inventory investment
- Increased productivity
Benefits of inventory management:
- Complete control of inventory.
- Complete information about the value of the inventory·
- Complete visibility on Quantities on hand, Quantities committed and
- Response time to demand changes reduced·
- Increased sales
- Knowledge of the exact size of merchandizing inventory·
- Frequent analysis of purchases, sales and inventory records.
- Removal of unnecessary use of warehouse space used by unneeded part
- Reduction in excess merchandize stock.
- Taxes and insurance premiums paid on excess merchandize inventory
By providing timely accurate information pertaining to inventory location,
movement and valuation, receipt of goods, sale and return of goods and
profits you can make sure that your inventory is visible throughout a
With inventory management you can set your product catalog to hide products
that are not in stock, or change prices based on the amount of products
available in the warehouse. The quantity available can be displayed to
the shopper and this can prevent unnecessary confusion when the shopper
adds items not available to a shopping cart. The store buyer can be automatically
notified about low inventory levels.
IT is a key enabler in the transformation of purchasing into a strategic
business function. The challenge is to find a way to put these technologies
to use and create value and competitive advantage.
Contact us for innovative ideas and solutions in creating and building
online stores with advanced features like Order management and Inventory
management. Check out our e-store packages.
Link to the Viking case study in the site
Link to the article on webenabling the distribution network in the site
Link to supply chain article in the site
Link to CRM article in the site