Issue Date: 25 March 2020
Inventory Optimisation in the Cloud
By Alex Mills, Sales & Marketing Director at ProSKU
Businesses need to maintain a balance between stock availability, which is usually a good thing, and carrying too much inventory, which is generally not. Getting this right is a headache for any business but it can be doubly problematic for a smaller enterprise, and without effective stock control, time consuming and expensive. Some may struggle with paper-based processes or spreadsheets while others may use basic functions in accounting, sales or online applications. But none of these compares with a proper WMS, and while traditional managed solutions may be beyond the budgets of growing businesses, the new generation of cloud-based WMS can offer fast, inexpensive implementation and fixed monthly pricing to create a real step-change alternative.
Getting stock levels right is important. Availability and the ability to deliver quickly is the lifeblood of any supply business. Studies show that customers buy from suppliers that can demonstrate they have the item and when it will be delivered. They are less likely to buy from a business that cannot. A WMS allows a supplier to maintain a real-time inventory manifest. At a simple level this means stock availability can easily be checked. But when a WMS is integrated with the supplier’s website or e-commerce applications the information can be presented in real time to potential online customers.
Behind the scenes the WMS can also ensure that stock is available and ready to sell. If stock levels fall below predetermined levels, it can flag an alert or trigger an order (by integration with other systems if needed) for replacement stock. When this arrives in the warehouse it can be allocated storage space and immediately made available for sale. Integrating a cloud WMS with e-commerce applications gives the business the maximum opportunity to satisfy customers without disruption, and much of this can be managed by the WMS.
Overstocking can also be problematic. All stock takes up space and excess stock will cost more to handle and store. It also prevents the business from extending its stock lines without expanding its storage facilities, which can be even more costly. But there is an additional problem with having too much stock. A business may have invested in materials to produce goods or committed to buying items from suppliers for resale. In both scenarios excess stock ties up cash that is only released when items are sold at a future point. It follows then that even a modest reduction in stock levels can release cash to use elsewhere in the business or improve the bottom line. A cloud WMS helps to optimise stock levels by ensuring the accuracy, efficiency and discipline needed to run a leaner warehousing operation. Savings made here alone can soon generate a return on investment.
Getting stock levels right is further complicated if the business offers perishable or limited shelf-life lines. Here the priority is to ensure items are sold and delivered before they go out of date, so product availability can fluctuate on a daily basis. Conventionally, businesses employ a first-in, first-out stock rotation policy and many manage this successfully with paper-driven processes. But a cloud WMS is much more efficient and, as with other stock management and order processing tasks, it is accurate and consistent.
Users have constant, real time access to important warehouse and stock control information with a cloud WMS. This can be viewed and managed from almost any device using a browser or dedicated app, with the WMS managing user access as appropriate. This type of control can be particularly useful for smaller and growing businesses where key staff undertake multiple roles which mean they’re not close to a desktop PC. For people in this situation, the ability to monitor and respond while carrying out other important tasks can be critical.
Cloud WMS can be integrated with other business applications and e-commerce platforms using standard data formats and APIs. Data from existing systems can also be imported quickly using familiar formats like CSV. This means applications can usually be configured to go live in very short timeframes, weeks or even days rather than months, to gain faster benefits and ROI. Unlike traditional on-premise systems there are few upfront costs and the per-user or transaction-based pricing is predictable and scalable, making it an affordable step-change alternative to doing nothing.