3 Functions Your E-Commerce Inventory Management Systems Should Support

Technology solutions can help distributors to tailor their e-commerce inventory management systems to fit the demands of the 21st century.

Your inventory management system should be working for you to support your business goals. But companies often have outdated processes and equipment that hold them back. Here are three functions that your inventory management system should be capable of carrying out to support e-commerce.

1. Provide inventory availability during online order entry: It’s very important for e-commerce businesses to let customers know if inventory is available. You don’t want to take orders and then have to notify the customers that their products are out of stock and won’t be delivered as scheduled. That won’t encourage repeat business. Customers should have visibility into inventory so they know what products are available and when they can expect to receive them.

   One of the big challenges that e-commerce businesses face is front-end to back-end integration. The customer-facing system should be fully integrated with the order fulfillment functionality of the ERP system. Otherwise, there likely will be inefficiencies and problems during order entry.

   Technology helps bridge the gaps between disparate systems. NetSuite has integration already in place, but some systems don’t have that integration. In those cases, you have to build it. Many companies don’t build integration because they believe it’s too costly or takes too much time, or they simply don’t see the value in it. But it’s definitely worth having because it solves a lot of problems.

2. Maintain appropriate inventory levels: Inventory is a very large cost for many companies, especially distributors. If you have too much inventory, you’re tying up capital unnecessarily. If you don’t have enough inventory, customer service suffers, because you can’t provide the products that they want. Finding the right balance is the key meeting demand while keeping costs low.

   A challenge e-commerce businesses face in maintaining appropriate inventory levels is a lack of communication between the inventory management and marketing departments. For example, if the marketing department decides to do a promotion without talking to the inventory management department, there might not be enough inventory available to meet the demands of the promotion.

   Communication is crucial, but it frequently breaks down, so make a deliberate effort to keep everyone on the same page. Sometimes, you create your own demand by running promotions, and the inventory management department needs to be aware if the sales team plans to push a particular item.

3. Know the demand for specific items: Identify high-demand items and low-demand items to better understand the optimal inventory levels. Some low-demand items might not be worth offering.

   You need historical information so you know how items are moving. Maintain appropriate metrics to manage the business, such as inventory turnover and order fulfillment ratios. Carefully managing those metrics will help an e-commerce business to perform better.

   Some demand planning is based on a gut feeling, but with the proper historical information, you at least have a point of reference.

Good e-commerce inventory management is all about the proper management of information. The system should be set up to provide customers and internal departments access to accurate data when they need the information.