As more consumers purchase goods and services online, companies should reorient their inventory management practices to better meet customer needs, consultant Dave Luton wrote in a recent Materials Management and Distribution article.
This shift comes as the internet alters the business model of some brick and mortar retail stores. Once upon a time, many businesses almost exclusively relied on physical stores and in-person shopping for the bulk of their revenue. Now thanks to the web and e-commerce, that dynamic has changed. According to the U.S. Census Bureau, e-commerce is responsible for at least 75 percent of total sales for print publishers, electronics suppliers, home furnishing companies and audio/visual equipment sellers.
How This Shift Affects Inventory Management Practices
While this shift in consumer behavior represents a potential boon for companies looking to streamline operations, Luton wrote that it is also creates a number of new challenges. Namely, more reliance on retail locations made shipping and inventory management easy, as companies had to send their wares primarily to a small number of set locations.
Thanks to e-commerce, organizations ship goods directly from the warehouse to the consumer, and thus need to keep track of far more moving parts than before. Instead of sending a few large orders, companies need to ship and track more smaller orders at any one time, the article said.
"An often unrecognized portion of the order process is the need for easy, transparent traceability by the end consumer," Luton wrote. "This tracking is often not needed in a retail environment, because consumers pick items from store shelves and retain them in their possession, except for oversized goods (such as furniture or mattresses) or out-of-stock items. Traceability means the order should be tracked in the distribution centre, where it is processed, and in the delivery transportation network. Achievement of this elusive goal means all elements of an order must be identifiable within and outside the distribution centre."
This new commerce paradigm requires a major shift in thinking and management, but Luton said these issues can be easily addressed with data collection tools such as barcode tracking software. In particular, companies should turn to a wireless barcode scanner to easily track orders both in the warehouse and while the goods are en route. Although these new technologies mean that businesses need to invest more time and money into their shipping operations, supply chain software can go a long way toward ensuring that an e-commerce initiative meets consumer needs.