Warehouses have long been an essential part of the supply chain, inventories in central locations to ensure fair service to many areas. Warehouse teams locate and prepare items for dispatch when a customer places an order. Warehouse operation and maintenance is built on a robust technology stack, including Warehouse Management Systems (WMS), Order Management Systems (OMS), and Inventory Management Systems (IMS) to track inventory, orders and more. After years of refinement and optimization, warehouses are refined machines, but that doesn't make them the right machines for all business models.
Different approaches, different needs
Not all business models benefit from the same approach to inventory. Some depend on the inventory ofhousing in large warehouses; others require a more persified approach with different tactics. Regardless of the business model and approach to inventory, everyone has unique needs that must be met in order to be successful. Here are three business models with different inventory approaches that illustrate this:
E-commerce retailers relying on large warehouses
The Amazons around the world have created extensive global warehouse networks with the promise of two-day shipping. They rely on manual and automated processes to pick, pack and ship orders. They have also built fleets of delivery vehicles and use their scale to contract carriers at great rates. For them, the warehouse and the m odels company correspond, and several partnerships, tools and resources link it all together effectively.
• Transport network : international, national, regional and local carriers.
• Shipping software : integration with WMS, OMS, IMS and any other application within their technology stack; designate which one is to act as the recording system.
• Inventory location : determine which inventory is stored in which warehouse (s) in operation historical order volume, customer geographic needs and other order data.
• Place of manufacture (if manufacturing their own products) : Identify the manufacturing location (s) with the capacity to produce each item to determine the best storage location.
Omnichannel retailers offering in-store shipments and BOPIS
TheRegional and national retailers with physical stores often keep inventory on hand and rely on warehouses to replenish inventory in stores. For them, shipping from the store directly to a customer decreases the distance and therefore the shipping time and costs. They can also use an online purchase-in-store pickup (BOPIS) model, increasing flexibility of execution and reducing reliance on transportation services.
• Transport network : in addition to more traditional carriers, shipment from the store requires a network of local carriers for each retail outlet; Using cost-effective execution carriers (Shipt, Postmates, DoorDash, Instacart, etc.) provides the flexibility to meet execution schedules (often same or next day).
• Shipping software : integration with WMS, OMS, IMS and other applications within the technology stack to help increase responsiveness.
• Inventory location : determine which products must be available at all venues versus which can be accommodated at specific locations; snow boots, for example, may be critical inventory in Portland, Maine, but not Los Angeles.
• Manufacturing location: Identify which manufacturing site has the ability to produce each item and quickly replenish the inventory of affected stores directly.
Service-oriented businesses leveraging 3D printing
companies traditionally stocking repairable parts, such as large appliance and auto manufacturers are increasingly turning to on-demand manufacturing (3D printing) to reduce inventory, avoid overstocks and eliminate over-stocks.waste, while reducing costs and shipping time.
• Transportation network : Build a network of local carriers that includes managing the economy of market as well as qualified local service technicians to install new parts on demand.
• Shipping software : integration with WMS, OMS, IMS and any other application in within their technology stack and leverage business intelligence to identify parts to be manufactured traditionally and those to be 3D printed on demand.
• Location of the 'inventory: Determine which elements are rapidly reproducible; which items, while essential to offer, are rarely in demand; and which items cost more to stock in stock than their value.
• Location of manufacture : Determine which local partners are available to create a network of 3D printers afin to print parts on demand for delivery.
As consumer behaviors and expectations change, product life cycles shorten, and supply chain interruptions Procurement occurs more frequently and persists longer, companies need to consider their approach to inventory and how it matches current requirements of their business model.
For example, shortages of inventory Carrier capacity greatly affect the shipping industry. Major carriers like FedEx and UPS continues to increase surcharges, implement capacity limitations and to abandon " customers on short notice . A companyomnichannel using a warehouse-only shipping model forgoes the benefits of in-store shipping and BOPIS, thus exposing itself to greater risk, especially when approaching a peak season full of potential challenges.
Of course, many companies use multiple approaches to inventory to meet their business needs, relying on a mix of two or three of the models above. This can provide everyone's advantages and minimize their weaknesses, but requires a more complex and fluid equation to determine what to inventory, where to store it, and how best to get it to the customer. A recent example of this flexibility comes from Home Depot.
When the pandemic struck last year in Mexico, lack of access to banks and financial mistrust prevented more than half adults to open and us bank accounts and credit cards. At the time, only " 5% of retail purchases were made online , but like in the States -United, stores have closed to slow the spread of Covid-19. This translated into a 54% increase in online sales. Home Depot Mexico's e-commerce growth has exploded. With 70% of its customers new to online shopping, mostly without a credit card and unfamiliar with the typical e-commerce buying process, Home Depot has adapted by offering online shopping with in-store payment. , including cash, upon pickup - a unique twist on the typical BOPIS transaction.
As new and unexpected challenges continue to emerge in the supply chain, shipping and logistics, companies need to think strategically about their business models and determine if their approach is corr inventoryespond to their needs. The above checklist provides a great starting point for this in-depth review and should help companies implement the most suitable inventory model (s). tailored to their current and future business needs.
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