If you are like most companies today, you are selling through multiple sales channels. Many companies are expanding their reach beyond traditional brick and mortar stores and increasing revenues through online stores and marketplaces like eBay and Amazon. This strategy requires a good plan to manage items as the cost of inputting item information to your online sales channels and managing inventory can quickly negate your profits.
To operate a multi-channel strategy that maximizes margins and provides a great shopping experience for buyers, follow these steps:
1. Designate an item master management system
Don’t jump into eCommerce without understanding the different requirements for item information compared to your traditional brick and mortar store. Careful planning and organization is required to keep item information consistent between sales channels. The best way to organize item information is to create a single location for your item master data.
An item master is the primary record of an inventory item that contains the detail for procurement, planning, forecasting and replenishment. You should designate one system as your item master regardless of how many sales channel(s) you are use. That same system should also maintain the master inventory counts for items. Common item master locations are enterprise resource planning (ERP) and point of sale (POS) systems.
2. Integrate your item master data with your sales channels
It’s critical to avoid manually rekeying item data into each system used in your multi-channel environment. Data errors can mislead buyers and result in order, pricing or inventory errors – all of which will ultimately discourage customers and negatively impact your reputation. Add the cost of correcting errors – which can include everything from time for a resource to manually research data corrections to return shipping and handling fees for items shipped in error – and you can quickly see how one error cuts into your profit margins. Make sure you know the item information requirements for each system; and how you are going integrate each system with the system you are using for your item master data.
3. Automate inventory synchronization
When you add sales channels such as an online store or marketplace, you must also figure out how to handle multiple locations pulling from your inventory. If items are loaded manually, it’s likely that inventory will be managed manually as well. Companies who have attempted this complicated feat report that it can take 5-6 hours a day just to track inventory – an impossible pace to maintain especially for small businesses with limited staff or larger companies with many sales channels.
Not only is manual tracking time consuming, it is near impossible to know the real inventory count at any given point in time. With manual inventory tracking, your sales channels are more likely to sell items that aren’t in stock. The flipside isn’t much better if you over-replenish inventory and end up tying up cash that could be better used elsewhere.
The efficient choice is to automate the synchronization of inventory. With automation when items are sold, inventory is immediately added/reduced from the item master. As those quantities are updated, inventory counts are pushed to all sales channels. Automation enables near real-time inventory counts across your sales channel and helps your bottom line.
4. Manage items with a multi-channel management platform
Individual systems can manage item information and track inventory but their vision is typically restricted to data located within that sales channel. Furthermore, they tend to have limited communications to other systems (many times it’s simply email), which still leads to manual key entry once you receive the data. A multi-channel management (MCM) platform, however, acts like central command for multiple sales channels by integrating POS, ERP, eCommerce and marketplace solutions together to automate the entire order-to-cash cycle.
MCM platforms should be about more than integration. Your MCM platform should collect item data and inventory counts from your item master and push it to all of your sales channels using established business rules, and then provide ongoing updates as it detects item or quantity changes. It should also provide a management console so you can choose which items to include in which channels and set thresholds for inventory levels so the system can automatically remove items from one or all of your sales channels when inventory counts are low to avoid the threat of stock-outs or canceled orders.
Some MCM platforms can also extend to import item information from third-party suppliers and manage inventory for drop ship items by importing inventory levels directly from suppliers and routing orders to them for fulfillment.
Don’t add new sales channels without implementing a well-though out plan for managing a multi-channel environment. By automating your item and inventory management processes, you’ll gain both external and internal benefits. Externally, customers will have a more consistent shopping experience. Internally, you’ll reduce errors, increase efficiency, and purpose resources. All of which will improve your profits!
Contact FMT Consultants today for more information about multi-channel management platforms for Microsoft Dynamics GP.
Brian Lynch, Vice President of Enterprise Market Development, nChannel