Setting up an multi-channel business is a challenging task, as you are not operating from one store, or one location, or one city, state or country. The logistics of it are daunting. Despite of the problems, the challenges can be overcome with the help of specific software that takes care of most aspects that would otherwise have to be done manually while also saving your precious time, money and resources. The most important aspect of an multi-channel business is maintaining inventory levels at an optimum level. Challenges Faced in Multi-Channel Inventory Optimization Fragmented Supply Chain Processes: If you have a physical store and are setting up an online one as well on different platforms, then you may find it very difficult to maintain a proper supply chain to keep your outlets well-stocked. You have to predict demand at various points, allocate inventory and keep replenishing it as per changing demands. Any breach in your supply chain can result in big losses, not only in monetary terms, but also in the loss of loyal customers -- present and potential. Maintaining A Safe Level of Stocks: Maintaining safety stocks are a complicated issue. Running out of stocks in certain circumstances can be back-breaking for your company. Therefore, companies tend to overstock sometimes, which can also become a burden, as they consume warehouse space, and ultimately lead to higher holding costs. So, to strike a right balance in the level of inventory you maintain is of utmost importance. In the end, if your inventory problems persist, you may have to go in for distress sales, clearance sales, or even returning the product to the suppliers. Single- And Multi-Level Inventory Control: Single-level inventory optimization is as important as multi-level optimization in such a business model. Single-level inventory control concentrates on inventory management for a single channel in your supply network. Multi-level inventory control takes a more holistic approach which concentrates on inventory levels across your whole sales network. Small companies would obviously function on a single-level inventory optimization model. As the business grows and more tiers are added, inventory management becomes more and more complicated and difficult to manage. This is where multi-channel inventory management software comes in, as it can solve most of these logistic problems of maintaining optimum stock at various points. The Importance of Returns Policy: If you have a proper returns policy in place, it will make your customers feel confident in repeatedly buying from you. If some customer happens to receive a product in a damaged condition or not as per the specifications they had ordered, they should be able to return it and get the desired product within least amount of time. Surveys have found that roughly 30% of online-ordered products are returned, in comparison to nearly 9% for brick-and-mortar purchases. So, when you are operating on both channels, it is important for you to know that the same survey also indicated that more people are likely to make their purchases online if they are confident that their returns will be accepted without any hassles. However, returns also have a direct impact on your inventory levels, and therefore you have to demand quality from your suppliers, as well as wisely choose your shipping partners, and only deal with those who are reliable. The bottom-line is that a flexible and transparent returns policy creates trust in your customer base, which in turn leads to higher purchases, loyal customers, and sustainably profitable business. Multi-Level Inventory Optimization : When you are operating your business on a multi-tier system, you have to maintain your inventory adequately at every level in your supply and delivery chain. This makes coordination between all points in your business all the more important, as even a slight deviation from the inventory levels can cost you a great deal. You will need to follow what is called the multi-echelon inventory optimization (MEIO) system that ensures interoperability at every point in your supply and distribution network. There are two ways of achieving your MEIO targets: Firstly, you will have to optimize on a geographic basis, which would involve infrastructure facilities, labor and inventory management. Secondly, you will have to take a tactical view of your business, which would involve aligning all your operational processes, and also analyze your data with the metrics and targets you have set. To Sum Up…The solution for all these inventory management problems of multi-channel retailers is to integrate all your operations with an order management software that provides a suite of tools for each of your order management needs.
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