3 Ways to Optimize Online Inventory Management
January 21, 2009 By Heather Fletcher, Senior Editor, Target Marketing
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Inventory management has come a long way since companies simply sent an employee into the warehouse with a clipboard and a pen. While some businesses still operate with offline inventory management systems, which now can be quite complex, many have opted for the dynamism of Web-based applications.
Far from simply plugging in inventory numbers and letting these Internet opportunities lay dormant, many of these companies are looking for ways to optimize their systems for peak cost savings and improved sales.
Below, those who work in the field of online inventory management systems provide advice.
1. Work with clean data from start to finish.
Joe Palzkill, director of sales and marketing for Omaha, Neb.-based inventory management software provider Direct Tech, says inputting faulty numbers—which well-meaning companies may believe they can sanitize at a later date—is a mistake that can throw off the rest of the optimization process.
"It's the old garbage in garbage out phenomenon," Palzkill says.
George Mollo, president of Nanuet, N.Y. marketing consulting firm GJM Associates, says one of the best features of online inventory management systems is marketers can feed order information into the system in real time. That, for instance, allows the system to subtract products from the inventory count the company accepts as orders. This is far better for businesses than the antiquated batch system, in which companies update their inventories all at once—perhaps at the end of the day.
"So obviously," Mollo says, "[with] orders later in the day, if I was low on inventory, I could be telling a customer I had it in stock when, in fact, I didn't."
At the same time, he says, humans are still quite useful. There's no substitute for quality control, for instance, when a box with 23 items mechanically scans as 24.
2. Build a standard operating procedure.
Palzkill says companies need to determine who's responsible for what and when. This step is about more than deciding who should maintain data. Palzkill points out that there can be a bifurcation between the front office and the back office, with both sides needing to improve communication.
"Often, the Web is controlled by the marketing department and they're just driving customer traffic, and they aren't thinking about whether I have the inventory to even support that traffic," he says. "So there's a whole new way of thinking about it that the merchant and inventory group need to communicate."
Far from simply plugging in inventory numbers and letting these Internet opportunities lay dormant, many of these companies are looking for ways to optimize their systems for peak cost savings and improved sales.
Below, those who work in the field of online inventory management systems provide advice.
1. Work with clean data from start to finish.
Joe Palzkill, director of sales and marketing for Omaha, Neb.-based inventory management software provider Direct Tech, says inputting faulty numbers—which well-meaning companies may believe they can sanitize at a later date—is a mistake that can throw off the rest of the optimization process.
"It's the old garbage in garbage out phenomenon," Palzkill says.
George Mollo, president of Nanuet, N.Y. marketing consulting firm GJM Associates, says one of the best features of online inventory management systems is marketers can feed order information into the system in real time. That, for instance, allows the system to subtract products from the inventory count the company accepts as orders. This is far better for businesses than the antiquated batch system, in which companies update their inventories all at once—perhaps at the end of the day.
"So obviously," Mollo says, "[with] orders later in the day, if I was low on inventory, I could be telling a customer I had it in stock when, in fact, I didn't."
At the same time, he says, humans are still quite useful. There's no substitute for quality control, for instance, when a box with 23 items mechanically scans as 24.
2. Build a standard operating procedure.
Palzkill says companies need to determine who's responsible for what and when. This step is about more than deciding who should maintain data. Palzkill points out that there can be a bifurcation between the front office and the back office, with both sides needing to improve communication.
"Often, the Web is controlled by the marketing department and they're just driving customer traffic, and they aren't thinking about whether I have the inventory to even support that traffic," he says. "So there's a whole new way of thinking about it that the merchant and inventory group need to communicate."
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