"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."
Mollo provides the example of Amazon.com, which lets even customers know how many of a certain item are in stock.
3. Build a forecasting model.
Marketers need to ask themselves several questions when building forecasting models in conjunction with their online inventory management systems, says Richard Murphy, vice president of TCLogic of Indianapolis, which provides Web-based inventory management systems.
First, companies should define a goal, as stocking strategy is driven by a targeted service level, he says.
Next, Murphy says, businesses should determine what's driving their inventories. "Is the performance of your inventory being driven by demand points, such as intermittent demand, seasonal demand or trends in that demand pattern? Is it being driven by how you're being supplied? Is it being driven by how you're purchasing inventory, either overseas or domestically? Do [you] have variable lead time patterns? Do [you] have trending lead times, either upward or downward? And find out what is driving your inventory, and then focus the inventory buying decisions around those drivers. And once you've been able to focus around those drivers, then you're going to be able to develop metrics, and once you develop metrics, then you can start measuring the performance of those drivers," Murphy explains. "And hopefully, those drivers will be diminished by the improved stocking strategies that are developed."
Getting into specifics, Palzkill says, marketers can optimize by knowing the product start and end dates and stocking accordingly; managing online events and buying inventory at the appropriate time; and building forward-looking variance reports to address contingencies, such as anticipated additional inventory needs or the necessity of canceling a purchase order.