Inventory Dimensioning, Explained

When it comes to order fulfillment, the weight and volume measurements of products are a major factor that affects shipping costs, warehouse capacity planning, and more. With this in mind, more and more fulfillment centers are "dimensioning" their inventory – using specialized technology to determine the exact cubic and weight measurements for each SKU, recording that data, and incorporating it into a warehouse management system (WMS). After dimensioning each SKU in your inventory, you'll have valuable data for optimizing your facility. By leveraging your dimensioning data strategically, you can greatly improve areas such as:
    

Shipping cost estimates

Because the process provides exact data, dimensioning can dramatically improve the accuracy of your shipping cost estimates - making them more akin to shipping cost quotes. By eliminating the inaccuracies of manual measurements, you may also see a decrease in accessorial fees and other freight charges (even on small packages).

Order packing efficiency

With the dimensioning data loaded into your WMS, cartonization functions can be used to instantly determine the best box (carton) size, rather than relying on a human's best guess. In addition to saving time by eliminating the trial and error of finding the correct size shipping boxes, this can also reduce the waste from large, air-filled parcels and unnecessary dunnage.

Slotting optimization

Similar to the advantages of cartonization, dimensioning can make your slotting process simpler and more efficient. If your WMS also knows the dimensions of the facility's product storage areas, it can recommend the most advantageous location.

Capacity & expansion planning

Dimensioned inventory greatly assists in planning for capacity changes or future expansion. Whether you need to determine the design of a conveyor system, or what types pallet racks will best meet your needs, having your inventory's dimensioning data on hand can be an invaluable time-saver.

Inventory Management Best Practices

Inventory that isn't carefully tracked and managed can create big problems down the road. Excess inventory occupies warehouse space and can tie up your working capital, while stockouts can contribute to a decrease in sales and an increase in dissatisfied customers. To keep the state of your inventory healthy and profitable, you should incorporate the following best practices into your day-to-day inventory management.

A.B.C. - Always Be Checking

In order to get the most robust picture of your inventory and how it moves, you should keep your data up to date with daily stock checks. Ideally, this should be an automated process executed through your inventory management software. By keeping close tabs on the changes in your inventory levels, you'll be able identify supply issues and solve them before they cause real damage to your bottom line.

Address the root causes of excess stock, ASAP

Overstock is an easy problem to fix via liquidation or donation. However, falling back on those strategies regularly without addressing the root cause of the excess inventory could cause you to lose out on profits in the long run. Take a serious approach to identifying what's causing excess inventory and develop a plan to 1) reduce the creation of new excess and 2) find ways to sell off the overstock more effectively.

Identify & prioritize your inventory's winners

Keeping a level inventory of all your products is a common inventory management strategy. However, it’s important to determine which products are your "winners" and focus on keeping those items in-stock, rather than just trying to maintain the same amount of product across the board. Running out of stock on a product that sells quickly is lost potential revenue.

Collaborate with your sales & operations teams

Inventory data is an important consideration when making logistical, purchasing, and fulfillment decisions. Of course, more data is better. Aligning your inventory management with your sales and operations teams can lead to more effective inventory forecasting – which involves estimating the quantity of a product or service that consumers will purchase based on data. Accurate tracking, measuring, and forecasting of inventory is crucial for seamless order fulfillment, financial decision-making, customer satisfaction, brand perception, and other aspects that drive the success of an ecommerce company.

Tips for Handling Backorders

If you want to implement a backordering system on your ecommerce site, communication is key – not just with your inventory managers but with your customers as well.

Before allowing customer to place backorders on your site, you should have a detailed understanding of your inventory management. Keep the lines of communication open and active with your fulfillment team to help determine the volume of backorders you’d be able to manage. Without this foundation, your backorder system could quickly start causing problems.

Once you’ve established that basis for working with backordered inventory, you’ll need to focus on the customer experience. From the shopper’s experience, ordering products that won’t be delivered right away can be risky or inconvenient. You can improve the backorder experience for your customers through informative communication. Be honest with estimated delivery dates and keep customers in the loop regarding delays as they happen. Let them know when you have the product back in stock, when their order is being processed, and when their order has shipped. If you predict another stockout, advise customers to order refills sooner, rather than later.

Using intel supplied by your inventory management team, you’ll be able to manage expectations and be forthcoming on order status to provide your shoppers with a smooth backordering experience.

Tips for Mitigating and Preventing Stockouts

The more retailers that you sell your products through, the more challenging it is to manage that inventory - and the costs of sub-optimal B2B inventory management can be steep. In 2015, CNBC reported that stockouts accounted for $634.1 billion in lost retail sales for the year. Those losses can easily pass on to you. If retailers are not confident in your product availability, they will find other suppliers.
    
Preventing stockouts with well-done B2B inventory tracking goes beyond keeping an accurate SKU count. Ideally, your inventory management software and staff should have the following capabilities.

Detailed tracking information

Your inventory feeds should provide your retailers with as much information as possible, such as:

  • Available inventory by location – not only can this free your retailers from being bound to a single inventory source, it can also be useful for shipping calculations
  • Restock dates – for low or out-of-stock units, provide both the amount and date by which the inventory will be replenished.
  • Real-time data

Comprehensive inventory management

Go beyond the management of in-stock inventory with more proactive services, like:

  • Stock alerts – actively communicate when products become out-of-stock, low stock, or back-in-stock
  • Allocated stock – allocating inventory for individual retailers helps to manage their expectations is very useful for preventing stockout issues
  • Internal backorder management – if it doesn’t take long for you to resupply stock, you may have the bandwidth to handle backorders on behalf of your retailers (or adjust their allocated stock accordingly)
  • Shipment notifications – automated shipment notifications with delivery timeframe estimates saves retailers the trouble of calling you, and gives them the information they need to reassure their customers.

If these upgrades to your inventory tracking sound too complex, Fulfillment Works can help! Our Client Access Center technology is customizable and lets you manage all aspects of your inventory from any internet connection (including mobile devices).