10 Ways Internet Marketing Reveals Inventory Problems
Are your Inventory Accuracy Levels at 99% and rising? If you say yes, let me tell you about some swamp land in Florida I am selling. In the meantime, I recently had a chance to see how an online firm used Internet Marketing and Multi Channel Marketing to quickly build an online presence but have almost immediately ran in to the weaknesses inherent in having weak backend systems. These weaknesses are costing them money. Money that is literally flowing out the door.
It is an old axiom of Just-In-Time production systems that as companies lower the level of inventory they traditionally keep to cover problems in their supply chain, the rocks in the bay are revealed. This is why Toyota, and many others, are famous for their Just-in-Time inventory management systems. If you run with close to zero inventory, then problems anywhere in your Supply Chain almost immediately ripple up and down the supply chain and can be addressed and money can be saved.
What does this have to do with Internet Marketing? Well, in today's world of online stores, a successful online store (of which there are very few), can quickly overwhelm the small business that has little or no inventory management capabilities. How do you know when you are about to run up against the rocks.
- You don’t have defined returns procedures commonly called RMAs (Reverse Material Authorizations).
- You have to manually process payments even with online payments in place because you do not 'trust' your inbound payment streams.
- You don’t have unique Stock Keeping Unit (SKU) Part Numbers Assigned
- You are selling identical products from different manufactures, guaranteeing part number problems.
- You do not have continuous cycle counting in place.
- You do not know what continuous cycle counting is.
- You do not know replenishment lead times.
- You do not know what your minimum re-order quanity is.
- You do not realize you cannot sum inventory counts.
- You're running it all on excel.
These issues, of course, only show up if you are actually touching inventory, or so it would seem. However, if you are primarily selling online using internet marketing, such as affiliate marketing and someone else is doing the fulfillment operations, most of these issues probably also need to be addressed.
You should probably be thinking about end-to-end analysis to monitor and manage these problems. Of course, to have a robust back-end system, there are many other common issues to address. But, inventory management excellence is a little recognized pre-requisite for internet marketing success. Perhaps some of our SAP consultants can help you achieve the required level of excellence..
Have you seen inventory management problems with your online store backend systems?
Lonnie D. Ayers, PMP
President, SAP BW Consulting, Inc.