Today’s consumers expect always-on, always-available access to their favorite brands. And when they want something, for example, to purchase a product or engage in services, they want fast and accurate delivery wherever they are.
In response, ecommerce businesses and retailers are rapidly adjusting warehouse operations and distribution models to meet these demands as quickly as possible–while facing internal pressures to lower costs and not overburden already busy employees and partner vendors. To manage evolving inventory requirements and support a quality omnichannel consumer experience, many are setting up multiple geographically-dispersed warehouses.
Yet, whether you’re a brand managing a single warehouse or multiple warehouses on your own or a logistics provider–either a third-party logistics (3PL) warehouse or fourth-party logistics (4PL) network–supporting these businesses, multi-location inventory management is challenging even with its many benefits. From issues with overstocking and understocking to managing shipments, tracking, routing, and returns, the more complex your warehouse network grows, the more challenges you may face.
The good news is, with the right multi-location inventory management software you can overcome these challenges and exceed customer expectations, all without overtaxing your budget or having to hire more employees to keep up with demand.
Challenges of Multi-Location Inventory Management
While each ecommerce business, retailer, 3PL, or 4PL will have a range of factors that influence how their multi-location inventory management programs work, across the board, regardless of size or industry, there are some common challenges businesses of all sizes must work to overcome.
Lack of inventory visibility
Imagine every time a customer places an order, an employee must feel confident enough about knowing your inventory that the person puts on a blindfold, walks into your warehouse, grabs something off the shelf, and ships it. That’s what it’s like to manage inventory across multiple locations without using inventory management software. A lack of inventory control is a common challenge and one that could cost your business time, money, and customers if you can’t complete their orders. It can also create workflow nightmares if you have too much product in one location and not enough in another. Your teams are left grappling with products that are out of stock, inaccurate orders, and shipping issues. Inventory management software solutions are key to overcoming this issue because it can enable task automation, streamline functionalities, improve internal and external communications, and provide real-time data for all of your omnichannel order fulfillment processes.
Higher supply chain costs
Without a strategy for managing inventory across multiple locations, you’re likely to face increased supply chain costs, bottlenecks, inefficiencies, and a greater likelihood of order errors. If you’re not using inventory management software across all of your warehouses, stores, or distribution centers, not only will your supply chain costs increase (think more storage and more transportation costs, more labor, more overhead) but you’re likely increasing supply chain complexities that could easily be mitigated by the right inventory management solution. The more your operational efficiencies increase across an expanding supply chain, the greater the potential negative hit to your business’ bottom line.
Inefficient order fulfillment
Optimized inventory fulfillment is critical for keeping your customers happy. Remember, they want access to your product when they want it, and they expect fast, accurate delivery. That means there’s no time to waste making mistakes while fulfilling orders, whether that’s not having inventory in stock or not having inventory in the right locations that expand service and delivery times. Instead of managing your orders manually, using spreadsheets or relying on tools that weren’t designed to handle inventory management, look for software that can help automate and optimize your order fulfillment processes. The right solution should have the capability to collect data about locations, proximities, optimized transportation routes, inventory availability, and other crucial parts of the order fulfillment process.
No inventory when you need it/too much inventory when you don’t
Inventory management software provides the data you need to ensure you’ve got the right quantities of products in the right locations at the times you need them most. For example, you might have increased demand for a certain product based on a season or holiday. Or, you may have decreased demand at other times. Inventory management software with data analytics can help you forecast how much inventory you need, when, and where to ensure you never miss a chance to fill your next order and you can scale and flex with demand.
Inefficient communication
The more warehouse locations and distribution centers you have, the more difficult it is to ensure everyone is on the same and speaking the same business language across your operations. Poor communication can lead to unhappy employees, frustrated customers, and bruised relationships with your partners and vendors. Inventory management software with real-time data and analytics ensures everyone has the same correct information any time they need it and it’s quantified in a way that supports business goals and optimization. Inventory management software is a great way to break down data silos from location to location, department to department, and even from business to consumer.
How to Manage Inventory Across Different Locations
Juggling inventory across multiple locations is not easy. From stocking shelves to optimizing fulfillment, it’s a balancing act, but there are some best practices to effectively manage inventory across all your locations. Here are a few tips:
Implement an inventory management system
Use an automated inventory management system (IMS) as the control hub for all of your inventory management needs. An IMS will give you visibility into your inventory levels at all of your locations and help you track movement across your facilities and out to your customers. An IMS with an easy-to-use dashboard can put all of this information right at your fingertips to ensure you’re always optimizing inventory allocation, decreasing the chance of stockouts and overstocks, and ensuring all customer orders and inventory replenishments are streamlined, efficient, and accurate.
The Extensiv solution:
- Warehouse Management for ecommerce brands: Perfect for in-house fulfillment, this warehouse management system (WMS) provides real-time inventory visibility across all locations, optimizes picking and packing processes, and integrates with popular shopping carts for automated order processing.
- Order Management for ecommerce brands: Ideal for multi-channel sellers, it centralizes order management across stores, marketplaces, and different warehouses, tracks inventory in real time, and offers data-driven insights for better demand forecasting and allocation.
- 3PL Warehouse Manager: The most comprehensive cloud-based order and warehouse management software available for 3PLs, this Extensiv offering provides real-time inventory visibility and streamlines order fulfillment with mobile barcode scanning compatibility and seamless integrations with the systems your customers use.
- Network Manager: Perfect for 4PLs and multi-location 3PLs, this software supports decentralization of inventory by providing full visibility to your customers’ inventory, order, and transaction data across all 3PL warehouses–all in one place–without duplicate entry or complicated integrations.
Calculate safety stock
Never be caught off guard because you don’t have something you need in stock. Instead, plan for and calculate reorder points and safety stock to ensure you have items on hold so you never completely run out of inventory. Calculating safety stock isn’t easy, but it’s imperative. You want to forecast as accurately as you can so that you’re not repeatedly depleting your safety stock when inventory runs low and that you also don’t have excess inventory sitting on shelves that increase operations costs. Want to take a closer look at how to calculate your safety stock? Check out this formula that will help you determine service level, deviation of lead time, and average product demand.
The Extensiv solution:
Warehouse Management and Order Management for ecommerce brands have advanced analytics and data forecasting tools. These tools can help you more effectively analyze historical sales data, understand lead times, and account for seasonal trends to ensure you have accurate stock levels for all of your locations, that you never overstock your shelves, and that you’re always optimizing inventory carrying costs.
Carefully plan warehouse locations
It’s not enough just to add warehouses to your network just to have more; you must also carefully plan for where these warehouses are located. Location is key to ensuring you can meet those increased customer demands for fast and accurate delivery. To ensure you’re selecting the most optimal locations for your warehouses, consider the proximity to your key customer base, internal and external transportation infrastructure, and costs and availability, for example, rent or lease fees, labor expenses, and warehouse or distribution facility availability.
The Extensiv solution:
Extensiv’s platform provides data and analytics in every software offering that give you the insight you need about your customer base and their purchasing behaviors so you can better plan for new and optimized warehouse locations.
Partner with a 3PL/4PL
If you’re an ecommerce business or retailer, the more you scale, the harder it may become to effectively manage inventory tracking across many locations. When you’ve stretched your capabilities as far as you can, consider working with a 3PL or 4PL for additional support. A 4PL has the expertise to manage multiple warehouses and omnichannel order fulfillment for you in addition to taking over management of your entire supply chain so you can focus on other important business tasks. Partnering with a 3PL or 4PL is a great way to scale, without hiring more people. You can save on operational expenses and lean into their expertise and infrastructure to ensure you’re always ensuring complete customer satisfaction.
The Extensiv solution:
When it comes to working with 3PLs and 4PLs, Extensiv sets itself apart from its competitors. As a leading technology provider for 3PL warehouses and 4PL networks, you can turn to Extensiv’s Fulfillment Marketplace to find the right logistics provider to manage your entire inventory system and fulfillment operations across multiple locations.
Interested in learning more? Request a demo today!
