Inventory and order management – two processes, one common objective
In most organisations, inventory management and order management are conducted separately, each with its own unique methods and objectives. While the former concentrates on inventory levels, safety stocks, and stock replenishments, the latter deals with customer orders, delivery dates, and complaints from customers. In case the two processes lack coordination, a well-conceived strategy in one area may be rendered futile by chaos in the other.
It should be borne in mind that inventory and order management have a common objective – to provide the customer with the required product on time and with maximum economic efficiency.
The effects of disconnect between inventory and orders
When order management is overpromising and inventory management under-delivering or vice versa, problems begin. For instance, the sales team can make commitments to delivery dates solely based on what appears to be available in the system but neglecting any reservations made for orders already placed. This will cause false hopes and last-minute scrambling by everyone involved.
Conversely, inventory management focuses exclusively on averages while overlooking any major orders expected in the near future or increased demand caused by promotions. This means having surplus inventory in products no one wants and shortages of products that need to fulfill current orders.
Achieving a consensus about reality
How? By having an agreed-upon consensus about what is really going on in terms of stock and order management. Stock management must consider not only previous usage, but also current and upcoming orders. Order management must know what is really available to fulfill, taking into consideration reservations as well as upcoming replenishments.
With such a consensus in place, decision-making becomes more consistent. The company will be able to prioritize orders depending on available inventory and their relative significance.
How StockM integrates inventory and order management
The link between these two processes lies at the heart of StockM. This software solution is mainly a system for managing inventories; however, it was created specifically to collaborate well with order management processes. StockM relies on real consumption and order data to assess available stock, committed stock, and future needs.
From an order management perspective, StockM ensures that order promises can be based on precise information. Once a new order comes in, the order management team knows whether it can rely on existing and planned stock to ensure promise delivery. Problems can be detected early enough to take action – for instance, reprioritizing or advising on realistic lead times.
In the case of managing inventory, the order flow will be considered a live indicator. This means that when particular items tend to be frequently ordered urgently or in backorder, StockM will take that into account during buffer planning. In the long run, this approach ensures that stocks are better tuned according to consumer behavior.
More pleasant experience for the customer and teams
By combining inventory management with order management via StockM, you create a win-win situation for your business. The customer gets accurate delivery dates and increased availability of goods. Meanwhile, teams have more time to establish good relations, expand their assortment, and look for new opportunities.
As far as the digital aspect is concerned, businesses often try to find solutions to problems in areas like inventory management, order management, and integration thereof. By providing an example of a solution that covers both processes and their integration, you will be talking their language.