How to Manage Inventory for Multi-Channel Distribution

December 3, 2015 by Amware Fulfillment

To manage inventory for multi-channel distribution, you need the right system.

Notice we didn’t say “systems.”

Many companies separate their B2C and B2B logistics operations and run them on different systems.  Here’s why.

multi-channel distributionInventory management requirements are very different for bulk retail and direct-to-consumer channels.  When you ship to stores, you track inventory by the pallet or case. When you ship direct to consumer, you might have to track 1,500 units of a single SKU, and (depending on the product) may also have to track 1,500 serial numbers. A provider with expertise in just one side of the multi-channel distribution equation can’t easily ramp up to handle the other side, as well.

Multi-channel distribution gone wrong

One marketer of sports drinks and energy bars found that out the hard way when it expanded from direct sales to retail sales.  The company asked its fulfillment warehouse partner to distribute these retail orders, but the provider lacked the know-how and systems to handle bulk order distribution and retail compliance. After several months and some punishing chargeback penalties, the company had to scale back its expansion plans into retail distribution, as well as its growth projections.

That’s one example of why companies create separate infrastructures, sometimes with separate 3PL providers, for multi-channel distribution. But if you want to control inventory, that strategy causes a whole new set of problems.

  • You won’t get a full, real-time view into all of your inventory – in warehouses, in trucks, and in stores
  • You’ll carry more inventory than you need, increasing your costs.
  • You’ll end up moving inventory from place to place to sync with demand and, in the process, drive up freight and labor costs.

Rationalize your infrastructure for multi-channel distribution

You need to view your inventory in exactly the same way consumers view your brand – as one entity.  Consumers don’t think of buying from either SHINY WIDGET RETAIL or SHINY WIDGET DIRECT. They want to interact seamlessly with your brand across all channels – the classic omni-channel experience.  Therefore, you need your back-end fulfillment processes to be seamless, as well.

That starts with having one master inventory for all your channels on a single system or tool that enables across-the-board visibility. Sales forecasts and historical data should tell you what products you’ll need for each channel, where you’ll need them and when.

Choose a partner that has experience serving multiple sales channels

If you outsource, make sure your partner can handle the operational requirements for ALL your channels of distribution. That partner should also provide timely, accurate reports on orders and fulfillment activity to help keep your inventory and labor force at optimal levels.

Are you maintaining separate inventories for your B2B and B2C channels?  Amware Logistics can work with you to determine the cost of such an approach, in excess inventory, space and labor, and what an alternate strategy might look like.

Mastering Multi-Channel Fulfillment  Multiple sales channels should not require redundant inventory, warehouses,  and information systems. Download our free white paper.

Filed Under: Fulfillment Services