Managing inventory effectively requires more than just tracking products across shelves, it demands real-time accuracy to reflect product availability across all channels.
Modern retailers face mounting pressure as customers demand exceptional shopping experiences across all touchpoints, be it online orders or traditional in-store shopping. Even minor inaccuracies in inventory data can lead to missed sales, diminished customer trust, and a damaged reputation.
Retailers need more than just a basic inventory management to escape this complexity, they need accurate Available-to-Promise (ATP) calculations to show customers what’s in stock at any given time. A robust Order Management System (OMS) makes this possible by computing ATP inventory and syncing real-time inventory updates across all channels.
In this blog, we’ll discuss 4 critical omnichannel inventory management capabilities to consider when choosing an OMS for accurate omnichannel inventory management.
Key Factors to Optimize Omnichannel Inventory Management
Here are four must-have omnichannel inventory management capabilities that help achieve smooth operations and deliver an exceptional customer experience:
1. Calculating Inventory Availability Across Multiple Channels
Omnichannel retailers often sell across multiple channels, including their own eCommerce platforms, physical stores, and marketplaces like Amazon and Walmart. Each channel comes with unique requirements and challenges, particularly in omnichannel inventory management. Achieving accurate inventory allocation across these channels is important to avoid issues such as overselling, delayed fulfillment, or inventory imbalances.
For example, marketplaces like Amazon impose strict penalties for late deliveries or canceled orders. To mitigate this risk, retailers can set a higher inventory buffer in the form of "Threshold" for such channels so that sufficient stock is available to meet the marketplace's requirements and avoid penalties. This approach helps maintain good standing with marketplaces while promising reliable fulfillment for customers.
Another scenario involves selectively making certain products available on specific channels. Retailers may choose to keep newly launched or high-priority products exclusive to their own eCommerce to drive traffic and maximize profit margins.
Without the right OMS, managing inventory allocation across multiple channels can lead to overselling and fulfillment delays, causing disruptions in customer experience and operational efficiency.
To address these complexities, a robust OMS should offer:
I. Enable retailers to define channel-specific inventory threshold to account for varying stock requirements and avoid overselling.
II. Support suppressing specific products from selected channels, offering flexibility to sell or restrict items as needed.
III. Accurately calculate channel-wise ATP, taking into account inventory thresholds, and suppressed product so that customers only see realistic availability across all platforms.
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Fig 1: Channel-Wise ATP Calculation
Result? Retailers smooth operations across multiple channels, improved fulfillment accuracy while safeguarding against penalties or operational bottlenecks.
2. Suppressing Inventory for Specific Locations Not Participating in Online Selling
Omnichannel retailers often face situations where they need to temporarily suppress certain locations from participating in online sales and in-store fulfillment. This could be due to various reasons such as staff shortages, ongoing renovations, or technical disruptions. In such scenarios, all available inventory from these stores should be suppressed to prevent overselling and maintain accurate stock visibility across channels.
Another common scenario is during high-traffic periods, such as in-store events or holiday seasons. In these situations, store managers do not want to completely halt in-store operations but need to manage the fulfillment load for online orders to balance walk-in and online demand. Setting fulfillment limits based on the store's capacity becomes necessary to alleviate pressure without compromising in-store service. Fulfillment limits should not affect the ATP inventory because even if a store’s max capacity is reached, its inventory is still available to fulfill orders the next day.
Without the right OMS, balancing in-store and online needs becomes difficult, increasing the likelihood of overselling and operational bottlenecks. To address these complexities, a robust OMS should provide:
I. Allow store managers to temporarily stop participating in online sales, keeping their inventory suppressed from ATP calculations.
Fig 2: Enable/Disable Online Selling
II. Define daily order limits for each store to reduce fulfillment burdens during high-traffic periods.
III. Flexibility to set the fulfillment capacity to zero when pausing fulfillment of online orders or enable unlimited order fulfillment when the store is fully operational.
Fig 3: Fulfillment Limits
Result? Retailers can adapt to real-time circumstances and only sell online what they can fulfill.
3. Calculating Inventory Availability Based on Locations and Their Fulfillment Roles
Some smaller stores, especially those in high-traffic areas, may not have the capacity to handle the packing and shipping of online orders. These stores can still support BOPIS, which aligns closely with serving walk-in customers, requiring less operational effort and space. For such stores, contributing its inventory for only in-store pick-up is a practical way to participate in omnichannel fulfillment without overburdening their staff or resources.
Other locations, such as flagship stores that have the infrastructure can accommodate both shipping and BOPIS. Meanwhile, some stores that focus exclusively on serving walk-in customers can still act as backup locations for fulfillment, stepping in when inventory at primary fulfillment locations is depleted. Using these as a last resort helps meet customer demands without compromising the shopping experience.
Without the right OMS, calculating ATP based on locations with different fulfillment roles becomes challenging, leading to inefficiencies. To address these complexities, an advanced OMS should provide the flexibility to:
I. Display ATP inventory based on which stores participate in Ship From Store or BOPIS or both.
II. Configure certain stores as backup locations that participate in fulfillment of online orders only as the last resort. This means that inventory available at backup locations is suppressed from online sales but only considered during order routing as the last resort.
Fig 4: Assign Backup Locations
Result? Retailers can make the most of each store's strengths while balancing the demands of online and offline channels.
4. Suppressing Inventory of Products from a Channel or Location
Omnichannel retailers handle a broad product catalog with diverse attributes and fulfillment needs. In such a setup, managing product availability becomes important to align with business goals. Certain products should only be offered through specific fulfillment methods, such as in-store pick-up or shipping, depending on their characteristics.
For example, high-demand items or newly launched products are often better suited for in-store purchases rather than online shipping. This approach helps maintain stock levels for walk-in customers, who rely on in-store availability. To cater to online demand, these products can be shipped from warehouses instead of stores. However, offering in-store pick-up for these items is still a valuable option. Customers picking up orders act similarly to walk-ins, helping strike a balance between inventory preservation and meeting demand.
In contrast, bulky or heavy products may not be ideal for in-store pick-up but can still be shipped directly from stores for online orders. Similarly, products requiring customization should be suppressed from both in-store pick-up and shipping, as they are best fulfilled at specialized locations such as warehouses or workshops.
Without the right OMS, suppressing specific products from specific locations can become complex. Retailers may inadvertently allow unsuitable fulfillment options, leading to customer dissatisfaction, logistical issues, or inventory shortages. For example, allowing pick-up for heavy items unsuitable for transportation can create unnecessary logistical bottlenecks.
To overcome these issues, an advanced OMS should calculate ATP based on rules like:
I. Allow a product to be picked up from the store while suppressing it for Ship From Store at specific locations.
Fig 5: Allowing In-Store Pick-Up Only
II. Allow a product to be shipped from the store while suppressing it for store pick-up at specific locations.
Fig 6: Allowing Ship From Store Only
III. Calculate ATP by entirely suppressing a product’s inventory from specific locations for all fulfillment methods.
Fig 7: Suppress Product Fulfillment From Stores
Result? Customers see only valid fulfillment options, reducing errors and enhancing the overall shopping experience.
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Addressing the complexities of omnichannel inventory management requires more than traditional systems. Accurate channel-wise ATP calculations, supported by a robust OMS, empower retailers to manage diverse inventory needs across channels and product lines.
HotWax Commerce OMS offers capabilities such as channel-wise ATP calculations, suppressing non-participating locations, role-based fulfillment configurations, and suppressing specific products. Complemented by a dedicated ATP App, it enables retailers to streamline their omnichannel inventory management, achieving accurate availability and avoiding issues like overselling or underselling.
Contact an expert to see how HotWax Commerce OMS can help you in achieving effective omnichannel inventory management.
