Sell more with unified commerce

Product sellers who have reached a high level of success and are still bogged down by manual processes need to adopt a unified commerce software solution that allows them to interconnect each critical aspect of their operation. Many of the 8,000 product sellers we work with here at Cin7 have experienced explosive growth since the start of the pandemic made online shopping a necessity.

Often, these companies find their reliance on manual stock counts and data entry has become unsustainable and increasingly prone to human error. We find that when a company begins searching for IT help to modernize their software stack to keep up with their growth, they’re ready for the power of unified commerce.

Cin7 provides a unified commerce solution like no other on the market today. Cin7’s all-in-one unified commerce solution automates all your workflows – how and where you sell, how you manage all your inventory, how you fulfill orders and how you manage your finances.

Bring critical business functions together

Adopting and paying for disparate software programs to manage individual business needs is certainly one approach to consider, but leads to the “swivel chair” approach of having to toggle between accounting programs, spreadsheets, ecommerce backends and shipping applications. It may seem like progress, but this approach is costly in both monthly fees and staffing resources.

By bringing all of your business functions together, across sales and operations in a unified and automated workflow, Cin7 helps sell to more customers through more sales channels and process more orders – more efficiently and faster than ever before.

How unified commerce creates a top sales operation

Here’s a scenario that illustrates the concept of unified commerce:

Your company sells products to consumers both online and in brick-and-mortar locations. You also have a healthy wholesale distribution division that sells in bulk to major retailers. Over time you’ve grown to 3 branded online marketplaces, Amazon, Walmart and Ebay, 4 custom ecommerce sites and 10 physical store locations.

Adopting an end-to-end software solution that connects to marketplaces and enables you to manage your ecommerce sites combined with overall inventory management and sales tracking will streamline your operations and save thousands with the efficiencies it creates. The solution should allow you to track store inventory, transfer orders to other locations, ship orders from your stores and warehouses, and manage customer loyalty programs.

It should also let you work with the third party logistics provider (3PL) you have contracted with to manage your warehouse operations, fulfill orders, and process returns.

Because you are a fashion retailer, and fast changing trends dictate what products are popular at the moment, you require real time sales performance analysis so you are not tying up too much capital in overstocked inventory.

Unified commerce brings together all aspects of a product seller’s business. When orders are placed, either by consumers or in bulk by major retailers, transactions are automatically recorded to accounting programs like QuickBooks and corresponding adjustments are made to inventory quantities. Ongoing management of each sales outlet is maintained within the Cin7 platform.

Workflow automation is a key benefit of unified commerce. Purchase orders can be set to generate when stock levels hit a predetermined threshold. Wholesale orders can be placed directly into your system by major retailers who have established an EDI connection with you. The fulfillment process is triggered automatically, sending orders to your 3PL. Stock can be shifted from one warehouse or store location to another. A dedicated payment portal is also provided so wholesale customers can easily keep their account current.

Perhaps most importantly, the customizable analytics reporting capabilities of Cin7 give management visibility into real time, accurate financial data both in dashboard views and pivot-table ready reports.

Our research conclusively confirms that product sellers thrive, grow sales, and reduce costs when they adopt a modern tech stack with a cloud-based inventory management solution that embraces the unified commerce approach to selling.

A complete selling solution

Product sellers that capitalize on unified commerce, a holistic solution that interconnects every critical business process across sales and operations, realize several benefits:

  • Sync sales, accounting and inventory control in real time
  • Design branded B2C and B2B websites to sell to consumers and major retailers
  • Completely integrate your Shopify site and your retail location with included POS app
  • Set order thresholds to automate purchase orders when stock runs low
  • Refer to sales dashboards or customize demand forecast reports
  • Assign orders to your 3PL for accurate fulfillment and shipping
  • Maintain a modern cloud-based tech stack
  • Maximize warehouse space
  • Cut overhead and keep headcount trimmed
  • Quickly process invoices and payments from wholesale customers

About Cin7

Cin7 helps over 8,000 product sellers benefit from unified commerce to move more orders with greater accuracy to more satisfied buyers. Efficiencies created by unified commerce save on overhead and provide a great customer experience. Cin7 simplifies your ability to sell by bringing together over 700 established connections with online marketplaces, major retailers, shippers, third party logistics providers and accounting programs. At a fraction of the monthly subscription fee for a bloated ERP solution, Cin7 delivers all of the key functionality a modern product seller requires.

Gain the unified commerce advantage over your competitors. Request a Cin7 product demo and get unified.

What every fashion retailer can learn from Zara

If you’re running a fashion store, you need to keep up with the latest product and service trends in the market. Zara has been one of the most successful (and most copied) brands in the fashion industry, and companies can find both inspiration and business ideas by taking a closer look at how they operate. 

Zara is a leading Spanish fashion retail brand owned by the distribution group Inditex. Founded in 1975, Zara works in textile design, manufacturing, and distribution. With over 1,700 stores across 86 countries, Zara’s profitability is still among the highest in the industry.

So, what makes Zara so successful? What operational strategies do they use? And finally, what can other fashion retailers learn from Zara? The answers to these questions can help you as you make your way towards retail success. 

Zara capitalizes on fashion trends

For Zara, its competitive advantage is its supply chain. Zara designs fashionable products inspired by trade fairs, catwalks, magazines, and more. Their designs are unique, and they are able to meet the demands of fashion-centric customers from all age groups. Whenever a new style is seen in the market, the talented designers at Zara can move quickly and capitalize while trends are at their peak. 

This flexibility means that Zara is associated with new trends in the industry, and that recognition leads to higher demand. So, how do they move so quickly? It’s obvious that Zara’s processes are very efficient. They surely have a great inventory management system that helps them automate and streamline their processes. 

Zara has a clear, defined, and consistent system

Zara designs thousands of products every year, and they deliver new products to their stores twice a week. They have a precise inventory management tool that makes it easy for them to determine which products they have in stock, how many of those products are available, and which sizes need to be delivered to what stores. 

Looking at Zara, it’s clear that having an inventory optimization model in place is essential. Zara is able to make sure that each store receives only the products they need, and no more. This way, Zara is able to stay efficient and avoid wasteful over-stocking.

Zara can go from idea to shipped product in 15 days

Zara’s stores place two orders per week, and they do it on a scheduled date and time. The shipping carriers are scheduled to leave and deliver shipments at specific times. This level of attention to detail and organization allows Zara’s staff to have clear expectations and processes.

With an organized logistic system in place, Zara also has the ability to go from idea generation, to design, and finally stocked in stores in only 15 days. The industry standard, on the other hand, is 6 months.

Zara’s distribution process is extremely efficient, too.They’re able to deliver products to their European stores within a day, and to their American and Asian outlets in 2 days or less.

Zara’s supply management sets it up for success

Zara’s flexibility, efficiency, and organization make it an outstanding organization, and a great model for fashion retailers around the world. Their cross-functional operations strategy, efficient supply management, and organized distribution methods result in well-managed inventories, lower prices, higher profits, and fantastic brand value.

Want to get organized like Zara? Request a demo here and speak to a specialist who can discuss how Cin7 increases operational efficiency and overall productivity for all kinds of retailers and wholesalers.  

7 core benefits of AI-powered supply chains

The global supply chain is filled with several variables that add to its complexity: government regulations, ever-changing customer demand, rising transportation costs, and international events such as pandemics. Any innovation that helps improve the supply chain’s efficiency can help increase your bottom-line profit.

Artificial intelligence (AI) is one such innovation that helps optimize the supply chain by better forecasting customer preferences and cutting costs by automating some repetitive manual tasks.

IBM defines AI as, “leveraging computers and machines to mimic the problem-solving and decision-making capabilities of the human mind.” In common parlance, AI is a technology that can think like humans to solve problems.

A survey by PricewaterhouseCoopers New Zealand (PWC) suggests that AI-based applications could potentially contribute up to $15.7 trillion to the world economy by 2030.

Artificial intelligence is soaring in popularity —  in fact, Gartner predicts that by 2023, 50% of IT leaders will move their AI projects from proof of concept to maturity.

Giant conglomerates such as Amazon already leverage AI to   better control   the supply chain. For example, Amazon has already transformed the ecommerce business through free shipping and 1-day delivery practices. It is now devising systems using AI and machine learning (ML) to automate its warehousing processes and drone delivery.

If you are considering AI-powered supply chains, here are seven benefits that could help transform and evolve your business:

#1 Warehouse automation

The warehouse should not be treated simply as a place to store goods. Furthermore, if the items in the warehouse are not properly stored, there could be difficulty in retrieving the items when required. This in turn can increase your fulfillment time, not to mention your customers’ frustration. Instead, the warehouse should be regarded as a strategic asset that can help with storage and faster fulfillment of goods, thanks to automation.

Automation can help with the timely retrieval of goods from the warehouse and facilitate a smoother fulfillment of orders. As you keep purchasing inventory, the algorithm continues to learn from the data, and – based on this purchase and supplier data – the AI can provide stocking recommendations.

Lack of real-time information can lead to inefficient warehousing. Using a warehouse management system can offer much-needed clarity and help in streamlining your operations. A warehouse manager can get real-time insights about the various parts, components, and finished inventory stored in the warehouse, since the technology takes virtually no time to process and analyze large swaths of data.

Drones are also helping to automate warehouse operations. In movies and wedding ceremonies, drones are often used for videography from a higher altitude. At the warehouse, drones scan and capture information from barcodes and RFID tags, as well as reconcile data with your warehousing software.

Apart from scanning, the drones can also pick up inventory and aid with quicker shipping. Using drones to fetch items from higher shelves also mitigates the risk of warehousing staff injuries caused by falling from height.

Helpful hint: Apart from speeding up the work and saving you time, AI automation can reduce the otherwise required number of warehousing staff and save money that would have been devoted to payroll.

#2 Minimize operational costs

Plant managers deal with several challenges in running business operations. There can be inventory shortages, unplanned machinery downtime, or a rise in raw material pricing. All these can increase overall operational costs. If you are operating on lean margins, any activity that helps with cost-cutting can be crucial for your success. To combat such supply-demand mismatches, businesses have started implementing AI technology, leading to cost minimization and delivering a better customer experience.

Research from McKinsey suggests that after introducing artificial intelligence in their supply chain, 44% of executives reported cost reduction, and 63% had increased their overall revenue.

Helpful hint: Unlike humans, technology can run 24/7 with maximum productivity. It is free of human error and reduces workplace accidents.

#3 Predicting trends

It can be challenging to plan for the supply chain due to globalization, competition, increasing product varieties, and varying customer preferences. Unplanned events such as pandemic-related lockdowns and logistical issues can fuel the fire.

When final production relies on the timely availability of several spare parts and critical components, their unavailability can create bottlenecks in the supply chain. With a robust AI-powered forecasting system, businesses are equipped with the necessary intelligence to prepare themselves before such events disrupt production.

Along the lines of AI, there is a buzzword called “Big Data” that is commonly used. As the name suggests, Big Data refers to data that is huge in volume and keeps compounding over time. For example, when customers purchase items from Amazon, they browse through many products that can yield insights into their consumption patterns.

Analyzing such a massive dataset may seem unfathomable by humans, but it can be done through AI-driven tools. Intelligent systems can analyze data and guide the forecasting of supply and demand. This can prevent your business from accumulating excessive stock. A study by McKinsey suggests that implementing artificial intelligence and machine learning can reduce supply chain forecasting errors by up to 50%.

Through machine learning, businesses can also leverage predictive analytics. This way, companies can spot patterns from historical data and current buying patterns for better forecasting.

#4 Better fleet management

The term, “fleet,” refers to a group of vehicles owned by businesses used for transportation. Fleet management is crucial for the smooth functioning of the supply chain as it links the manufacturer (supplier) to the customer. From rising fuel costs to labor shortages, fleet managers need to tackle many challenges. Managing a large fleet can be an arduous task if the necessary information is not available in a timely manner.

Using AI in logistics can offer real-time tracking and vital information for shipments. AIcan also assist in reducing the losses arising from fleet downtime and make the most of the fuel capacity.

AI-powered autonomous vehicles are also gaining popularity. Utilizing self-driving trucks can help reduce the cost of drivers and improve efficiency. Although it is a relatively new technology, the trend for autonomous trucks is gaining traction in the US logistics market, and it will continue to expand over the coming years.

#5 Improve inventory management

Inventory management lays the foundation of proper supply chain management. Effective inventory management can ensure a logical flow of goods in and out of the warehouse. With so many variables to consider – like order picking, packing and fulfillment – manual inventory management is time-consuming and prone to errors.

Inventory bottlenecks lead to delays and reductions in revenue. With the help of AI, businesses can gain complete visibility of supply chain variables and identify the processes that act as bottlenecks. Upon identifying bottlenecks, you can quickly eliminate them by strategically finding opportunities for improvement.

Apart from bottlenecks, understocking and overstocking are also issues that adversely affect your business. Understocking leads to losses arising from missed sales opportunities and risks reducing customer loyalty. Conversely, overstocking poses the risk of loss due to not being able to sell the inventory. Businesses can use demand forecasting (through AI) to avoid overstocking and accurately predict trends. Based on the data, the production and stock levels can be calibrated to maintain optimum inventory.

Cloud-based inventory management software can provide a centralized view of all inventory across multiple locations. With accurate information about their inventory, purchase managers can determine when to place new orders.

Thanks to technological advancements, even the purchase order process can be automated. By customizing quantity thresholds, a purchase order can be automatically generated and sent to  suppliers to avoid stockouts.

Helpful hint: Machine learning algorithms can also mitigate fraud by automating auditing and inspections. Audits help to spot any deviations from common product patterns. Privileged credential abuse is another challenge that causes a breach in the supply chain, but with the help of AI technology, such misfortunes can be prevented.

#6 Speedy shipping

What good is producing excellent products and services if you cannot deliver them to your customers in a timely fashion? Even after using state-of-the-art technology to improve your warehousing and operational processes, if you cannot ship products on time, your profitability will suffer.

Using AI in the supply chain can not only assist you with forecasting the products’ demand but can also lead to better shipping control. It factors in customer’ locations to deliver the products, along with the time it takes to ship them.

Your operations managers can get real-time information about the delivery schedules, and the team can be warned upon detection of a discrepancy. You should not overlook last-mile delivery as it constitutes around 28% of delivery costs.

#7 Enhance customer experience

Offering a stellar buying experience is essential to fostering a better relationship with your customers. Happy customers not only lead to repeated sales but also act as ambassadors to promote your brand through positive word-of-mouth.

It is plausible that your customers have questions about your product and will contact the company. If your support team makes them wait too long, the chances of them switching to your competitor are all but guaranteed to increase.

Implementing AI-based chatbots on your website can help you tackle such issues. Chatbots are available around the clock, and studies suggest they can answer up to 80% of routine questions. As the answers are already installed in the system, the bots can quickly solve the queries, allowing your support team to prioritize other projects.

Apart from answering questions, chatbots can also act as sales agents allowing potential customers to interact with and submit purchase orders.

Amazon has a fine example of machine learning to offer a better customer experience. Their algorithm helps them to provide better product recommendations based on previous orders and searches made by the customer. They also use chatbots to offer assistance regarding purchases, returns, and refunds.

In summary

Based on the benefits examined in this article, it is evident that AI can make a breakthrough impact on the supply chain. From reducing costs to optimizing operations, it can help your business outpace the competition.

As challenges in the supply chain increase, businesses will welcome the opportunity to upgrade their technology and better serve their customers. While external variables might accelerate the adoption of AI, it is already transforming from a nice-to-have to a must-have item that will help your business stay relevant and represent the standard in supply chain management.

Cin7 inventory and order management software should be your go-to solution as you pivot towards AI for your sales operations. Gain the same advantages as the top product sellers who have already discovered Cin7’s connected multichannel solution. Book a demo with one of our consultants and take a step closer to adopting the efficiencies that await.

5 secrets to negotiating price with suppliers

In today’s market, the supply and demand environment is more volatile than ever before. To make sure that you are not paying more for your stock than necessary, you will have to negotiate with suppliers more effectively.

It is said that the more you negotiate, the better the outcome for your balance sheet – but this suggestion should be taken with a grain of salt. After all, anyone can negotiate, but to successfully do it, it should be understood that the concept of supply and demand is the foundation for any negotiation. Failing to keep this in mind may end up straining or fracturing your relationships with suppliers, diminishing your reputation within the ecommerce community and placing your business in peril. 

So how should you negotiate with suppliers for your ecommerce business? There are myriad negotiation hacks that will help you secure the deals you seek and build your reputation as a shrewd business owner. The experts at Cin7 have created a list of five negotiating tactics to help you get better deals with a win-win outcome. Let’s get started!

#1 Research before negotiating with suppliers

Before you begin negotiations with a potential supplier, you must first conduct comprehensive research. Since they are selling you the product(s), they will have a thorough understanding of its market costs, demand, importance in the product value chain, and they know about your competitors. You should have a fair understanding of these factors too so that you bring credibility to the negotiating table and have a productive discussion. 

Doing the due diligence in researching a supplier, as well as their competition, will help you get an idea of market prices while keeping the sales goal of the supplier in mind. Based on your research, your proposal could involve promising long-term business, a shorter credit cycle, or changing the frequency of payments. Therefore, it is important to do your homework in order to proffer potential suppliers a fair, tangible, and mutual benefit in doing business with you.

Helpful Hint: As you research, be sure to note industry-specific terminology. Using it will help enhance your credibility and may be the difference in reducing the chance of suppliers quoting inflated prices.

#2 Calculate your purchasing needs 

Once you have a better understanding of the supplier’s business and its needs, your next step is to make sure your proposal fits both their needs and yours. 

To construct that proposal, determine the quantity of what you want to purchase, the order frequency, and the total cost of the purchases you would make during a given year. Having this information handy will provide you with more negotiation leverage and give the supplier a better idea as to how much potential you have as a business opportunity for them. The more your proposal meets the needs of the supplier, the more likely they are to offer you the discounts you seek.

Helpful Hint: Ask for bulk discounts. If you have a large order, you are in a great position to negotiate prices. Request to see their discount grids, as most suppliers use them regularly to manage sales. Be sure to refer to data gathered from your  inventory management software when finalizing your tentative order size. 

#3 Offer partial advance payments and deferred discounts

The next tip is to offer a partial or full advance for the first order. This is one of the best ways to establish trust and help the supplier decide to start working with you. You can always switch to their standard credit cycle down the line.

This also presents an opportunity to demonstrate a commitment to a mutually beneficial business arrangement. Specifically, when offering an advance payment, remember to ask for a discount on a total purchase volume after achieving a milestone, i.e., meeting a certain sales threshold. This is considered a deferred discounting mechanism, and it helps suppliers ensure that they are going to reach their sales goals before activating your agreed-upon discount. 

#4 Be honest and transparent

There are all sorts of reasons to seek a better price for products. For example, you might urgently need a product at a lower price to keep up with the competition or to have enough profit margin to meet your own sales goals. You might be a small business owner who needs a discount to remain profitable or a combination of any of these scenarios and yet not have much to offer in terms of value to the supplier. One thing you can offer, however, is full disclosure of your status. This is a gesture of good faith and will lay the foundation for a solid professional relationship. 

It is imperative that you do not use any deceitful tactics like negotiating under false pretenses or making hollow promises to get discounts from your potential suppliers. A business is only as good as the word of those who represent it, so make sure you are earnest in your negotiations. 

Helpful Hint: Sometimes a negotiation results in a stalemate. Don’t shy away from pausing a negotiation in the event of a failure to reach an agreement. Keep in mind that the number of sellers for the items you need may be limited based on your purchasing capacity and expected price range.

#5 Once an agreement is reached, get it in writing

One of the most important qualities of a good negotiator is to close the deal in writing. All too many businesspeople make the mistake of not signing agreements after they have completed the negotiation simply due to procrastination or lack of operational knowhow. This can lead to a situation where the other party forgets the details of your conversation, and hence, you may have difficulty reminding them. Also, if the decision-makers forget about certain details that you previously negotiated, you may miss out on the deal you thought you had secured. Therefore, it is in your best interest to finalize and ink the deal as quickly as possible.

Helpful Hint: You may use document signing tools available online to expedite the process and then email a copy of the signed agreement to the supplier. Place your first order reflecting the explicitly stated terms and conditions. 

With an inventory and order management system like Cin7, you have the option of connecting to your suppliers via a custom EDI connection streamlining future orders by placing them electronically.

In summary

Negotiating is a tough skill to master in any industry, but as an ecommerce business owner, you will put that skill into practice quite often, thanks to the shortening life cycles of various SKUs and sudden surges in demand for products. While you will naturally get better at negotiating over time, it is crucial that you apply the five tips to be a successful deal broker. Keep your eyes open for discount opportunities, negotiate your way into the best deals with your suppliers, and watch your ecommerce business thrive. 

Enter into supplier negotiations armed with accurate sales data gathered from a robust inventory and order management solution like Cin7 that updates in real time with your accounting software. Request a Cin7 demo today.

Cin7 study: Inflation fears causing consumers to change purchasing habits

Global crises and ongoing macroeconomic factors like supply chain disruptions, supply shortages, and the COVID-19 pandemic continue to impact consumers around the world.

With many unknowns still up in the air, fears and tensions are growing among consumers as prices of goods rise and threats of continued inflation loom. Are consumers concerned enough to change spending habits? If so, how will the threat of rising costs impact retailers and product sellers who have been managing challenge after challenge for more than two years?

According to a recent survey from Cin7, consumers are conclusively concerned about inflation, and they’re changing their preferences towards product sellers as a result. Their primary criterion for purchasing goods is now price by a wide margin, with the survey finding that the price of goods (45%) is the most impactful factor when choosing where to buy items, followed by quality of goods (18%), online ordering capabilities (12%), geographic location (9.5%), supporting a local or small business owner (9%) and lastly, speed of delivery (7%).

Consumer concerns and buying behavior

The vast majority of consumers (81%) state that they’re worried about inflation. Only 22% of consumers said they’re not reducing their spending right now, meaning that it’s doubly important for sellers whose products are not considered “essential” to make their value known and do everything in their power to keep demand up even when spending is being reduced.

Consumers consider buying on price in wide margins, at the expense of smaller and local product sellers and are instead gravitating towards big box retailers – with 49% stating they’d make purchases wherever is cheapest and 26% saying they’d purchase in-store from big box retailers. The survey results suggest that consumers don’t have major qualms about shopping at big box stores – and while they are still shopping online, a growing percentage of people would cut back if supply chain issues caused prices to rise.

Convenience and location matter, as 46% of respondents claim they’d purchase from locally-owned businesses if the price of goods were the same at different stores, followed by big box retailers (40%), and online from small businesses (14%). This signals trouble for online sellers as they’ll need to ensure their customers feel it’s just as simple and convenient to shop online from them, even if they can get the same product elsewhere. Otherwise, they risk losing out to local product sellers with brick and mortar presences, as well as big box retailers who have both online and in-store presences.

Buying behavior has already shifted as consumers look to reduce spending. The top two things they’re cutting back on – going out to eat at restaurants (67%) and purchasing non-essential items like clothes and toys (65%) – are not only detrimental to local and small businesses, but also signal challenging times ahead for two industries that have been hit hard during two years of the pandemic.

Adapting to shifting demand

As the price of goods increases globally and supply challenges continue, product sellers need to do everything they can to keep costs down. To do this, sellers must implement cloud-based technology to optimize operations to enable them to focus on better managing inventory and warehouse capabilities to keep up with fluctuating demand, accurately forecast and plan for the future, gain end-to-end visibility and more. This will be critical to fight the supply chain headwinds that are driving costs up and margins down.

Sellers also need to do everything they can to expand their sales channels with the help of integrated inventory and order management technologies – nearshoring product where it makes sense to get items into consumer hands quicker and outsourcing to third-party logistics (3PL) providers to compete with big box retailers who hold a lot of power in terms of addressing the warehouse and labor shortages impacting sellers today.

Find out how Cin7’s inventory and order management solution cuts operational overhead allowing you to price your products competitively. Let a Cin7 consultant show you how workflow automation and ready integrations with over 700 major retailers, online marketplaces, ecommerce sites, and 3PLs reduce costs. Request your free demo here.

Accelerate B2B wholesale selling with built-in EDI

Electronic Data Interchange (EDI): The electronic exchange of business information using a standardized format; a process which allows one company to send order information to another company electronically rather than by paper or email.

The top 30 retailers in the US, UK and Australia will buy over 2 trillion dollars of products from their suppliers this year. Are you getting your fair share of these purchases? Do you have the EDI technology to be a great supplier to these retailers?

Imagine if Walmart wants to order $100,000 of products from you. Which type of supplier are you? Type 1 or Type 2?

Type 1 suppliers – You’ve adopted a robust inventory and order management system that has a built-in EDI connection direct to Walmart. When Walmart needs to order from you, the purchase order is immediately received electronically by you for fulfillment because the required commercial documents have been coordinated between both parties ahead of time. And, as an added bonus, your inventory system has a seamless, bi-directional integration with your accounting software, so all of the appropriate journal entries are made and your stock count has been updated, all in real time. Supplier type 1 has a fully automated sales workflow designed to sell fast and scale over time.

Or, are you type 2?  The Walmart procurement rep has to manually complete your required form fields by navigating a PDF purchase order template, double check it for accuracy, and email it to you. Then your employee has to email the procurement rep several times to clarify the order details before manually entering the PO information into an Excel spreadsheet, accounting system or inventory tracker without making any mistakes. 4 or 5 days later, the order is ready to be fulfilled. As you may already know, Walmart will stop doing business with Type 2 sellers after their first experience. So, there are very few type 2 sellers left in the world.

Wholesalers and distributors who sell products in bulk to retailers have a vested interest in streamlining the sales process as much as possible by leveraging the latest advances in transactional sales automation.

Electronic Data Interchange (EDI) is the electronic exchange of business information using a standardized format; a process which allows one company to send information to another company electronically rather than by paper or email.

EDI software provides built-in templates that are used to establish unified field formats before transferring data between vendor and retailer systems, making repeat orders a snap.

EDI is an asynchronous data transfer technology that uses a file-based, batch transfer model. The standardization levels for EDIs have matured and been accepted almost universally. Experienced EDI providers maintain these standards and customize them to meet industry-specific requirements.

Adopting an inventory and order management software solution that integrates seamlessly with accounting software like QuickBooks or Xero and that offers a full service, built-in EDI capability with hundreds of major retailers is the key to quickly growing a flourishing wholesale distribution operation.

The benefits of EDI to wholesalers and their retail customers are numerous.

  1. Retailers who can predictably work with distributors that reliably fulfill electronic sales transactions will order more products, more often, engendering loyalty for years to come.
  2. Wholesale sellers that offer electronic order processing and retailers who take advantage of it can both cut staffing costs.
  3. EDI shortens the initial sales transaction, shaving days of admin work off of fulfillment time that may already be delayed due to supply chain disruptions.
  4. Electronic order processing reduces incidents of human error resulting from manual data entry and paper-based record keeping.

Wholesale sellers that choose inventory software with hundreds of pre-built EDI connections see their operating expenses shrink and sales grow exponentially. With the right inventory and order software, wholesale distributors enjoy the following:

  1. Secure, industry-compliant electronic connections that speed sales transactions compared to paper or email-based order processes. The faster a retailer can transact business, the more business they’ll bring you.
  2. Retailers that prefer to do business with you over your competitors who still rely on manual transactions and can’t provide the same simplicity and immediacy that you can with built-in EDI.
  3. Customized and automated workflows that minimize error risk, increase sales volume and lower staffing costs. When ordering is easy, retailers order more often.
  4. Dropping that expensive third party EDI provider. It’s a much better idea to go with a comprehensive inventory management solution that has all the EDI connections you need ready and waiting.
  5. Being directly connected to your third party logistics provider (3PL) warehouse the way you need to be. EDI connections to 3PLs streamline and automate fulfillment workflows and make the ordering process transparent from download to dispatch.
  6. Quick and efficient electronic exchange of other types of required business documentation with retail trading partners. These include invoices, order receipt confirmations, transaction updates, order status notifications and detailed shipping status updates.

Request a demo of Cin7 today to learn even more about the advantages of an inventory and order management system with full service, built-in EDI.

For a deeper and more comprehensive understanding of EDI, check out our extensive EDI resource here.

The next time Walmart, Target, Tesco, Costco, or any large retailer opens the door for you to sell to them, will you be ready?

Posted in EDI

7 considerations for EDI success

Technology has drastically improved how we interact with the world. Transportation has evolved from animal carts to fast cars; data transmission has changed from postal letters to instant emails. With the advent of the Internet, the world has turned into a connected village.

In such a connected world, your business needs to be able to share relevant information with stakeholders like suppliers. Thanks to technology, this process can be streamlined using EDI. You can electronically share information about purchase orders, invoices, and status information with your stakeholders using EDI.

In this article, we will discuss what EDI means and what challenges you may face while using EDI for your business. Let’s get started.

What is EDI?

EDI stands for Electronic Data Interchange, and it facilitates the computer-to-computer data transfer between two (or more) parties. In layman’s terms, EDI is similar to a chat messenger that delivers information from your device to your friend’s device.

The parties that exchange information through EDI are EDI trading partners. EDI software allows its users to create templates so that they can standardize documents shared with EDI trading partners.

Suppose you integrate EDI with your ERP (Enterprise Resource Planning) tool or inventory management system (IMS). Once complete, your EDI can automatically fetch the necessary documents from the ERP/IMS database and send it to trading partners as required. This way, you do not have to create documents from scratch.

In the absence of EDI, businesses had to rely on the postal service, faxing, or email all of which had drawbacks. Let us understand EDI better with the help of an example.

John runs an apparel business, and he replenishes the inventory by ordering goods from David – the manufacturer. In the past, his purchase manager would draft a purchase order, print it, and then postal mail to David to reorder stock. The order would be received by David’s sales representative, who would manually enter the items being ordered along with the respective quantity into the system to finalize the sale.

The process seems lengthy and time-consuming, right? With EDI, sending information takes seconds rather than its postal counterpart – which can take days (even weeks!).

John’s purchase manager simply needs to add order information – product specification, quantity – in his EDI software, which will be automatically forwarded to David’s (manufacturer) EDI software. David can easily integrate the EDI tool with his order management system, such that an order can be directly placed when John sends a purchase request through EDI.

(Image credits)

It is evident that EDI can streamline the purchase process which is better than doing it manually. The manual process also has room for many errors; for starters, the sales representative can enter incorrect order quantities into the system.

EDI not only saves your processing time, but it also helps in boosting the accuracy as it minimizes human error.

EDI also brings labor cost savings, as you do not need to incur the charges of printing the order details and the cost of postal handling/faxing/email the documents. Even the recipient does not need to endure the hassle of sorting and storing the physical copies for the record.

Common EDI challenges

Now that we are clear about the use and benefits of EDI let us also discuss the challenges faced while implementing EDI.

#1 Compatibility with trading partners

Deciding to implement an EDI system involves revamping your database. This challenge can multiply if you choose to create and administer the EDI in-house. Even after successful implementation from your end, the challenges do not end.

As EDI facilitates the transactions between trading partners in real-time, it is essential that your EDI system successfully synchronizes with their system for accurate data transfer.

Another hurdle could be that some of your suppliers may not be so keen to implement an EDI due to a lack of knowledge and hesitation about data sharing.

Apart from the stakeholders, it is also essential to train your internal staff to work with the EDI system. You do not want your purchase manager to order 1,000 items instead of 100 accidentally! The repercussions of mistakes can be huge, and thus it makes sense to fully acquaint your employees with the relevant features of the EDI.

As the stakes are high, it is advisable to consult an EDI expert rather than trying to figure things out on your own.

#2 Standardized formatting

The complexity of EDI integration can be challenging when your trading partners customize the formatting guidelines to cater to their unique needs. For instance, the invoicing transaction code is referred to as EDI 810.

Some invoice fields are common across all trading partners. However, the partner may likely add some additional EDI segments specific to their business.

In such scenarios, compatibility can be an issue that can lead to transaction errors. Here the experience and support of EDI providers become crucial as they are experienced with handling such issues.

While doing B2G (Business-to-government) transactions, your EDI should be compliant with the document formats legislated by the government. For example, Since 2020, the majority of European governments have been mandated to accept invoices electronically. Even the federal German public bodies have stopped accepting unstructured invoices – PDFs, printed documents – and only accept e-invoices.

As your business expands, it is essential to comply with government standards to avoid penalties. The standards can be region-specific – like the VDA format in the German automobile industry – or industry-wide.

These are some widely adopted standards in the EDI industry:

  • UN/EDIFACT (Electronic Data Interchange for Administration) was devised by the United Nations in 1987. It created standards for the syntax and structure of the messages to ensure that EDI is compatible with multi-industry transactions.
  • GS1 is essentially a subset of EDIFACT, and it is widely used to standardize product data. It uses GS1 identification numbers to help identify each product, location, and trading partner. The GS1 identification numbers are usually in barcode format, which can be scanned to add the physical products into the database, and movement can be tracked.

You must also ensure that your EDI can accommodate various transmission protocols such as FTP, HTTP, SFTP, and AS2. AS2 (Applicability Statement 2) has gained popularity in the retail and consumer goods industry since its adoption by Walmart. AS2 is used to transmit EDI messages quickly, safely, and cheaply!

#3 Security considerations

Despite its wide adoption across various industries, some partners may still be concerned about implementing EDI due to the nature of information sharing.

These concerns may arise from various factors such as lack of trust and risk of information leak due to security breaches. International laws can further add to the challenges by introducing legal frameworks and data protection rules.

You must ensure that the information is shared via encrypted transfer protocols. It is best to discuss your security measures with your partners, to ensure that everyone is on the same page and comfortable with your business practices.

It should be noted that the sensitivity of the information varies, like your order data may not be as sensitive as the invoices (which can contain vital billing information). You need to take extra precautions while dealing with highly sensitive data – as with healthcare customers, for example.

A value-added network (VAN) is a hosted private network that is used to offer connectivity between EDI trading partners. It acts as the gateway to sharing documents between parties – in other words; it is like a digital postal service. You need to check the security certifications of your VAN network, like ISO 27001 accreditation.

#4 Rising EDI cost

EDI helps lower your operational costs and optimizes logistics; however, you need to spend to get started. A substantial investment to purchase the necessary infrastructure – hardware and software – for EDI transactions will be required. If you decide to build an in-house EDI, you also need a dedicated IT team for its maintenance.

If your EDI implementation does not go well, it could also tarnish your reputation amongst your trading partners. Your manufacturing vendors may even penalize you for incorrect ordering as it can impact their production lines.

To lower your costs, you can outsource to a cloud-based EDI system provider. In this case, you won’t have to invest in a dedicated set-up and transactions run in the cloud, leading to cost savings.

Additionally, a provider updates the EDI automatically, so it saves you from any hassle when scaling up.

#5 Data errors

According to a study by the University of Tennessee, 60% of B2B transactions are suspended or declined due to some anomaly in the data. This makes it crucial to take necessary steps for data governance, to make the most of your EDI’s potential.

The report further suggests that 16% of the orders placed in a month contain an incorrect price and 20% of orders are for items that are either discontinued or not available in stock. Surprisingly, 8% include a duplicate purchase order.

Such situations can be dealt with by adding EDI rules that monitor transactions for variables like price differences and PO validity. This way, the system can send alerts to your team whenever a discrepancy is found.

There are times when a manufacturer needs to increase the price of a particular product. Needless to say, it is crucial to alert the buyers so that they can alter their order quantity.

For instance, the purchase manager gets a specific budget (say $100) to order a quantity of goods. Presently, the manufacturer sells each unit at $10, so the buyer can avail of ten units ($100 budget / $10).

However, if the manufacturer increases the price from $10 to $20, the purchase manager will need to reduce the quantity from ten units to five units ($100 budget / $20). But if the manufacturer does not promptly inform the buyer about the price change, it could lead to disputes and damage their relationship.

Price changes are inevitable; to solve such issues, businesses use EDI 845 – the price authorization acknowledgment document. Vendors use it to communicate price changes to resellers. EDI 845 is used primarily in the pharmaceutical industry, but manufacturers and distributors also utilize it.

As your business operations scale, so does the volume of your EDI transactions. With greater volume, it can become challenging to avoid errors or spot missing fields. Popular EDI formats such as EDIFACT were not meant for humans to comprehend, and that is why spotting errors can be tricky.

Even if you somehow manage to do that, manual error inspection is time-consuming. Thereby, automating the error detection process can help you save time and increase your profit margins.

#6 Integration with your inventory management system

EDI should be flexible to adapt to your way of doing business instead of the other way around. The technical integration should allow you to use the formats that you prefer or commonly used by your trading partners.

Many businesses already use an ERP (Enterprise Resource Planning) system or inventory management solution to gain insights into their business processes. Look for an EDI that also integrates with your existing system so that you can directly process the EDI orders.

Instead of manually pulling the documents from EDI and then feeding them into your inventory system, you can do this in real-time by integrating them together. This helps you meet increased customer expectations.

#7 Offering transparency

As the complexities of the supply chain rise, the need for transparency between trading partners is more important than ever.

The functionality of EDI has evolved over the years. What started as a means to improve the B2B transaction process has now evolved into a tool that provides better inventory management.

You can adopt some EDI transactions that provide inventory information to boost transparency. EDI 846 can provide information about inventory levels, and EDI 214 offers buyers shipping status notifications.

With the right system, you can share alerts and notifications with your trading partners. Offering transparency ensures that information is not siloed and helps everyone to be on the same page.

Wrapping up

We live in a period where the supply chain is constantly getting disrupted by various factors – be it pandemics or political factors. During such a period, investing in technology that can help optimize your supply chain – such as EDI – seems an obvious choice.

Implementing EDI can be beneficial as it streamlines your B2B transactions and provides much-needed transparency. Choosing the right EDI that integrates with your ERP can do wonders for your organization.

Vetting the best EDI is also vital as it contains sensitive information that can affect your business’s overall profitability.

To learn more about Cin7’s built-in EDI capabilities, request a demo.

Posted in EDI

How to avoid costly SKU proliferation

Imagine the demand for one of your products is through the roof. In response, you purchase more of that product with several variations. Your goal is to capitalize on the popularity of the product by giving your customers choices like color, style, and size.

That describes SKU proliferation. It is the process of adding products or variations of products to your inventory. Each of those variants receives its own unique SKU.

SKU proliferation impacts almost every aspect of your business. In this article, we will describe the pitfalls of SKU proliferation and its implications on your business as well as how to manage it effectively.

A SKU is a unique number assigned to a specific product

SKU stands for stock keeping unit. It is an alphanumeric code assigned to a product that helps easily track and manage inventory. SKUs differ from UPCs and GTINs. SKUs are individual to the business and are used to make purchasing decisions to improve profitability. UPC is a Universal Product Code used primarily in North America and GTINs are Global Trade Item Numbers used throughout the rest of the world and every product has its own distinct code number. Competing businesses that carry the same product will have the same UPC/GTIN but a different SKU.

Here’s how it works. A clothing company might have several variants of the same item including size, material, and color. Each variant is assigned a unique SKU. For example, a medium-sized blue t-shirt can be assigned the following SKU: BLUTEEMEDCF26.

SKUs enable businesses to display similar items to customers based on common features. This is where upselling and cross selling shines – it’s that suggestion just before checkout that reads “frequently bought together” or “you might also like.”

SKU proliferation and its causes

As trends fluctuate and competitors enter the marketplace, businesses strive to keep up with customer demands. SKU proliferation is the process of adding more products (SKUs) to your inventory to meet those needs. SKU proliferation can be considered a byproduct of multichannel selling – customers are used to having multiple choices at their fingertips.

Before we discuss the problems associated with SKU proliferation, let’s explore why businesses encounter this problem in the first place.

1. Technology upgrades

Technology has changed the way we do business. Multichannel selling has forced wholesalers and retailers to carry more inventory in an effort to provide a seamless shopping experience. Without proper sales forecasting, businesses overstock to meet anticipated sales through multiple channels.

2. Faster delivery preferences

Imagine how quickly you would be out of business if every time you sold a product you had to wait for the product to reach your store before sending it to your customer? To accommodate delivery demands, more and more businesses are stashing inventory to dispatch if and when an order is placed.

3. Poor inventory management

Inefficient inventory management leads to a stockpile of unwanted or obsolete inventory, each with individual SKUs.

Problems created by SKU proliferation

As the variety of products (SKUs) increases, so does the complexity of running your business. SKU proliferation disrupts the logistical process, forces rigorous inventory control, and increases costs.

Here are just a few of the larger problems created by having too much inventory.

1. Increase in storage costs

Storage costs are directly correlated to the amount of inventory a business has. The more inventory you keep, the higher your storage costs will be. In addition to the costs of the actual space, anticipate rising costs in utilities, insurance, and staff to manage storage.

2. Difficulties in fulfilling orders

As inventory increases, it can become more challenging to fulfill orders accurately and in a timely manner. Having too much inventory can be confusing, leading to errors caused by similar SKUs or incorrectly assigned SKUs. As a consequence, the wrong product might be shipped, increasing costs and hassles associated with returns and a potentially negative reflection on your brand.

3. Inefficient cash flow

Securing more inventory comes at the expense of something else. Funds allocated towards inventory can decrease cash flow when your business needs it most. According to a US Bank study, 82% of business failures result from poor cash flow management.

4. Increase in order fulfillment times

Having too much inventory slows down the fulfillment process. Overstuffed warehouses create time-consuming efforts to find products and package orders. This is on top of errors that might be caused by too many SKUs.

SKU rationalization is the remedy to SKU proliferation. It is a method of reducing the overall number of SKUs by identifying obsolete or poor-performing inventory. Just keeping your best sellers cuts storage and management costs and improves profitability.

SKU management for businesses

As your business grows, SKU proliferation may seem inevitable. But it doesn’t have to ruin your business. Using SKU rationalization, you can identify those products that are actually making you money and return or “fire-sale” the rest.

Effective SKU management not only saves money but also time. Decreasing inventory will allow you to easily find and package online orders and replace items on the sales floor.

It might seem like SKU proliferation is a good thing. After all, it’s a strategy to ramp up sales while the buying is hot. The catch is its impact on business logistics. Proactively monitoring your SKU base allows you to implement corrective measures to effectively scale your business. It is part of an inventory management solution that enables you to forecast sales and keep up with trends without busting at the seams.

Cin7 was built with modern businesses in mind. Its inventory and order management software offers a cloud-based solution that integrates all your sales channels into a single platform. Cin7 facilitates advanced automation processes creating seamless transactions centered around a positive customer experience.

Ditch the spreadsheets and stop manual data entry. Conquer new markets with Cin7’s inventory and order management system.

Book your Demo now.

FIFO vs. LIFO – Reporting compliant inventory valuations

In retail and wholesale sales, solid profits result from inventory that is closely managed. In this blog, we will discuss inventory valuation and accounting principles. We will cover why it is so important to value your inventory, different methods for inventory valuation, and how you should choose your inventory valuation method based on your business.

What is inventory, and how is it valued?

Generally speaking, inventory are goods that can be classified into 3 stages:

  • Raw materials
  • Items that are in production
  • Goods that are ready for sale

Based on your business needs, internal accounting staff may need to assign value to inventory and classify it as a company asset since inventory can turn into cash in the near future. In order to accurately value your company, all your company’s assets may need to be assessed.

When to classify inventory as an asset

There are two methods of determining income and expenses for accounting purposes: cash accounting and accrual accounting.

According to the Internal Revenue Service (IRS) if your business is holding inventory, then you are required to use the accrual method of accounting.

In accrual accounting, a transaction is recorded when it is earned, which is triggered by generating an invoice or receiving a bill. This is why it is essential to track your inventory along every phase of the business cycle.

However, the 2017 US Tax Cuts and Jobs Act states that “if your business has gross receipts of less than $25M, you can treat your inventory as “non-incidental material and supplies.” In layman’s terms, this means that the items in your inventory need not be valued and considered as assets of the company as they are bought for resale. In this case, you can use the cash method of accounting.

Inventory valuation method

At the beginning and end of the fiscal year, inventory valuation is a must. For valuation purposes, you must:

  • Apply Generally Accepted Accounting Principles (GAAP)
  • Clearly reflect your income
  • Maintain consistency from year to year

Since inventory moves among different stages in your organization, it’s challenging to track all the costs of individual items. GAAP provides businesses with helpful guidelines to properly evaluate their inventory.

Different methods of inventory valuation

A company can choose from various methods to determine its inventory costs suggested by GAAP. GAAP refers to a standard set of accounting principles that have been issued by the Financial Accounting Standards Board (FASB). GAAP suggests that businesses use one of two different inventory accounting methods – first-in-first-out (FIFO) or last-in-first-out (LIFO).


FIFO stands for first-in-first-out. It is a method of inventory management and valuation in which goods produced or acquired first are sold, used, or disposed of first. In other words, goods are sold in the order they were received and subsequent shipments of the same item go to the back of the line.

For reporting purposes, FIFO assumes that assets with the oldest costs are included in the income statement’s cost of goods sold (COGS). So, if you sell a product, the cost of goods sold by using the FIFO method is the value of the oldest inventory. FIFO is one of the most popular in inventory valuation methods.

Using the FIFO method has some significant advantages:

  • It is more realistic because most businesses ship older stock first to avoid depreciation of value or spoilage.
  • FIFO increases the value of your purchased inventory and company net worth in times of inflation. As a result, you apply a higher asset value.
  • Your operational reports are always accurate. As you are selling the oldest items first, your balance sheet will always show the actual cost price of the inventory.


LIFO stands for last-in-first-out. It is a method of inventory management and valuation in which goods produced or acquired most recently are recorded as sold first. In other words, goods that were just received are accounted for ahead of stored backstock of the same item. The cost of the newest products is the first to be accounted for as the cost of goods sold (COGS), whereas the lower price of older goods are counted in inventory.

Some accountants in the US often advise using the LIFO method for your inventory accounting when you have stock with frequently changing costs. Using LIFO as a preferred method for such scenarios helps match the latest cost of inventory with the sales revenue of the current period. This can be a more straightforward approach for initial inventory valuation as well as for tax filing purposes.

Unlike FIFO, LIFO has some disadvantages:

  • LIFO brings taxable income down when your cost price rises, but your profit will turn out significantly lower.
  • If, in the near future, you plan to expand your business, not all countries allow a LIFO valuation.
  • LIFO is not realistic for companies that sell perishable goods. Leaving the oldest inventory sitting idle could risk spoilage, leading to losses.

Example of FIFO

Let’s understand how FIFO is used to calculate Cost of Goods Sold (COGS).

Buys an Item $100
Buys the same item after inflation $150
Sells an item for $175 -$100
Reported profit $75

In the FIFO method, when calculating profit, its initial/oldest purchasing cost is subtracted from its selling price to calculate the reported profit.

Example of LIFO

The same example used earlier can be used to show the LIFO method for calculating the cost of goods sold (COGS).

Buys an Item $100
Buys the same item after inflation $150
Sells an item for $175 -$150
Reported profit $25

In the LIFO method, when calculating profit, the most recent purchasing cost is subtracted from its selling price to calculate the reported profit. As you can see, using the LIFO method for inventory valuation and accounting lowers your return profit.

Differences between FIFO and LIFO

FIFO or LIFO are the methods that companies use to assess their inventory and calculate profit. The amount of profit a company generates affects their income taxes.

The differences between FIFO and LIFO are shown below.

Comparison parameter FIFO LIFO
Meaning The first-in-first-out or the FIFO method assumes that the oldest products in a company’s inventory are sold first. The last-in-first-out or the LIFO method assumes that the last item of inventory purchased is the first one sold.
No restrictions by GAAP or IFRS IFRS forbids LIFO method
Recording keeping In the FIFO method, the number of journal entries decrease In the LIFO method, the number of journal entries increases
Impact of inflation Decreases the COGS and increases the net profit Increases the COGS and decreases the net profit
Preference Higher Lower

Which method is better?

We can say with certainty that the higher the cost of inventory, the lower the profit and the tax rate. The lower the cost of inventory, the higher the profit and the tax rate.

To know which method is best suited for your business, you need to look at the way your inventory costs are changing.

  • If your inventory cost is increasing or is likely to increase in the near future, LIFO can be better. Because the cost of goods is higher, you will benefit from the lower taxes.
  • If you feel that inventory cost could be decreasing in the near future, FIFO is the best option.
  • If your preference is to accurately assess your inventory cost, FIFO is the better option. This is because FIFO operates on the assumption that the older and less costly items are usually sold first.

GAAP/IFRS regulations for FIFO and LIFO

Generally Accepted Accounting Principles, sets the standards for accounting procedures in the United States. Under GAAP, both FIFO and LIFO are allowed.

However, International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Body (IASB) does not permit use of the LIFO method.

Outside of the US, most other countries follow the rules laid down by the International Accounting Standards Board (IASB). This is the reason why most US based companies use the LIFO method for local financial statements and switch to the FIFO method for their overseas operations.

If you ever decide that it would be ideal for your business to switch from the LIFO method to the FIFO method, you need to file a FORM 970 with the IRS. You are allowed to go back to LIFO only if the IRS gives specific permission. 

Closing comments

In a nutshell, we have learned about inventory valuation and its importance in business to accurately determine the total value of all your assets and liabilities. While we have seen both FIFO and LIFO methods of inventory valuation, one thing is clear. No method is a foolproof solution for your business. Both methods have their pros and cons. As such, you should choose the method that best suits your business. If you are a firm that operates internationally, FIFO is the best method outside the US because the LIFO method doesn’t meet compliance requirements in most countries.

Cin7 was built with modern businesses in mind and only supports the FIFO method. Cin7’s inventory and order management software offers a cloud-based solution that integrates all your sales channels into a single platform. Cin7 provides advanced automation processes to create seamless transactions centered around a positive customer experience.

Ditch the spreadsheets and stop manual data entry. Reach new markets with Cin7’s inventory and order management system. Check out our product overview video here.


The Cin7 quick reference guide to inventory management

In today’s economy, small to medium sized businesses are competing with global conglomerates. Efficient inventory and order management is one way for solopreneurs, entrepreneurs, and small business managers to level the playing field and grow their brand.

Inventory management functionality is what fast-growing businesses need to stay competitive. This article is your definitive guide to inventory management to scale your business efficiently and effectively.

What is inventory management?

Inventory management is the process of ordering, storing, using, and selling business inventory. It is a system that tracks raw materials, components, and finished products to ensure enough supplies are on hand to meet the purchasing demands of the customer.

Inventory management is measured as inventory turnover. It reflects how often your products are sold within a specified time period. A measure of business health is maintaining adequate inventory turnover where your business does not have more products than sells – or excess inventory. Poor inventory turnover leads to deadstock or unsold stock/product.

Retail inventory management

Retail is a general term used to describe businesses selling physical products to consumers. Although not exclusive to retail, inventory management plays a more critical role in this industry over others.

There are a growing number of ways to sell products including the following:

  • Offline. A company uses a physical brick-and-mortar location to sell its products.
  • Online. A company sells its products over the internet using an ecommerce website or marketplace.
  • Multichannel. This employs multiple ways a company sells to its customers including an online store or marketplace or a physical location. Increasingly, companies also use social media sites to sell products. With multichannel selling, each channel operates independently of each other.
  • Omnichannel. This way of selling creates a unified, integrated experience for customers across all offline and online channels. Where multichannel selling operates independently, omnichannel is focused on a seamless experience for the customer.

Wholesale distributors sell products to other businesses rather than individual consumers. This form of selling is referred to as business-to-business (B2B) or B2B ecommerce. B2B selling can include any of the above methods.

Regardless of how a company chooses to sell its products, inventory must be managed. However, inventory management is different depending on the constraints of how products are sold.

Importance of inventory management

Good inventory management is an essential part of running a successful retail business. It provides a seamless customer experience, maximizes profits, and improves cash flow. A company’s inventory management system should optimize fulfillment and avoid shrinkage and waste. Without an effective system in place to manage inventory, retailers risk running out of products during peak demands from their customers.

Good inventory management includes the following:

  • Enterprise resource planning (ERP). ERP software manages key business operations including human resources, accounting, procurement, warehousing, production, marketing, and sales. ERP systems optimized for inventory management help maintain optimal levels of stock by combining the inventory needs of staff, customers, and suppliers.
  • Proper warehouse management. The barcode system, first-in-first-out (FIFO), and last-in-first-out (LIFO) techniques offer a clear picture of present and past inventory available with the company and optimize warehouse functions.
  • Managed sales operations. Sales is a continuous process that depends on manufacturers for goods or services. Efficient inventory management minimizes the risks of unavailability of raw materials needed in manufacturing.
  • Customer experience. Understanding the customer buying journey mitigates risks associated with insufficient stock to fulfill orders.
  • Shrinkage avoidance. Shrinkage results in inventory loss attributed to employee and customer theft, administrative or cashier error, vendor fraud, damage, and spoiling.
  • Cash flow. Inventory levels are key to maintaining a good cash flow that ensures all aspects of the business run smoothly. Excess inventory ties up cash in products that could rather be spent on operations including salaries and other fixed costs.
  • Fulfillment. Product availability is essential for fulfilling orders quickly. A good inventory system delineates where products are along the supply chain.

Types of inventory management

There are numerous types of inventory management systems. Which is best for your organization depends on budget, cost, utility, and accessibility.

Barcode inventory management

The barcode system is an automated and simplified way to manage inventory. A unique number or barcode is assigned to each product. Data points assigned to that number can include information about the supplier, the product, and the inventory or stock. When a product is sold, the barcode is scanned and inventory adjusted automatically. Additionally, management can find key inventory metrics by scanning the barcode to bring up the item on a computer database.

Continuous/perpetual inventory management

A continuous or perpetual system manages inventory in real time, recording changes in inventory at the time of the transaction. It uses radio frequency identification (RFID) to passively identify tagged objects (inventory) for tracking along a supply chain.

Periodic inventory management

This is a manual process used to determine the inventory at a particular time point such as end-of-day or year’s end. This form of inventory management is most time-consuming as it involves physically counting the products on the shelves. Periodic inventory management is used primarily for inventory valuation and accounting purposes.

Inventory management process

Below is the step-by-step method to improve an organization’s inventory management system.

1. Determine the loopholes

Identify actual stock on hand and the inventory requirements for the goods sold to determine if gaps exist between demand and supply, and reasons for those gaps.

2. Analyze spending patterns and consumer demand

Market demand forecasting helps organizations estimate production quantity to determine what is needed to maintain adequate inventory.

3. Evaluate the cost involved

Cost of goods sold includes different expenses like warehousing, maintenance, bulk discounts, transport, and supply chain costs. Each of these needs to be well analyzed.

4. Identify the extent of process automation

It is not possible for each organization to completely automate the inventory management process. However, it’s important to identify those particular areas where automation is possible.

5. Inspect supplier’s performance and practices

The supply chain is critical for maintaining adequate inventory. Identifying any holes in the supply chain or supplier’s performance is necessary. And, if needed, identify additional or alternative suppliers.

6. Classify inventories into various categories

Products must be segregated into categories based on the product type, maintenance cost, customer class, or profit margin.

7. Set objectives for all inventory categories

Set benchmark objectives and goals to efficiently track and manage the performance of all inventory categories. This can identify any issues within each of the categories.

8. Prioritize the areas of improvement

Analyzing goals and objectives allows companies to prioritize improvement needs. Improvement prioritization should be based on the impact of problems identified. Implement a hierarchy to address those areas.

9. Take advice from experts

Designing a proper inventory management system cannot be overemphasized. Employing consultants or experts will ensure the inventory management system meets the company’s needs and stays within their desired budget.

10. Frame suitable inventory management policy

The final step in implementing a good inventory management strategy is consistent and timely evaluation to determine what changes and improvements are necessary to add value and create an improved customer experience. These changes can be based on a number of factors, most notably supply and demand.

Choosing an inventory management system

Which inventory management system is right for your business depends on a number of factors. Here are just a few things to keep in mind.


There are various signs you have outgrown a standard inventory system including inventory errors and constant over stocking. When you find you’re spending more time on manual, operational tasks than growth, it is likely time to automate your inventory process.


Prepare a list of “must-haves” for your inventory management system. Do you ship orders or use digital packing? Does your company process both wholesale and retail orders? Are you manufacturing your products? All of these affect which type of inventory management system is best for your company.


Customer support is essential for set-up as well as troubleshooting should things go wrong. Support includes phone, chat, and/or email contact. Consider support hours – is the support team available when you need support?

Ease of use

Determine your staffing needs and the technical prowess of your staff. Will the inventory management system meet those needs and ability levels? The system you choose needs to be easy to use as well as transferable between departments.


Prepare a list of must-have integrations, e.g., ecommerce platform, accounting, shipping, marketplace, POS, 3PL, etc. It’s essential that the new inventory system integrates directly without requiring additional applications, middleware providers, or software managed by third parties.


Your inventory management system will manage a critical part of your business. Finding innovation-driven software using the latest technology is vital.

Ready for even more in-depth inventory management coaching? Download our complete guide on inventory management here.

Cin7’s inventory management solution for multichannel selling

Cin7 was built with modern businesses in mind. Its inventory and order management software offers a cloud-based solution that integrates all your sales channels into a single platform. Cin7 provides advanced automation processes to create seamless transactions centered around a positive customer experience.

Ditch the spreadsheets and stop manual data entry. Reach new markets with Cin7’s inventory and order management system.

Book your demo now.

21 inventory software features wholesale sellers should look for

Wholesale commerce is all about large volume and big profits, but as with all business, can come with the risk of big losses. Changes in consumer preferences, supply chain operating factors, and increasingly aggressive competition make it necessary for wholesalers to stay on top of their game.

Integrating software to organize their success should be the first thing that any wholesaler thinks of. The challenge is that there are many wholesaling software solutions with similar features available on the market. So how do you choose the ideal software that helps you manage and scale your wholesaling business?

To answer this question, experts at Cin7 have curated an extensive list of 21 must-have wholesale management software features. This 21-point list will help you make the right decision for your business so let’s get started.

Our experts have divided these 21 aspects into seven categories to keep things simple for you:

  1. Inventory management
  2. Order management
  3. Warehouse management
  4. Order fulfillment
  5. Reports and forecasting
  6. Documentation management
  7. Third-party integrations

Inventory management

In this section, we will cover wholesale selling features that will help you manage your inventory in a smarter and more efficient way.

#1 Inventory control

Any software you adopt should enable you to maintain the quantity of inventory you deem necessary and provide you with real-time stock visibility. It should help you meet customer demand at all times with minimum inventory holding costs and mitigate any delays in order fulfillment.

Make sure the solution automates processes like reordering and stock taking to help eliminate the risks associated with decision-making. In a nutshell, it should help you control your inventory flow in the most financially and business-wise manner.

#2 Inventory tracking

This feature revolves around providing you with real-time visibility of your inventory throughout your organization and across partner organizations. Every step needs to be tracked from when you purchase stock from your vendor, pick-up by your logistics partner to customer delivery.

You should be aware of the five Ws (who, when, where, why) and H (how) at all times, as it is instrumental in helping you make the right decisions. Also, you should be able to get details in terms of all batches and lots since this information will help trace any recalls.

#3 Barcode support

It is inevitable that you will require a full-scale barcoding solution that allows you to generate barcodes for all stored items. This includes items that are temporarily waiting to have barcodes printed for order pickup, packaging, stock transfers, and cross-docking.

The software either needs to provide in-built barcode generation capabilities or support it via a third party integration. However, it is preferable to have it built in natively as barcoding will be an integral part of your operations with many company-specific references like SKUs.

#4 Product bundling

As a wholesaler, you may need to sell products in bundles, but this complicates the accounting and other operational aspects. Your inventory management solution should support product bundling (also known as inventory kitting) so that you can sell confidently.

The platform should allow you to combine prices, select product combinations, and calculate margins and taxes. It should be able to consider your current stock levels, how long stock has been sitting in the warehouse, expiration dates of perishable goods, and offer compatible products for upselling/cross-selling.

Order management

In this section, we will learn about the features that will help you manage wholesale orders.

#5 Automating order processing

Automating order processing with the help of robust EDI solutions has become a bare minimum feature for wholesale selling as customers today expect instant confirmation and other post-order communications. Your software should natively integrate through EDI with all your selling channels and facilitate a two-way transfer of information so that your customers are aware of stock availability and make purchases hassle-free.

Customers should also have visibility into shipping fees, terms, and conditions, along with your return policy, making the entire order processing experience coordinate with the customer journey, and your business model.

Real-time inputs for all orders saves valuable time spent on order processing and boosts your organization’s productivity. This would also streamline their workflow management while enhancing the customer experience.

#6 Managing order history

As a wholesaler, order history management becomes essential from two perspectives: firstly, it aids in demand forecasting and secondly, it helps you increase the average lifetime value of a customer resulting in repeat business.

Ideally, your solution should go far beyond merely allowing you to manage order history. It should help make sense out of purchase decisions and generate insights that help you shape future strategies and campaigns. It should be a valuable addition to your client relationship management and overall personalization efforts.

#7 Shipment tracking

The wholesale sector has recently adopted digitization as a part of its business strategy, and shipment tracking has become a standard demand for wholesaling businesses giving clients important shipping updates.

This could be in the form of dashboards and self-service portals where your customers can access the latest updates regarding their shipment and directly communicate with shippers. It should also provide you with the shipping status of the goods sold and detailed information regarding any delays.

Warehouse management

Here are ways that a warehouse management module can improve internal logistics.

#8 Managing inventory location and available storage space

Your software should provide you with both the real-time location of any item and its historical storage data. This will help you make decisions involving stock transfers like changing the location of inventory with respect to the consumption patterns and making space for incoming shipments.

This will help you direct your warehouse staff regarding pickups and material handling while also ensuring that your storage space is utilized optimally. It should also help you with storage space allocation and insights regarding the availability of space based on incoming inventory. Also, you should keep in mind that keeping track of inventory location will require you to use barcoding solutions and perform inventory counts periodically.

#9 Internal and external stock transfer

As a wholesaler, stock transfers are part and parcel of your business. Therefore, this is an important feature as it will allow you to perform internal and external stock transfers with accuracy and efficiency. It should allow you to print barcode labels for individual stock items, pallets, and entire consignments to help coordinate with internal and external stakeholders.

The solution should also help streamline accounting and record-keeping with templates that capture all vital information like the person in charge at both ends, details regarding transferred items, schedule, and cost of the entire process. It should also facilitate a reverse supply chain in case the goods are unfit for use. The goal is to keep stock levels accurate despite  inventory movement.

#10 Generating pickup and packaging slips

Pickup slips enable your staff to swiftly find and fetch ready-to-ship products from their respective locations in your storage facility. Depending on your requirements, a warehouse management system should support various picking systems such as batch picking, cluster picking, wave picking, zone picking, and hybrid picking.

Packaging slips need to support specific requirements like adding special handling instructions and product bundling instructions alongside regular customer details. You may be required to provide additional documents like the bill of lading (BOL.) Its format should be in line with the expectations of your shippers and provide them with all the required information upfront.

Order fulfillment

Order fulfillment for wholesalers differs significantly from retail sellers. We’ve targeted these specific functionalities for the wholesale sector.

#11 Sharing order details with the customer

This is one of the important wholesale order fulfillment features that will allow you to send an order confirmation email with order status and other details. You will also need to integrate your wholesaling software with an email marketing platform in order to send and revert to transactional emails requiring data from within your organization.

Other email communications include delays in order fulfillment, shipping, order cancellation, returns, or refund processing. You should also check out the information-sharing capabilities across multiple channels.

#12 Customer self-service portal

Many software providers offer a customer self-service portal. It can be a great addition to your customer experience enhancement efforts and significantly reduce the workload for your customer service team. Customers can refer to the portal to answer questions that the customer service team would otherwise need to reply to manually. Customers can access shipment or product return status directly in the portal or VIA automated emails that serve the same purpose.

You can also look for additional features like a FAQ zone, community forums, and guides that will help serve your customers’ needs. It will also give you a chance to understand their content needs better and optimize accordingly.

#13 Returns processing

Statistically, 30% of online orders are returned, and hence, returns processing is an undesirable yet significant part of your operations. As we discussed earlier, a self-service portal comes in handy, but you will need other features too. Make sure your solution can print return labels, helping to automate return merchandise processing.

Because you’ve chosen a warehouse management solution that connects bi-directionally to your accounting software, you will also benefit from the visibility of the returning inventory and control of its costs. Also, you can choose to store the returning goods at a local fulfillment center and redirect them for resale if the items are fit for use. Automated returns processing will also let you know about the issues faced by your customers and even come up with educational material in case you find that returns are caused due to a lack of product knowledge.

Reports and forecasting

Here’s a list of business intelligence oriented features you should look for when considering wholesale inventory management software.

#14 Report building

Accessing data insights from your solution’s reporting capabilities should be a priority when considering software. It should pull real-time data in easy-to-understand formats so that you can make business decisions without investing too much time. It should be able to identify any irregularities in your processes and point out the exact reason behind any lag in the functioning of your organization.

The solution should have reports to empower each of your business functions, including purchasing, warehousing, inventory management, inbound and outbound shipping, demand forecasting, and manpower planning. Thus, the software should keep you well informed and provide you with crucial real-time inputs to keep your wholesale business running at optimal levels of efficiency.

#15 Demand forecasting

Demand forecasting is the process of estimating the market demand for your products during a given time period with accurate details such as the volume, demand centers, trends, and reasons such as festivals, holidays, and customer affinity.

These reports will help you implement a lean operating model where market conditions dictate action, and value is delivered at each node in the supply chain. Also, you can minimize inventory holding levels and make timely purchasing decisions. This, in turn, saves you from facing stock-outs or missing sales due to the unavailability of products.

#16 Capacity planning and estimation

As a wholesaler, you will need to understand the availability of your staff and their ability to complete work against business requirements. Reporting should also include availability of the assets and tools required for them to do their jobs, such as the material handling trolleys and trays used to transfer items.

The reporting should give you more accuracy around work delegation and estimated time for completion of tasks. The system uses inputs to determine how many employees are present, what assets are available for use (trolleys, trays), and the execution strategy to be employed (e.g., batch pickup, wave pickup, hybrid pickup combined with LIFO/FIFO). The result of the final computation is reflected in the pickup/packaging slips. This feature saves your team from having to make last-minute adjustments. You will also get an idea regarding the right number of resources required to run your organization and reduce attrition levels.

#17 Financial and accounting reports generation

Reports like inventory audits, inventory reconciliation, ABC analysis, inventory evaluation, inventory shrinkage, and inventory holding costs are among the basic requirements you should have in mind. Your software should also provide you with the accounting data that can be directly fed to your accounting system to eliminate work duplication and reduce any manual errors.

These reporting capabilities will help you understand your organization’s financial health so you can make timely adjustments to maintain your profitability. Reports like inventory turn days, inventory turnover ratio, fill rate, average spend per customer, and repeat order rate help you connect with the financial aspect of your operations.

#18 Sales quoting

Your wholesale inventory management software should help you with building sales quotes as it contains all the required data, including product availability, fulfillment lead time, discount grids, and payment terms.

This can be especially useful when considering the nature of bulk orders as there are many push and pull factors that contribute to a sale. Having a bird’s eye view of the pricing factors regarding the sale size can provide you with the much-needed leverage when considering special discounts, offers and each sales representatives’ performance.

Documentation management

As a wholesaler, it is important to maintain a documented track record of your operations. You will also need to be able to transfer documents within and outside your organization.

#19 Built-in EDI

EDI technology allows you to transfer business documents across multiple verticals in a standardized format so your employees can coordinate orders and collaborate effectively. EDI technology optimizes and automates the workflows across departments and even beyond your organization without compromising your business interests.

Having a solution with built-in EDI connections will help you reduce costs and increase your staff’s productivity as the software bears a significant portion of their administrative workload.  Built-in EDI will help reduce errors, aid in the auditing process, and secure your organizational data.

Third-party integrations

Lastly, we will have a quick look over the third-party application integrations that are necessary for the smooth running of your wholesaling business.

#20 B2B ecommerce marketplaces

It goes without saying that your wholesale inventory software should support integration with all leading marketplaces, including Amazon Seller, Etsy, eBay, AliExpress, and other leading platforms. A complete multichannel selling suite will help scale your business without any operational bottlenecks.

Wholesale inventory software plays an important role in pulling data from a single catalog and making products available according to the platform-native fields and functionalities. However, you need to look out for cases where your shipper and marketplace platform don’t display full interoperability. For example, one of the shippers may not support product bundling while the marketplace may support it. In such cases, your software should be able to fulfill the gap by coordinating with the shipper and ensuring that your products are delivered as per the displayed offer within due time.

#21 Third-party logistics companies

3PL integration is a must-have feature as it provides the required visibility into goods in transit and shipped orders. It allows you to pull data from your 3PL provider’s portal to your portal and website so that your customers and employees can track shipments.

This feature enables you to display carrier charges in real-time so that your customers can make a choice depending on their budget and preferences. Thus, this feature allows you to streamline your backend processes to a great extent.

Summing up

Towards the end of this list, we can say that a lot of these features are interlinked and hence the ideal solution for your brand needs to have most of them in order to provide you with an excellent user experience. On top of these functionalities, we would like to advise you to look for excellent customer support since every solution will have a learning curve and you must be able to access help in a timely fashion for a successful transition. If you have any queries regarding the selection of an ideal wholesale software solution for your small business, get in touch with Cin7 experts today!

Posted in B2B