Why your business should use supply chain visibility

All businesses need a strong supply chain to ensure the goods they want to sell are delivered on time, in perfect condition, and at a competitive price. Yet, the supply chain is a complicated system with many players, each with its own goals and strategies. Every step in the production process — from sourcing materials to shipping products to customers — is handled by a dedicated group of people or systems.

Having a well-functioning supply chain can save you time and money. For example, if you have trouble finding a specific product type, you can use your network of suppliers of your other products to help find it. In many ways, your supply chain is critical to the success of your business.

In recent years, there’s been a revolution in how businesses use the supply chain. As the way we buy things changes, the supply chain has undergone a transformation, changing how companies operate in many ways. One essential part of this transformation is the use of technology. Today’s businesses rely on digital tools to manage their supply chains more effectively than ever. This includes electronic data interchange (EDI), which allows companies to send and receive information.

 

What is supply chain visibility?

Supply chain visibility is the ability to see everything that happens in the supply chain. This includes tracking the progress of products from their origin all the way to your customer. It allows you to make sure that products are delivered on time and in accordance with your specifications. You can also track inventory levels and forecast future needs.

When a supply chain is visible, you track the flow of products and materials to ensure they are delivered on time, in the correct quantity, and at the correct cost. This helps you identify and fix problems early, preventing the development of larger issues that could disrupt your operations. Many different tools can be used to track your supply chain, including internal systems, cloud-based ERP systems, and third-party suppliers.

 

The increasing complexity of strategic supply chains & role of technology in managing them

One of the most critical aspects of the supply chain transformation is the increasing complexity of strategic supply chains. A strategic supply chain is essential to your overall success, and it involves multiple steps and connections between different companies. The more complex the supply chain, the more difficult it is to manage.

One way that technology has helped to manage this complexity is by making it easier to track products throughout the supply chain. This tracking can be done with electronic data capture (EDC) systems or radio frequency identification (RFID) tags. EDC systems allow you to track products as they move through the manufacturing process, and RFID tags allow you to track products as they move through the distribution process. These systems allow you to detect problems early in the process and fix them before they become significant.

Another way that technology has helped to manage the complexity of supply chains is by making life easier for purchasing and planning departments. Purchasing departments now have access to more information about their suppliers, including information about the products those suppliers are manufacturing. This allows purchasing departments to be more efficient in selecting the best suppliers and helps them stay competitive in their industry. It also helps companies ensure that their supply chain remains stable and reliable.

Another benefit of technology is that it allows you to expand your sales worldwide and across different regions of the country. For example, you might have factories in several other countries or need goods produced and shipped directly to stores in another region. With modern technology, this kind of operation can take place with ease, as each factory in the supply chain can use technology to get information on how to produce, package, and ship all of the goods they’ve been tasked with supplying.

 

How does technology help make a supply chain visible?

Technology has helped in increasing supply chain visibility. One of the most important ways technology has done this is by creating a digital trail. This trail records all the actions that have been taken along the supply chain, from the sourcing of materials to the delivery of goods to the customer. This information can be used to track down any issues that may have occurred and to make adjustments as needed. It can also help companies to improve their communication with their suppliers. Two technological advancements in the supply chain are the use of big data and Internet of Things (IoT) technology.

Improve analytics with big data

With automation of the supply chain, more data are available for statistical analysis. This can lead to better decision-making at every stage of the supply chain. For example, in your warehouse, picking zones and warehouse space allocation can be determined by analyzing data on the most popular products and efficiency of workers. Similarly, production scheduling and transportation processes may be improved by analyzing such facts as cost, inventories, capacities and consumer patterns.

See more with Internet of Things technology

Although not widely used in the supply chain yet, IoT technology has huge potential. IoT refers to objects that are connected to one another or to a central sensor and communicate with one another. For instance, sensors may be placed on freight containers that report their location and condition to a central source. By tracking devices and data in real time, you can take corrective actions, such as replacing a shipment of food that has been exposed to unsafe temperatures. You can also collect data that over time can reveal patterns, such as where you consistently have bottlenecks in your distribution, that can be used for predictive analysis and preventative measures.

 

How does supply chain visibility enable better inventory management?

By digitizing and automating various aspects of your supply chain, you can improve your inventory management.

Improve inventory management

Inventory management is an important part of any business. It’s essential to be able to track inventory so that you can make sure that you’re always getting the supplies that you need and minimizing the amount of inventory that you have on hand. By having high supply chain visibility, you can ensure that all the different parts of your business are working together as a cohesive unit. This will lead to increased efficiency and reduced costs overall.

Maintain healthy inventory levels

Maintaining healthy levels of inventory allows businesses to avoid excess stock that can lead to increased costs and reduced profits. By automating your inventory, you’ll be able to submit orders for high volume products and make decisions about poorly performing products more quickly, allowing you to maintain healthy inventory levels. This will help to ensure that the inventory remains in good condition and does not exceed the company’s needs.

Boost demand forecasting

By using big data analytics to understand which of your products sell well at certain times of year, you can better predict demand, plan for shortages and manage your inventory effectively.

 

How can Cin7 improve your inventory and supply chain visibility

There are many possible reasons brands lose track of their stock. Generally speaking, though, a lack of visibility tends to come down to inadequate inventory management. If your inventory management system doesn’t automatically include purchases, sales, and other activity that impacts the big picture or if it doesn’t track information in real-time, the information you have about your inventory is not complete nor up-to-date. Here are two common examples:

1. Using manually updated spreadsheets

This is one of the biggest reasons for lack of visibility. Small companies that sell few products can manage fine with spreadsheets. With even a little growth, however, spreadsheets can get out of date quickly, giving you a lack of visibility of what’s in your inventory. Reported stock levels will not match reality, and you may not realize it’s time to restock.

2. Managing sales channels and inventory separately

When you use separate systems for sales channels and inventory, you risk overselling your inventory. For example, if you are a company with a Shopify store and you add Amazon Seller to your channel mix, you will now have at least two places to track inventory, plus any spreadsheets or siloed inventory software you may use as a “master.” The information in your master inventory depends on the people who collect and update the information. If the information is even a little off, the company could end up selling customers a product that isn’t available.

Inventory visibility cannot be an estimate of the products you think you have. It must be the actual inventory based on current sales and any other activity that impacts accurate stock levels and locations, such as purchases, which increase inventory, and branch transfers, which move products to different locations.

 

How to achieve inventory visibility

Proper stock visibility requires accurately recording everything that happens to products in your inventory. This includes purchases, sales, stock transfers, returns, and any workflow that changes inventory quantity, location, or cost. To that end, visibility can only be achieved if all data are integrated with and tracked in a central inventory master, including:

  • All purchases that increase your inventory of components and finished goods,
  • Production jobs that lower component inventory and increase finished goods inventory,
  • Sales orders that reduce your inventory,
  • Dispatched orders that reduce stock on hand and change order status,
  • Purchases and sales that adjust inventory at each stock location,
  • Stocktakes that confirm or adjust inventory at each stock location, and
  • Stock transfers that decrease inventory in one location and increase inventory in another.

The key to visibility is to integrate your data so that you can track products in real-time as they move through your supply chain, affecting stock levels and inventory value along the way.

The benefits of inventory visibility

Integrating data allows your company to

  • Reduce data entry and eliminate related errors.
  • Eliminate the use of redundant software and portals.
  • Increase order accuracy.
  • Maintain optimal inventory levels / reduce overall storage costs.
  • Fulfill orders faster and increase order transparency.
  • Build customer satisfaction and drive future purchases.
  • Increase forecast accuracy for improved inventory planning.
  • Reduce losses due to obsolete inventory.

 

Achieving inventory visibility is simple with Cin7

By providing real-time visibility into the status of shipments, Cin7 helps companies to identify potential issues in a timely manner and take corrective action. By using Cin7, businesses can confidently rely on the software to help them make informed decisions about their business operations. Book a free, no-obligation demo below to learn more about how Cin7 gives product companies complete, real-time inventory visibility. Request a Demo.

How can third-party logistics (3PL) improve your supply chain?

Nowadays, when it comes to businesses moving their goods through their internal systems, disruption seems to be the new normal. Events like a pandemic, trade sanctions, and war can seriously affect this supply chain, creating problems for internal logistics, and ultimately, the delivery of goods. To avoid this, companies should be thinking of ways to overcome these obstacles, putting strategies in place to ensure the smooth running of their supply chains.

A good solution to these problems is third-party logistics (3PL) software.

In this article, we’ll take a deep dive into 3PL and show how partnering with a 3PL company can streamline your business and make it more efficient.

 

What is 3PL?

There’s 1PL, 2PL, and 3PL, and PL stands for party logistics. The first, 1PL, describes  a business that directly delivers its orders to its customers. The second, 2PL, means that a business hires an outside courier service to deliver goods to customers.

In 3PL, a business outsources its supply chain management to a third party. This could include everything from internal logistics to order fulfillment, or any aspect of it.

3PL services you can use include:

  • Warehousing,
  • Transportation,
  • Picking up,
  • Packing, and
  • Last-mile delivery.

You can choose the services offered by 3PL according to your needs. However, since 3PL providers focus totally on logistics, using their expertise to streamline your internal processing and order fulfillment can only improve your supply chain.

How does 3PL work?

Well, that depends on which services you use. But as an overview, this is how a typical 3PL arrangement works:

  • Your entire inventory is stored at a 3PL warehouse. Here, SKU numbers are assigned to your items for easy identification, and they are separated into designated bins.
  • When a customer places an order with you, it’s forwarded to the 3PL company for  fulfillment. To make it even easier, modern order management software will  automatically send the order to the 3PL provider’s warehouse. You don’t have to do anything.
  • At the warehouse, a team breaks down your customer’s order, identifies the storage location for each item, and retrieves them.
  • When all the necessary items have been collected, they are packed in a delivery box, which is sealed shut. An order receipt and shipping label are then printed and attached to the outside of the box.
  • A shipping carrier, organized by the 3PL provider, picks the box up from the  warehouse and delivers it to the customer.

This is how a 3PL provider helps you with order fulfillment.

 

How leveraging 3PL in a supply chain can help your business

Let’s discuss how a 3PL provider can benefit you.

1. Cost benefits

If you choose to do it alone, you’ll have to buy or rent your own warehouse space. That, of course, would mean hiring and training staff to work in the warehouse.

3PL can eliminate this expense, enabling you to put more money into other areas of your business, such as sales and marketing. A move like that could increase your revenue. What’s more, since 3PL providers specialize in logistics, extensive networks they have in the supply chain means they can negotiate better rates.

2. Focus on core competencies

Handling the fulfillment process on your own, means going through a painful trial and error period while you set the system up. Inefficiencies in your warehousing and order processing will cost you time and money.

You won’t have to worry about any of that if you use 3PL. They’ll take care of warehouse management, carrier selection, the paperwork, and choosing the best shipping routes. After all, who better to handle your fulfillment than those who specialize in it, right? Using 3PL will free up time you can spend on your core competencies, leaving the 3PL you use to leverage theirs.

3. Access to expert knowledge

In the logistics industry, 3PL companies are well regarded. Their deep knowledge and  technical know-how could be a game changer for your business if there’s a disruption in the supply chain. That’s because if an unforeseen circumstance occurs, they are able to make the necessary adjustments to ensure that your order gets fulfilled as quickly as possible.

The fact that they specialize in supply chain management means that they’re constantly   upgrading their systems and using sophisticated technology like a warehouse management system (WMS).

All this helps track inventory in real time, giving you information you need to make good, data-driven decisions for your business.

4. Flexibility

If you are planning to expand into new territories, a 3PL can offer you flexibility. It can enable you to test new ground without having to put money into warehousing or staffing.

It means, in short, that you can try out a new market with limited upfront cost to see if it’s  worth it or not.

5. Ensures compliance

Whether you plan to fulfill orders locally or globally, you need to comply with many federal, state and local laws. Joining hands with a 3PL provider can help.  Regulations can be complex, and constant updating means they change over time.  Working with a 3PL ensures that your logistical operations are compliant with the law.

For instance, if you deal with consumer packaged goods (CPG), a 3PL can make sure that  perishable items are not only kept at the stipulated temperature, but that they’re handled properly until delivered to the customer’s doorstep. This includes proper labeling, like clearly showing when a product is hazardous. Taking care of these issues shelters you legally.

When it comes to international compliance, 3PLs are especially helpful. They can take care of all the required paperwork, from customs to transportation documentation,  ensuring that your international deliveries are smooth and stress-free.

 

Let Cin7 help you integrate 3PL into your business

Now that you’re clear about the advantages of 3PL, you may want to use it to streamline your business.  Cin7 could be a good way to do this.

Cin7 works with 200+ 3PL providers, and the list is constantly updated. By using Cin7, your orders will immediately be routed to a 3PL warehouse for fulfillment,  freeing you from the cost and hassle of having to take care of that yourself.

In addition to 3PL, Cin7 provides a complete suite of features that do everything from managing your inventory to giving real-time visibility. Cin7 lets you manage your inventory, orders, and fulfillment in a much better way.

Book a demo with our experts to learn more about how Cin7 can help you with 3PL.

How retailers can thrive in tough economic times

The last few years have been really hard for retailers. Disruptions from the Covid-19 pandemic forced many businesses to slow or halt operations altogether.  Factory shutdowns created a production backlog, with 38.8% of small businesses facing delays from suppliers, according to the US Census Bureau.  At the same time, consumer demand for many products spiked as people panicked about the future, making it difficult for retailers to meet demand.

Today, there are new challenges for retailers. The Russia-Ukraine conflict has destabilized the energy and commodity markets. Labor shortages have made it difficult to find workers, and inflation is at 40 year highs. In fact, in a survey conducted by Small Business for America’s Future (SBAF) 60 percent of 1,576 small business owners said that inflation is their top challenge.

 

What can retailers do to improve their situation?

 1. Improve your inventory management

Inflation makes it expensive to replenish your inventory from suppliers. You need to either raise your budget to get the same level of inventory that you got before the inflationary period, or you must lower your order quantity.

It is important to be strategic about your inventory, as piling up unsold inventory raises storage costs and freezes your working capital.

ABC analysis is a popular inventory classification method that can help you sort your inventory. It helps identify the critical SKUs that generate the majority of revenue for your business.

To learn more about ABC analysis, refer to our detailed guide.

Using your sales data, you  can eliminate underperforming SKUs. You can channel your working capital to acquire the best sellers by removing the bad ones. To ensure that you don’t overstock underperforming products, it is important to always have a clear picture of what is in your inventory.

Cin7 inventory management software offers advanced reporting features that can improve your inventory planning. In addition to inventory tracking, you can gauge the performance of your SKUs and forecast the demand accordingly. With the right data at your fingertips, you can make better decisions around inventory replenishment and avoid overstocking situations.

2. Use inventory management software to leverage multichannel sales

Using specialized inventory management software can be a gamechanger for multichannel sales.

Without inventory management software, you’ll have to manually allocate inventory for your offline and online stores, which can lead to a loss in opportunities. For instance, say you sell smartphones on Amazon, Shopify, and your bricks-and-mortar store. If you have 100 units of iPhone 13 ready to sell, then you have two options:

Option 1: Placing maximum inventory for all channels

In this option, you put the same quantity (100) on the online and offline store. The problem is if you receive 60 orders online and 60 orders offline at the same time, you cannot fulfill all the orders as you have oversold your inventory. You have a total of 100 units, but the ordered quantity is 120.

Option 2: Dividing the inventory
Another option is to divide the inventory across all the channels. You can allocate 33 units for Amazon, 33 units for Shopify, and 34 units for your offline store. In this case, the issue is underselling. If someone wants to place an order of 50 units on Amazon, but you’ve listed only 33 units, you’ll miss out on potential sales despite having inventory in your backend.

An inventory management solution saves you from the trouble of allocating inventory. It syncs your inventory in real-time, so if you receive 60 orders from Amazon, it automatically reduces the available inventory to 40 in Shopify and your offline point-of-sale system.

In addition to multi-channel sales, offering omnichannel support (i.e., unifying the online and offline buying experience) can sweeten the pot. Joe Troyer (CEO of Review Grower) says, “Customers are smoothly switching between online and offline experiences, and they are willing to shop at businesses that can make this transition as simple as possible. In-store research and showrooming, the practice of inspecting a product in-store only to make the buy online, are now more widespread than ever thanks to the development of mobile retail.

By incorporating real-time feedback across channels and devices and engaging the customer wherever they may be, they may use the right customer data to build an omnichannel customer experience that enables consumers to participate whenever and however they choose.”

3. Learn from competitors

You should carefully monitor the actions of your close competitors. Ask:

  • What are my competitors doing to attract more customers?
  • Are they making any changes in their pricing strategies?
  • Are they offering any discounts or bundling products to offer more value?
  • How are they promoting their business across various channels to attract new customers?

The insights you collect will help you in determining the price changes in the market so that you can maintain price parity.

For those who are pondering over offering products much cheaper than the competition, with the intent of attracting their customers — this can backfire. For instance, low pricing might signal that your quality is inferior to your competitors (tarnishing your brand image). Additionally, increasing your sales volume by reducing prices doesn’t necessarily lead to higher profits when there is inflation.

4. Outsource fulfillment to 3PL

Being strategic in what you outsource can be of immense help in reducing your operational costs and freeing up working capital. You should focus on cutting costs without sacrificing the product’s quality.

Third-party logistics (3PL) providers are businesses that take care of an organization’s supply chain and logistical operations. 3PL providers can offer a lot of fulfillment services such as

  • Warehousing,
  • Shipping and receiving,
  • Order picking and packing, and
  • Returns management.

If you do all this on your own, you will incur the hassle of setting up your warehouse, hiring and training employees to fulfill the orders efficiently, managing payroll, and maintaining the warehouse. Outsourcing this to a 3PL can help you save money. Additionally, as they specialize in fulfillment, you can expect a lower error rate in shipping orders.

Altogether you get better efficiency and professional experience while saving you time and resources.

Speaking of logistics, Amazon has made it a norm for customers to expect free shipping. However, offering free shipping at this time can put you in a very tough spot. Here is a suggestion from Anders Ekman (COO at Ingrid delivery platform):

“Interestingly, there is a “sweet spot” where paying for delivery might mean selling fewer products, but still earning more. It turns out that free shipping is not always the best solution for every e-retailer after all.

To give you an example, one of our customers at Ingrid started experimenting with paid delivery options instead of offering free shipping for all orders. Once they began to charge 10 SEK more for the delivery, the conversion decreased by 2.5% but the value of an average shopping cart increased by 4.2%. At the end of the day, revenue from deliveries alone increased by 11% and the profit margin increased by 5.5%.

If you’re still skeptical, you can start small – A/B test your delivery checkout alternatives, and offer different delivery options and prices based on what margin you have on the product (for example, a high-profit margin item should have a lower delivery cost and vice versa). Whatever you decide, don’t be afraid to start charging customers for deliveries. Experiment with your delivery strategy and different software integration – the results might truly surprise you, despite the current economic climate.”

5. Revamp your pricing and promotional strategy

High inflation also strikes your supply chain partners, and they are likely to offset the “extra” expenses upon you. For instance, if you use a fulfillment partner to deliver your products, rising fuel prices could force them to raise their fees and increase your expenses. You need a strategy for pricing because drastic price changes can negatively impact your sales.

Here’s what Lou Haverty (CFA and founder of Enhanced Leisure) recommends: “Retailers feel a pinch on both sides. Retailers face higher costs sourcing their products, but face slowing consumer demand. They can either lose margin or risk lower customer sales if they raise prices.

Their best option is to reduce product quantity instead of price. Keep the price the same, but slowly reduce the quantity sold at a given price point. This creates the least amount of negative customer feedback.”

Rethinking the product assortment is also crucial for maintaining healthy sales. “Due to rising prices, customers are less likely to stick with a single brand and are instead purchasing private-label items.

Retailers may take advantage of this by revising their category strategy frequently. Product-specific inflationary pressures and quickly altering customer preferences must be balanced by winning retailers. For example, their balance of private and national brands might be reconsidered.” says Sina Will (Marketing manager at Foxbackdrop). You can also bundle your low sellers with best sellers to clear off your inventory and offer a better value to the customers.

At tough times like this, you need your loyal customers more than ever. Here are some tips by Amar Vig (MD at London-fs) to build customer loyalty, “Remember that most customers also serve others in their day jobs, so when they are behind the counter, they want to feel significant.

Promotions and freebies can undoubtedly help customers feel special, but personalization is the actual secret to a truly memorable experience.

Retailers can increase customer loyalty by getting to know their clients through their prior purchases and hobbies. These conclusions can be drawn from statistics or even from a straightforward chat. Which of these approaches is most practical will undoubtedly depend on the size of the company, but no company should be too big to have a casual chat with a regular client.

The customer’s preferred form of communication may be used to give customized content and offers that anticipate their desires and requirements and direct them down the sales funnel toward their next purchase. Even a personalized email subject line can make all the difference.”

6. Leverage working capital

You need a consistent cash flow to combat inflation. If your expenses exceed the income generated, you have a negative cash flow. Conversely, if you’re making more cash than paying – you are cash flow positive.

The benefit of having liquidity can’t be overstated. Thanks to consistent cash flow, you can continue running your operations as usual. You’ll be able to pay your staff on time, boosting their morale and productivity. Moreover, you can avoid out-of-stock situations by having enough money to buy more inventory.

If you’re running an offline store, then negotiating better rental terms with the landlord can help alleviate the monthly overhead. Leveraging your bargaining power can also help in saving some working capital. “While small retailers don’t exert the same sort of control as big retailers, there are still ways to reorient your supply and distribution networks for cost and distance efficiencies, even if it means saying goodbye to some old suppliers and making friends with new ones,” says Alice Li (Founder of First Day).

In case your retail store isn’t able to generate enough consistent cash flow, you can resort to retail borrowing solutions. You can get a business line of credit to get some relief. Finding a suitable financing option can help your retail business to cover up for the extra expenses led by inflation.

7.Refine the buying experience at your retail store

To survive, retailers need to find ways to deliver better value to the customers. The rise in online shopping has made competing tough for some traditional brick-and-mortar retailers.

Brandon Wilkes (marketing manager at The Big Phone Store) highlights the importance of cleanliness, “The pandemic has highlighted the importance of health and safety, and this is likely to be a key consideration for consumers in the future. Retailers will need to ensure that their stores are clean and safe, and that their products are sourced from reputable suppliers. They will also need to be transparent about their health and safety policies and procedures.”

“Brick-and-mortar retailers can use their physical locations to create unique customer experiences that cannot be replicated online. In addition, retailers can focus on providing personalized service and developing relationships with their customers. By doing so, they can create a loyal customer base that will continue to support them in the future.” says James Jason (founder of Notta.ai).

To deliver a stellar buying experience, you need to listen to them. In the words of Bill Glaser (CEO of Outstanding Foods), “Retailers can also improve customer retention (guaranteeing profitability) by innovating according to customer feedback. Small businesses have the unique advantage of adjusting quickly to changing consumer demands. Your business can survive and thrive during economic downturns if you hone in on customer needs.”

Irrespective of the experience that you deliver at the offline store, there are still some strong merits of having an online store. For starters, you can reach out to more people than in your local vicinity. Even the operational costs of scaling are marginally lower than an offline store. Thus, instead of competing with online stores, it’s wise to also complement your offline store with an online store. Cin7 can help with that.

8. Make product returns a win-win situation for consumers and you

At a time when consumers are thinking carefully about their purchase decisions, you should do everything possible to mitigate their purchase risks. Allowing product returns is one such tactic that you can use for risk-reversal.

However, stores must weigh the cost of receiving returns. For starters, it increases storage costs, and you don’t want to pile up excess inventory that doesn’t get sold. In this regard, Gary C. Smith (President of NAEIR) says, “Returned products are a headache. They need to be inspected and repackaged, which takes valuable time. Plus, the retailer is taking a chance that the product won’t go out of style or expire before it can be resold. It’s unlikely most returns can be resold at full price, so even brand-new merchandise can end up at a liquidation warehouse or in the trash heap.

Rather than trashing merchandise or selling to a liquidation warehouse, where brand identity can be at risk, retailers have another option: Making in-kind donations to a nonprofit. The resulting tax break may be quite handsome, and it may even be more financially beneficial than reselling the merchandise at a cut-rate price.”

9. Use an inventory forecasting tool

In normal circumstances, retailers can accurately forecast product demand. However, with an inflationary environment, the market is volatile, so forecasting demand can become… demanding.

Incorrect inventory forecasting leads to situations like understocking or overstocking, both of which aren’t desirable for any retailer. Read our inventory planning guide to learn best practices to improve your forecasting. 

If you’re looking for a sophisticated software solution for inventory forecasting, you should check out StockTrim. Based on the demand levels and your supplier’s lead time, you can get details about the quantity that you should order to ensure that you don’t face stockouts. You can also analyze the current demand trends from StrockTrim. With the tool, you can even predict the demand for new products (without any sales history).

In addition to all this, Stocktrim perfectly integrates with Cin7

 

Way Ahead

Navigating economic challenges is part of the business of retail. Successful navigation is made easier with the right tools. Cin7’s inventory management tools offers real-time inventory visibility, advanced reporting features, and multi-channel sales management to give you better insights and improve your operations. Book a demo with our experts today.

Top supply chain trends to watch in 2022

Covid-19 has changed the way many businesses operate, and new trends are emerging daily. Many industries have sustained massive losses and others have made huge gains. In fact, entire supply chains have transformed in new and interesting ways.

Here’s a list of key trends that will take over in the supply chain industry in the coming year. In modern times, the supply chain is an essential part of every organization. We expect a year full of supply chain improvement and evolution. Let’s jump right in.

Improved artificial intelligence (AI)

Artificial intelligence (AI) will become a primary driver in the ever-growing supply chain industry. AI algorithms have the capability to automate basic operations by processing data from previous operations. AI has the potential to save a lot of time and remove a substantial amount of human error. These two improvements will make supply chains much more efficient.

AI can also decrease the amount of human capital needed for performing both basic and complicated tasks. Because of this, the potential for AI is enormous. It can help businesses identify patterns in data and give managers access to a range of useful insights. As businesses take advantage of AI, operations in the supply chain will become more accurate and efficient.

Robotic automation

Robotic automation, including drones and driverless vehicles, can improve the supply chain by streamlining logistics operations. In the coming year, some executives will start using self-driving drones to make small goods deliveries.

In 2019, nearly half of U.S. companies spent up to $869 million on at least 16,400 robots. Robotic automation is playing a massive role in the supply chain and supply chain management companies.

The emerging scope of IoT (Internet of Things)

Like AI and robotic automation, organizations are increasingly interested in using IoT devices to improve visibility. The Internet of Things will benefit the supply chain industry in many ways.  Companies will be able to fit sensors into vehicles, warehouses, and outlets to provide data that enhances visibility in inventory management, production, and maintenance.

End-to-end IoT services are rapidly being adopted by supply chain organizations. IoT will help increase transparency across the entire supply chain. Everything will be tracked in real time as GPS sensors are fitted in different kinds of transportation.

Sensors play a vital role in warehouses by providing visibility into inventory management. It will also play a large role in gauging demand for retailers, too.

Blockchain

Customers want same-day delivery of their products, but this level of speed and efficiency can be difficult to manage for logistics teams. This is where blockchain technology can help supply chain management.

Blockchain can help businesses eliminate intermediaries and communicate directly with potential customers. Blockchain technology can also assist in distributing data transparently. However, blockchain’s most significant advantage in supply chain management is that it offers complete protection for securing information. Because it’s decentralized, blockchain helps keep data protected from unwanted edits. Customers, shipping lines, logistics firms, and vendors can communicate over a single, protected platform where information is stored.

Agility in supply chain management

Thanks to the pandemic, the supply chain industry is becoming much more agile. Supply chains are becoming increasingly flexible, and they now have the ability to deal with changes, disruptions, and challenges that arise.

Thanks to AI and machine learning, many companies can adapt on the fly. Shipments are becoming more personalized as pre-orders specify exact requirements. As industries move forward, customers are becoming more prioritized. The ability to customize is becoming a total necessity. Companies are starting to build infrastructure that permits customized orders in the supply chain without adding any cost.

Smart contracts

Automation is escalating in multiple ways. Along with AI and robotic automation, smart contracts are starting to emerge, too. Companies are starting to use smart contracts to settle payments with cryptocurrencies automatically, which removes the need for arbitration and makes the payment process much quicker.

Smart contracts are transaction protocols that are executed when required conditions are met. They can also be useful for generating invoices when shipments reach their destination. The most common use case, however, is when financial transactions are being performed between parties.

Omnichannel is the new trend

Customers are starting to expect better customer experience, and omnichannel can help by providing a quicker, more direct shopping experience. Omnichannel services will help customers as they shop online or in stores.

People want to purchase and receive goods as quickly as possible. This is why the demand for streamlined logistics is increasing every day. Omnichannel supply chains are helping customers get a smoother, more transparent experience.

ScaaS (Supply chain as a Service)

As supply chain management teams become smaller, companies are starting to hire groups of skilled individuals who focus on making strategic, supply-chain-enhancing decisions.

Most businesses still manage their supply chains in-house. However, as trends and technologies evolve, many companies will adopt the ScaaS (supply chain as a service) business model. It’s a great way for companies to outsource logistics, inventory management, packing, and more.

 

Stay on top of new trends to streamline your supply chains

As new technology emerges, processes will become both smarter and faster. If you follow the trends, your supply chain has the potential to become more sustainable and customer-centric. Trending technologies like IoT, AI, and blockchain can help simplify your current processes and automate your operations.

By staying updated and well-informed on evolving supply chain trends, you can stay flexible and adopt the technology that makes more sense for your business. As you do this, you will reduce supply chain disruptions. Ultimately, this knowledge will help your business boost efficiency and productivity.

With Cin7, you can get real-time inventory insights. You can also automate your purchase orders to avoid stockouts. Cin7 also integrates with 3PL providers to help you streamline your order fulfillment. Book a demo with our experts to learn more about using Cin7’s capabilities for scaling your operations.

Supply chain resilience strategy: build and measure

It is no secret that COVID-19 damaged the modern-day supply chain. From silicon shortage to toilet paper stockouts, the marketplace has seen it all. According to a survey from the Institute for Supply Management, 95% of the businesses had to endure operational troubles during the initial pandemic days in April 2020.

While businesses cannot prevent such disruptions, they can prepare themselves to persevere through them.

The Cin7 team has compiled a list of strategies to build a resilient supply chain for your business and help gain an edge over the competition.

 

What is supply chain resilience?

The origins of the supply chain resilience concept can be traced back to the work of C.S. Holling, an ecologist who coined the term “ecological resilience.” It refers to the ability of an ecosystem to maintain normal patterns despite being subjected to the damage arising from ecological disruptions.

Supply chain resilience is defined as an organization’s ability to recover from unexpected supply chain disruptions using its “ecosystem’s” existing capabilities, ensuring that the operations run smoothly and the customers remain satisfied.

 

Challenges and risks in building successful supply chains

The pandemic disrupted nearly every stage of an organization’s supply chain. The effect was global and prolonged.

As bad as the pandemic was and continues to be, it is just one of the many factors that disrupt the smooth functioning of the supply chain. Here are some scenarios that pose risks to the supply chain:

#1 Operational risks

Operational risks occur because of breakdowns in normal working operations. Both technical and non-technical reasons can pose this risk.

Example: Machine failure due to poor maintenance (technical) and mismanagement (non-technical). This risk can be classified as internal risk, i.e., it can be fully controlled and avoided by the organization.

#2 Financial risks

Delays from the supplier can cause delays in your production process. This type of risk emerges due to shortcomings in the suppliers’ finances and revenue.

Example: The supplier reduces the production of your raw materials due to their own financial woes or files for bankruptcy. To combat such a scenario, either extend them a line of credit or search for an alternative supplier.

#3 Legal risks

Legal risks arise when organizations are slapped with lawsuits, whether they are frivolous or not. Fighting lawsuits takes a toll on your time, money, and resources. Severe cases can also tarnish your reputation, leading to a loss in revenue and business development.

Example: If a lawsuit for an intellectual property violation is filed against your company or you are fined for breaking environmental laws, any suppliers who get trapped in either scenario can catastrophically disrupt the supply chain of your business.

#4 Geopolitical risks

Globalization has converted the entire world into a connected village, where consumers are no longer dependent on geographical boundaries to purchase items.

Producers benefit from globalization, as they are no longer restricted to sourcing their raw materials from the same region. Faster connectivity ensures that they can order from any corner of the world at a price that fits their budget.

Global connectivity also comes with its challenges. While businesses operate under the trade and commerce laws of their nation, working with partners from various countries adds various layers of complexity.

Situations like political turbulence, governmental policy changes, and war outbreaks can hinder your suppliers’ capacity to make timely delivery.

Example: The US-China trade war and Brexit are classic examples of geopolitical risks.

#5 Natural disasters

Hurricanes, earthquakes, and other natural disasters have been disrupting the supply chain for ages. Such disasters can be classified as external risks, as they are not in the control of the business. Regardless of the classification of risk, these calamities lead to port closures and cargo flight cancellations, in addition to creating capacity constraints and supply shortages.

Even climate change affects the operations of businesses. Research from the

United Nations Development Program (UNDP) suggests that rising temperatures could lead to adverse effects on the workers.

According to the UNDP, climate change’s economic impact on labor productivity could reach $2.5 trillion in global losses by 2030.

Example: In 2017, Hurricane Harvey and Irma—fueled by symptoms of climate change—hit the gulf coast in a span of two weeks. These hurricanes left a trail of physical and economic destruction, including a severe disruption to the regional supply chain.

#6 Cyberattacks

The rise of digitalization has also given rise to cyber security attacks. In fact, cyberattacks have become a leading cause of supply chain vulnerability.

The supply chain becomes a tempting target for hackers as vendors often possess sensitive data about companies or have enough access to allow for privilege escalation.

As attacks of such nature become more common, manufacturers must invest in cybersecurity proactively. This is for safeguarding them as well as their clientele’s data.

Example: Airbus is one of the world’s largest airline manufacturers, and they were subjected to a series of cyberattacks in 2018. The hackers gained access to the confidential documents containing the schematics for classified military transport planes through the attack.

 

Strategies to build a resilient supply chain

A robust supply chain resilience strategy requires two complementary supply chain pillars: resistance and recovery capacity.

Resistance capacity is the ability of a supply chain system to minimize the overall impact caused by disruption. It can be done in two ways:

  • Evasion: Entirely avoiding the factor causing disruption in the supply chain.
  • Containment: Minimizing the period between an event and the time when the supply chain starts to recover from the effects.

Recovery capacity is a supply chain’s ability to restore itself to the level prior to its disruption.

For organizations to achieve true supply chain resilience, they need to be prepared to confront obstacles before they cause any considerable damage.

There are seven distinct strategies to build strong resilience and ensure quick recovery.

#1 Creating buffers

Manufacturers should create buffers to build resilience against minor operational risks like employees calling out sick or shop floor machines breaking down. Building buffers and making them a part of your operational process reduces your dependence on the supply chain working at full capacity.

According to one survey, 21% of the supply chain experts consider maintaining buffer stock as a solid indicator of resilience. The challenge of maintaining high buffer stock can increase your carrying costs, so the optimal buffers need to be strategically planned.

#2 Optimized inventory control

If you are relying on a single warehouse for storing your inventory, consider the option to spread your inventory across different locations.

A natural disaster damaging the warehouse or a virus outbreak among warehouse employees would undoubtedly lead to fulfillment delays.

Splitting the inventory helps minimize the risk and helps expand your customer reach by reducing shipping costs and speeding the shipping time.

Another way to build resilience is to invest in technology that provides real-time visibility into your supply chain. It helps monitor your supply chain performance and identify any and all bottlenecks. Inventory management software assists you to make better inventory decisions and set up reorder points to ensure that you never run out of stock.

Investing in an integrated warehouse management system helps you with better inventory management while reducing the number of errors. Successful organizations devise strategies to manage the longer lead times and methods to counter the unexpected surge in demand, while building replenishment models to ensure that the goods are available when needed.

#3 Investing in human resources

Human resources are necessary to complete the work but having experienced supply chain managers with market knowledge helps navigate through unexpected disruptions.

Merely hiring exceptional people is not enough—the business also needs systems built and SOPs to establish production infrastructure. Your team should have personnel dedicated to fostering better supplier relationships and for commodity management.

Commodity managers monitor the market to scout for new products in demand, price changes, and the latest supply chain developments. This information helps ensure staying on top of market trends and aids in better cost management and decision making.

Helpful hint: The pandemic has been a catalyst to the remote working environment. Such work environmental changes affect the wellbeing of the workers, both physically and psychologically.

The mental well-being of the workers must not be overlooked. “Emotional resilience” is every bit as important as supply chain resilience.

#4 Having multiple supply partners

The concept of partnering with multiple suppliers for procurement is referred to as multisourcing.

One piece of famous investment advice is “Don’t put all your eggs in one basket.” Similarly, relying on a single partner for procuring materials is filled with risk, so partnering with multiple vendors will ensure that your proverbial eggs are placed in several baskets.

Multisourcing ensures that your supply chain does not get disrupted when your primary supplier fails to deliver on time, as you can source it from someone else. It also helps with incentivizing competitive pricing among suppliers so that you get the best returns.

The pandemic demonstrated that diversification is an integral part of building supply chain resilience. For example, China is lauded as one of the world’s leading raw materials suppliers but had production grind to a halt due to Covid-19. When the lockdown was imposed in 2020, manufacturers sought and partnered with different countries like Mexico and Vietnam to expand their network.

Helpful hint: While working with multiple suppliers, you should have a dedicated team for supplier relationships. The supplier relationship manager focuses on developing deeper relationships with suppliers by understanding their core strategies and approaching them with mutually beneficial opportunities. If the supplier is working on limited capacity, there is a good chance they will prioritize the business that has built better relations with them.

#5 Effective communication

Managing supply chains requires a cross-functional effort from all the departments. Businesses need to be agile and loosen the silo structure, which inhibits the flow of information.

As the trend for hybrid working increases, companies should allocate the necessary IT resources for smooth operations and orient them with the relevant tools for communication. Managing virtual teams is very different from conventional teams, so provide managers adequate training to lead them.

Helpful hint: Keep your employees and suppliers in the loop during any periods of disruption. Provide them with relevant company information to help them make informed decisions and minimize errors.

#6 Planning and forecasting

When introducing a new product to the marketplace, it takes approximately two to three years for product development, and the lead time takes approximately 25 to 40 weeks.

It means that to deliver a product during the holidays, a business must start the plan in March. However, businesses forecast demands using their historical data, yet no demand forecasting plan would have predicted that a pandemic would be declared in March, leading to lockdowns and drastically changing customer preferences.

A feasible way to combat such forecasting issues is to invest heavily in analytics and upgrade supply chain technology. A business continuity plan identifies all the potential risks, quantifies them, and then devises a plan to deal with them, while keeping the organization running concurrently.

#7 Developing ecosystem partnerships

Many eCommerce businesses lack the supply chain infrastructure to manage the inbound and outbound logistics. This is where third-party logistics (3PLs) come to the rescue.

Partnering with 3PLs can offer reduced costs, a warehousing facility, and access to a better transportation network. This can help streamline the fulfillment process and diversify the fulfillment process so that manufacturers can prioritize their core competence.

Third-party logistics partners also bring their years of experience to the table, helping you optimize your solid supply chain infrastructure and build resilience.

 

Measuring supply chain resilience

To test the efficacy of your planning, McKinsey recommends a stress test model. This model quantifies the supply chain resilience against five factors:

  • Industry attractiveness
  • Customer exposure
  • Operations exposure
  • Corporate resilience
  • Supply chain exposure

Apart from the stress test model, there are three core metrics that help in evaluating supply chain resilience.

#1 Time to survive

This metric refers to the time to resume business operations after a disruption.

For instance, the time to survive metric for some factories in China was nearly three weeks. It reflects how long it takes to establish the necessary safety measures (like offering personal protective equipment kits) and obtain clearance from the government.

In this phase, the companies need to answer some key questions around:

  • Compensating the people
  • Bringing people back to the workplace
  • Taking corrective measures to reopen their premises

In a nutshell, time to survive answers the question, “How long does it take to reopen the business?”

#2 Time to recover

Recovery time is how long it takes to return your business to the capacity it had before the disruption.

Even though the Chinese factories started to function again after the Covid-19 outbreak, they were only running at a fraction of their standard capacity. This occurred due to a lack of workers and loss of production time. It took an additional three to four months to recover.

Prepare and protect your business by examining how long it would take to get operations back in working order.

#3 Time to thrive

The time to thrive arrives after the recovery phase, but only after an evaluation of how the business confronted the crisis.

It juxtaposes the state of business before and after the crisis and determines if and how the company learned any lessons from the disruption and improved.

Regardless of what analysis emerges during this phase, businesses should be ready to pivot their offerings to match what the market demands now. For instance, many restaurants now offer home delivery or pick-up due to the consumers’ behavioral change caused by the lockdown.

Once a company determines how it has or hasn’t improved after facing the crisis, the time to thrive is not far off.

 

In summary

Businesses need to be agile and flexible enough to adapt to the changes caused by disruptions.

Building a resilient supply chain mitigates the risk and boosts operational efficiency. Companies that invest in supply chain resilience often see shorter product development cycles than those that overlook it, which can be a competitive advantage.

By partnering with Cin7, you can automate your workflow as well as get better analytics and insights about your inventory, which helps in data-driven decision making. You can also partner with the best 3PLs through our integrations.

The experts at Cin7 can help you build a resilient supply chain for your business. Book a call now to discover more!

Wholesaling 101: Challenges and growth strategies

To avoid running out of stock, retailers need to constantly replenish their inventory. But have you ever wondered where shop owners get their products?

Many retailers get their products from wholesalers — who play the crucial role of bridging the gap between manufacturers and retailers. Thanks to wholesalers, manufacturers don’t need to worry about distributing their products. Instead, retailers are able to get their products from one place.

Wholesalers are an indispensable part of the supply chain, and the global wholesale market is estimated to reach around $64 billion by 2025. So, just how important a wholesaler’s role is in the supply chain? If wholesalers can’t do their job correctly, both manufacturers and consumers suffer. In this article, we’ll go through common issues wholesalers face and practical strategies to overcome those challenges. Let’s dive right in!

 

What is wholesaling?

Wholesaling is a distribution model where businesses buy items in bulk from manufacturers or distributors and sell them to other companies. Wholesalers are able to acquire products cheaply because they only purchase in large quantities. Essentially, wholesalers are the middleman between manufacturers and retailers.

Although wholesalers and retailers are very closely related and perform similar functions, they are different from each other. The difference between wholesalers and retailers can be explained with three terms:

  • Quantity – Wholesalers purchase in large quantities from manufacturers, whereas retailers purchase in small amounts from wholesalers.
  • Purchase intent – Individuals who purchase from wholesalers resell those items at a higher price to their customers. Conversely, individuals who buy from retailers plan to use those items rather than sell them to someone else. Retailers – who purchase from wholesalers – are not consumers; instead, they resell to consumers.
  • Transaction type – Wholesalers are generally business to business sellers (B2B), whereas retailers are usually business to consumer (B2C).

Alibaba is the largest B2B marketplace, and you can find plenty of wholesalers selling their goods to retailers there. In the United States, Orangeshine is a popular online wholesaling marketplace that allows fashion wholesalers to sell products.

 

4 reasons why wholesalers are essential

Reason #1: Wholesalers support manufacturers and retailers

Wholesalers purchase products in bulk from manufacturers. They assemble products from various manufacturers and then sell them to multiple retailers by breaking them down into smaller quantities. This helps distribute products from manufacturers to retailers.

Reason #2: Wholesalers help store products

Manufacturers have limited storage space, and it’s not feasible for them to continue producing items if their storage space is full. Wholesalers solve this problem by purchasing inventory in bulk and storing it in their own warehouses. This helps manufacturers focus more on production and less on worrying about inventory storage.

By taking care of storage on their own, wholesalers facilitate the assembly of products from various manufacturers and safeguard them in one place.

Reason #3: Wholesalers stabilize supply and demand

Since there is time between the manufacturing and consumption of goods, there can be a mismatch between goods demanded and goods supplied. Wholesalers help in striking a balance between demand and supply. They are able to store products when demand is low, and then they can sell products when retailers’ demand rises.

Reason #4: Wholesalers take on risk

Wholesalers are responsible for transporting goods from their warehouses to various retailers. If there’s any damage during transit or storage, wholesalers take full responsibility and cover that loss.

 

Wholesale challenges and how to overcome them

Challenge #1: Cutting out the middleman

Manufacturers and retailers often try to streamline operations and cut out middlemen to increase profit margins. And in this example, the wholesaler is the middleman. By cutting out wholesalers, retailers can save money, and manufacturers can make more money.

Obviously, this is a concern to your existence as a wholesaler. In these situations, your solution might be dropping your prices, which in return would reduce your profit margin. While this might be a viable option for the short term, there will always be another wholesaler who’s willing to offer even lower prices than yours. At that point, you’re simply in a race to the bottom.

Rather than focusing on decreasing your margins, you should focus on increasing the value that you bring to the table. You should ask yourself, “How can I better serve my customers — other than lowering my prices?”

For example, you can help manufacturers take care of logistics and distribution. Bulk purchases can get you a discount from manufacturers, and retailers can benefit by purchasing from you instead of manufacturers.

However, manufacturers are now exploring ways to handle shipping and logistics of their products on their own to increase profit margins. Some retailers are even searching for ways to connect with wholesalers themselves to find a better deal directly.

To offer more value in this case, you should try to leverage your existing distribution network. You might be able to convince manufacturers that they would get better returns by working with you, rather than experimenting and trying to handle logistics on their own. By offering quicker delivery to retailers, you can prove that you provide better value.

As you deal with large amounts of stock, tracking can turn into a nightmare. That’s why it’s essential to invest in a good inventory management system that tracks inventory in real-time and automatically places purchase orders when stock is low. This, too, can be a differentiator.

Challenge #2: Slow shipping

Delays from wholesalers can lead to stockouts for retailers, which can reduce customer loyalty. Modern consumers are accustomed to 1-2 day delivery thanks to Amazon. This has, in turn, also raised the bar for wholesalers. Retailers now expect wholesalers to quickly deliver products so that they can serve their own impatient customers.

The challenge for wholesalers is not just shipping more quickly; in reality, it’s both shipping quicker and making fewer mistakes. Inaccurate delivery affects wholesalers’ reputation and often requires paying a fee.

Accurate delivery can be a great value add-on for savvy wholesalers. If you successfully provide quick and precise delivery, you’ll be able to convince retailers to buy from you.

This is exactly why it’s necessary to invest in good order management software. Barcode scanners can also be implemented to cut down on packing and picking errors, too. You can scan items at multiple stages, which further boosts accuracy and speed of processing.

Optimizing your warehouse helps reduce storage costs and speeds up inventory processing — which in turn, leads to faster shipping.

Challenge #3: Inventory damage

Damage to inventory is also another huge factor in a wholesaler’s performance. The core function of wholesaling lies in storing inventory and distributing it to retailers. Property damage is a serious threat to any wholesale business, and it can lead to huge losses in both value and ability to store products.

There are several ways stock can be damaged — fire, earthquakes, flooding, and more. Transit can also damage items due to heat, or if the ride is too bumpy. Mistakes from workers can lead to damages, too. This is exactly why it’s so important to constantly troubleshoot both equipment and machinery.

It also might be a good idea to get your property insured to help cover losses when natural disasters do occur. Plus, employee-related damages can be reduced by offering adequate training on products and their use.

Lastly, you should make sure to check product quality as soon as you receive them. This way, you’ll be able to detect damage and return products before they become inventory.

Challenge #4: Slow growth

Every business aspires to grow fast and constantly improve sales. Fostering relationships with your partners is a great way to help in accelerating the growth of your wholesaling businesses.

International expansion can also aid in getting more customers. When you focus on building contacts locally and internationally, you can expand your customer base. The COVID pandemic has proven the value of an online presence and international supply chains.

Challenge #5: Fines and penalties

In the early stages of their career, many wholesalers do whatever it takes to get contracts with manufacturers.

While having a contract certainly offers assurance, it can also backfire. If contract guidelines are not correctly adhered to, manufacturers can legally penalize wholesalers. And these penalties have to be paid, whether mistakes occurred accidentally or intentionally.

Therefore, rather than signing a contract hastily, you should first consult a lawyer and get a comprehensive understanding of all the terms and conditions mentioned in the agreement.

A lawyer’s cost when going over contracts is negligible compared to the amount that could be paid in the penalties. Only once you are fully aware of the terms should you proceed with the deal.

If you have any concerns about specific conditions, you should openly discuss and negotiate with your manufacturer. If your manufacturer refuses to negotiate, you can always go to another manufacturer who meets your demands. Remember that a signed contract is the foundation of your relationship with the manufacturer — so it should be carefully considered.

Challenge #6: Theft

Employee theft and shoplifting led to retail sector losses totaling $61.7 billion in 2019. The wholesaling business is not immune to theft, either. Since wholesalers deal with large quantities of goods, theft can compound quickly and lead to significant losses.

Theft can occur in warehouses and transit, so investing in security is necessary. You can install security cameras to monitor goods on your premises regularly. You should also consider arranging for staff to monitor goods when in transit and when unloading inventory.

Challenge #7: Inaccurate data

Wholesalers need to know exact quantities for goods purchased, goods sent to retailers, inventory in stock, and more. Storing information manually in ledgers can lead to human error and cause severe losses, which makes it challenging to get accurate information about current levels.

Real-time data helps when trying to meet the demands of manufacturers and retailers. A manual counting process simply isn’t good enough when dealing with massive numbers. Therefore, the best option is to invest in real-time inventory management solutions.

One solution is Radio Frequency Identification Tags (RFID), but they can cost up to $50 per unit. Still, RFIDs allow you to accurately track inventory without employees having to enter any data. Since wholesalers already operate on thin margins, implementing RFIDs might not make financial sense.

A cloud-based inventory management system does the same job and offers real-time information about inventory without being as expensive. Plus, It also helps create a dashboard and generate reports to get important information at a glance. This allows you to make data-driven decision-making.

 

Grow by focusing on value instead of price

Wholesalers are an important part of supply chains — but they can’t get complacent about upgrading business practices. As retailers explore technological advancements like ecommerce stores, wholesalers must also upgrade their systems and processes to keep up with new challenges.

Ultimately, to survive in the long run, wholesalers need to focus more on delivering value, and less on lowering prices. That’s where Cin7 can help separate savvy wholesalers from their competition. Get in touch with the Cin7 experts to learn more about how we can help you with automation, data collection, and more.

 

Here’s how digitizing your supply chain can breathe new life into your business

Digitization has reached almost all aspects of businesses — including supply chains. New technology like embedded sensors, RFID, and GPS have helped companies transform their traditional supply chain structures into flexible, agile, open, and collaborative digital models.

In fact, according to a McKinsey survey, 93% of supply chain executives say they are actively planning to make their supply chains more resilient. And in this day and age, “resilient” means digital. Many companies are seeing the need to become more organized — and they’re doing that  by regionalizing their supplies and nearshoring their processes. This type of organization ensures products don’t have to travel long (and expensive) distances.

Either way, there’s no denying that digitizing supply chains will allow these companies to improve their agility, visibility, and efficiency. Digitization allows for organizational flexibility and accelerates innovation.

Now, let’s dive into the meaning of digital supply chain management, understand how it’s different from a traditional supply chain, and explore the benefits of supply chain digitization.

 

What is a digital supply chain?

In a traditional supply chain, companies need to source parts and raw materials to make their product. After they understand demand for their product, companies will then find the correct sales channels and use logistics to provide customers with visibility into their orders.

A digital supply chain, in contrast, offers significantly more visibility throughout the process. The integration and application of advanced digital technologies allows customers and stakeholders to monitor supply chain operations — from procurement data and inventory management, to distribution and transportation.

For example, Bluetooth Low Energy (BLE) asset tracking can offer instant updates on location, including when cargo is in transit. The main goal of supply chain digitization is to enable insight for greater efficiency. This, in turn, can cut down on redundancies and greatly increase profits.

Companies with digital supply chains can move their resources, assets, people, and inventory to where they need it at any given time. Digitization helps you reduce costs by giving you the ability to respond proactively to both transportation and manufacturing risks.

The potential payoffs of any fully-realized digital supply chain include saving time, money, and resources. It will allow your company to be less wasteful and more environmentally sustainable.

 

Traditional vs digital supply chains

Traditional supply chains work based on historical transactional inputs, while digital supply chains function in real-time. Digital supply chains are networks, while traditional supply chains are linear. Supply chain networks communicate almost instantaneously, whereas linear supply chains move slowly and inefficiently.

Digital supply chains are also more accurate. Information from operational technology and IT systems are integrated with digital supply chain management, while traditional supply chains rely on standalone systems. When companies go digital, they can more efficiently find potential problems and predict likely risks.

Traditional supply chains rely on humans to make nearly every decision. Digital supply chains, on the other hand, have built-in automated decisions that are monitored by humans. Because of this, digital supply chains are exponentially faster.

 

Why your supply chain should go digital

Digitization in supply chain management empowers planning, sourcing, and logistics teams to collaborate. It also allows those teams to automate processes and leverage analytics. This type of synergy among teams drives growth, mitigates risk, and optimizes costs. Here are some more supply chain digitization benefits:

More organizational flexibility

A digital operating model gives management more freedom and flexibility. For instance, what degree of centralization is needed to support specialization? How can you minimize process costs when you factor in local labor? How can your processes become more productive? With Digitization, you can answer these questions by analyzing data in multiple ways. And then you can be more flexible when implementing solutions.

Better decision making

Once you integrate your supply chain with digital technologies, you can also make faster and more informed decisions for each function. Digitization helps you measure performance accurately and efficiently by aggregating and organizing transactions. This, in turn, allows you to access information at both the micro and macro levels.

For example, BASF (a German multinational chemical corporation) uses AI and machine learning-based technologies to predict the optimal time to replenish supply when stock is running low. This type of automation leads to increased inventory visibility that supports smarter replenishment planning, more efficient decision-making, and better customer service.

Increased automation

An end-to-end digital platform can improve data accuracy, enhance efficiency, and increase supply chain efficiency by automating many labor-extensive processes. From determining the most appropriate shipping mode, implement smarter scheduling, and more — automation saves time and money.

Alerts can also be generated automatically, especially if purchase orders are in danger of delays or complications. This helps companies take precautionary measures and be prepared to handle customers who may have logistics-related complaints.

Accelerating innovation

All digital transformation processes inevitably lead to innovation. Why? When data becomes available, it’s much easier to see trends and inefficiencies. This improvement over conventional supply chain management helps to strengthen the company’s business model over time and builds stronger relationships with suppliers and customers.

End-to-end customer engagement

Digital transformation in supply chain management also increases customer engagement throughout their buying journey. For instance, when placing an order, digitization allows your customers to automatically stay updated with their order details. They know their order status all the way up to receiving it — thanks to the supplier’s automated tracking system. Here, digitization ensures that customers feel more secure and in control when buying.

For example, Farmer Connect uses Blockchain technology to connect coffee growers with the consumers they serve. By launching a mobile application, “Thank My Farmer,” they allow coffee lovers to trace the origin of their coffee and directly support the farmers who grow the beans. The app is a win-win for companies, workers, and customers. It connects the purchaser to traders, farmers, brands, and roasters.

 

Top trends for supply chain digitization

If you’re looking to improve your organizations overall productivity and performance, here are some supply chain trends you should try:

Integrate your eCommerce website

Integrating eCommerce helps provide a more seamless customer experience and makes your operation more efficient. Once again, the free flow of information across departments is key. Thus, companies immediately see the benefits of interconnected supply chains for eCommerce operations.

Utilize artificial intelligence (AI)

AI in the supply chain helps companies analyze data, enhance performance, and perform routine tasks. AI also helps supply chain leaders solve problems with increased visibility across networks that were previously disparate or remote.

Leverage the Internet of Things (IoT)

An IoT is a network of physical objects connected to the internet. The IoT already plays an important role in the supply chain, and it will gradually grow in importance with increasingly diverse applications. As a matter of fact, within a few years, up to 50% of companies could be using these advanced technologies to support supply chain operations.

IoT has the ability to improve fleet tracking, warehouse management, inventory control, and even technological and mechanical maintenance. Plus, imagine how “smart” warehouses and fleets might increase the accuracy and efficiency of multiple areas of the supply chain.

Integrate Blockchain

Blockchain can be greatly beneficial for businesses to minimize supply chain disruption and improve customer service. In fact, by 2024, global blockchain spending is expected to reach almost 19 billion U.S. dollars.

Blockchain has already helped integrate carriers, logistic providers, and shipping lines into a single platform. The transparency offered by blockchain technology helps to identify issues and cut out waste early in processes.

Create a supply chain digital twin

A digital twin is a model that  simulates the supply chain’s performance with AI and advanced analytics, and explores the complexities that show risks and vulnerabilities. Basically, it’s a virtual representation of the supply chain that consists of hundreds of warehouses, assets, inventory, and logistics positions.

Having a digital twin helps increase visibility. It also allows leaders to be more strategic and ready to take advantage of opportunities — especially in complex supply chains.

 

Five steps to digitize your supply chain

Transforming your traditional supply chain into a digital one is a complex process. However, it’s absolutely necessary to stay competitive. Here’s how to do it in five steps:

Step #1: Define your vision

The first step in implementing digital transformation in the supply chain is to define a clear vision and set some clear, attainable goals. These goals can be related to business objectives like faster decision making, improved supply chain visibility, and automated operations. When defining a vision, you need to:

  • Assess your resources and existing systems: Identify where you are, and see where you can improve. Do your existing systems use technology that supports your new goals? Can you Identify digital solutions that help you achieve desired business outcomes?
  • Access your current ability to analyze data: Can you currently collect, generate, and analyze data? If not, it may be hard to come away with actionable insights.
  • Access your workforce’s skills: Does your team have the necessary skills to work with and adapt to the new business model?

Step #2: Unify your processes

When you unify your processes into one system, you gain end-to-end supply chain visibility. That means you get enhanced transparency to streamline core functions including warehouse management, inventory management, logistics, demand forecasting, and more.

Step #3: Automate as much as possible

Wherever you can, you should replace recurring or routine tasks with automated processes. Not only does it help you simplify tasks, it also allows you to derive meaning from large volumes of data. Make sure not to automate processes that include complex situations or require collaboration between planners — but look at each part of your business and see what can be automated.

#4. Leverage data and analytics

Supply chain leaders need access to real-time data to make more informed decisions. Access to data and analytics helps you deal effectively with partners, suppliers, and your workforce. Real-time data also helps you identify potential disruptions and greatly increases visibility across the supply chain.

You can use AI-powered analytical tools for improving planning processes and drawing actionable insights. For example, using analytics, you can help prevent stock from being depleted completely and adjust your inventory accordingly.

#5. Align your people with your processes

Even if you are looking to shift to a digital supply chain, the switch would be worthless unless your team members are aligned with your new techniques and processes. Always make sure your shift integrates technologies with people, processes, and management. Without full integration, teams won’t be able to achieve your desired results with your new business model.

 

Allow Cin7 to help with your digital transformation

The quickly evolving technological landscape and increasing customer expectations are causing organizations to revisit how they do business. Adapting new technologies and integrating your supply chain leads to greater flexibility, efficiency and resilience.

For businesses re-evaluating their supply chains, now’s the time for action. Supply chain digital transformation isn’t easy, but it’s definitely worth it. If you have any questions about digitizing your supply chain, get in touch with Cin7 today and we’d be happy to assist you on your digital transformation journey.

A detailed guide to preventing inventory shrinkage

What is inventory shrinkage?

If you own a retail business, you’ve likely experienced inventory losses. Unplanned inventory loss, known as inventory shrinkage, results from a myriad of causes including theft, shoplifting, and damage both in-store and in-warehouse.

For example, Rio Shoes, Ltd., had 4820 pairs of shoes, but, upon a physical count, the inventory was only 3980.

According to the 2020 Retail Security Survey published by the National Retail Foundation, inventory shrinkage cost the retail industry $61.7 billion in 2020. Retailers need to take steps to prevent unwanted loss that results in decreased profitability.

“In a business where we only make a penny on every dollar that comes in, it is especially important that we control our shrinkage.”

Fred Klein, VP Loss Prevention, Big V Supermarkets

Here, we will learn why it’s important to calculate inventory shrinkage rate, how to calculate the rate, and how to prevent or reduce inventory shrinkage.

What are the leading causes of inventory shrinkage?

There are several reasons that contribute to inventory shrinkage. However, the top reasons include shoplifting, employee theft, administrative and paperwork errors, and vendor fraud or error.

According to the 2021 Retail Security Survey, participating retailers indicated that these loss risks and threats have become more of a priority for their organization over the last five years:

Why is calculating inventory shrinkage important?

It is well-known that physical inventory in the retail business consumes an enormous amount of working capital.

Inventory is money that is stashed in your warehouse. 

This only highlights the importance of identifying the sources of inventory loss and stopping or decreasing the causes.

A certain amount of inventory loss will be attributed to damaged goods. However, concerted efforts and corrective actions must be taken to eliminate unethical reasons such as theft.

“Not controlling shrinkage is taking a shortcut to bankruptcy.”

John L. Pagliaro, President of Dana Associates

How to calculate inventory shrinkage

Inventory shrinkage and rate are determined for a specified period, such as the fiscal quarter or year. Inventory shrinkage is calculated by subtracting actual inventory value by recorded inventory value. The shrinkage rate is calculated by dividing inventory losses by the amount of inventory you should have, and multiplying that number by 100 to determine the rate.

To calculate the rate, you’ll need to determine the following:

  • A physical count of actual inventory and its value.
  • The recorded inventory, or inventory you should have, and its value.
  • Deduct the value of actual inventory from the recorded value to determine inventory loss (inventory shrinkage).
  • To calculate the rate, divide inventory loss (inventory shrinkage) by the recorded inventory and multiply by 100.

Inventory shrinkage = recorded inventory value – actual inventory value

Inventory shrinkage rate = inventory shrinkage / recorded inventory value * 100

For example: Joe’s Accessories has $5200 mobile accessories. After conducting an actual inventory count, they determine the value on hand is only $4900. Joe’s Accessories realized inventory shrinkage of $300 with a rate of 5.7% over a specified period (fiscal quarter or year).

Inventory Shrinkage = $300 ($5200 [recorded inventory] – $4900 [physical inventory])

Rate = 5.7% ($300 [inventory shrinkage] / $5200 [recorded inventory] * 100)

How to prevent inventory shrinkage

A combination of safety measures can be implemented to reduce or prevent inventory shrinkage. Some of those include:

1. Implement a two-person checks and balances system

A checks and balances system is a system that can be implemented at crucial inventory management stages like signing invoices, accepting stock, and recording stock.

Having a second person verify records prevents inaccuracies and omissions. It can identify loopholes contributing to stock shrinkage so that measures can be implemented to control fraud.

2. Safeguard expensive inventory

Inventory shrinkage is measured in terms of value. Safeguard expensive items by assigning employees with special privileges to handle that inventory, or store expensive items under lock and key in a separate location.

3. Prevent vendor and purchase order fraud

Follow-up with vendors to ensure your purchase manager isn’t involved in transactions that are questionable or unethical in nature. Double-check damaged goods that are filtered from purchase orders. Employ inventory management software like Cin7 that provides trackbacks and purchase order history.

4. Eliminate loopholes and improvise process

Identifying loopholes to prevent employees from exploiting inventory can significantly reduce inventory shrinkage.

5. Increase pre-employment screening

Small items such as truffles, caviar, gemstones, and small electronic devices are high value and easy to steal. Boost pre-employment screening to include:

  • Background checks
  • Criminal history
  • Credit history
  • Education verification
  • Past employment history

6. Employee training and incentives

Proper loss prevention training will reduce shrinkage. In addition to loss prevention training, employee incentives. Create a strong company culture that fosters honesty and integrity.

7. Invest in a security system

A lot of hardware systems with software support are available on the market to safeguard inventory from being stolen. These systems include CCTV cameras, intrusion detection, door auto lock systems, and door access control.

Alternatively, you can install a custom system according to your needs and budget to reduce theft as well as unauthorized access to your warehouse.

8. Track your inventory

Using the latest technology business owners can track inventory as it moves from procurement to sale. Examples of tracking devices include radio frequency identification (RFID) tagging and bar codes.

9. Invest in an inventory management system

The role of an inventory management system is to monitor movement of products from procurement through production to sale. A good system will allow you to track inventory to a specific location whether that is a bin in a warehouse or a store shelf.

An inventory management system ensures that you have enough inventory (stock) to meet demand without overstocking.

What if inventory shrinkage goes unnoticed?

Missing inventory will adversely affect your profits.

“Shrinkage is the single greatest threat to profitability in our industry.”

Alasdair McKichan, President, Retail Council of Canada.

Here’s an example: Joe’s Accessories sells accessories at a 20% profit. When inventory valued at $1000 is missing (inventory shrinkage), his profit loss is $1200 ($1000 + 20%). Joe’s Accessories loses the actual value of the inventory ($1000) plus the profits that would have been earned by selling the lost inventory (20%).

Ultimately, shrinkage will need to be reconciled in your books. These are recorded as business losses. Significant inventory shrinkage is a monetary loss. Inventory has value – even stock that has been sitting around a while or was acquired through trade or barter.

Final thoughts

Inventory shrinkage can affect your bottom line – at the very least. It can also have deleterious effects on business and employee relations. To boost profits, business owners need to lower their inventory shrinkage rate. The most efficient way to do so is to use the latest and most efficient method of inventory management.

With the use of software systems like Cin7, inventory shrinkage is readily caught and resolved efficiently.

Book your demo now.

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.  

A complete guide to robotics and warehouse management

The word automation was first coined and used by Ford Motor Company then Vice President, Delmas Harder in 1948 when he commented that, “What we need is more automation.”

He realized that there was a need to improve material handling in-between the various production stages to compete in the market with companies like Chevrolet.

Why this is significant is because it was the first time anyone thought of automating a process in a manufacturing unit. This led to the creation of robots that are now used in the manufacturing plants, warehouses, to ease and quicken the processes.

Let’s dive into the history of how the robots came into existence.

History of robotics in warehouses

However, it was not until 1954 that George Dovel filed for a robotics patent when he created the first industrial robotic arm, Unimate.

This robot was capable of moving the materials around 12 feet away within the manufacturing unit. This also earned George Dovel the title – Grandfather of Robots.

It took until 1961 for a patent to be granted due to concerns about laborers losing their jobs.  General Motors was the first company to make use of the first of these robot arms in manufacturing at their New Jersey plant in 1962.

Then came the Stanford Arm in 1969 created by Victor Scheinman. It was technically a first of its kind, electrically-powered, an automated robot arm that could move around accurately. The arm was powerful enough to assemble the Ford water pump by itself with optical and contact sensors.

This marked the beginning of a new era of using robots in the manufacturing process for achieving higher efficiency and improving lead time in the production of items.

By 1990, the use of robots started in households as well with the advent of Roomba robots developed by iRobot. Roomba was a first-generation vacuum cleaning robot that became a huge success.

Since then, there has been no looking back and the usage of robotics has come a long way in a short span of time.

In 2003, Kiva systems started creating AMR (Automated mobile robots) which were used in moving goods around warehouse and distribution centers using a conveyor system or by forklifts.

Kiva robots were so effective that Amazon bought the company itself in 2012 and now uses them across all their distribution centers.

Amazon is at the forefront of warehouse robotics development with 100,000 robots operating in their fulfillment centers across the globe.

Types of robots

As mentioned earlier, there was no looking back once the Roomba robot and Kiva robots were introduced and hugely successful in the market. Various types of robots came into existence that served various purposes.

However, for the warehouse, 5 major types of robots are used:

#1 Automated Guided Vehicles (AGV)

The Kiva robot that we are so familiar with is actually an Automated Guided Vehicle robot. This robot helps in transporting products and materials from one place to another by using magnetic stripes, sensors, or a track embedded in the warehouse floor. They are the best alternative to the manually driven forklifts and picking carts.

#2 Autonomous Mobile Robot (AMR)

AGVs have developed a lot over the years and now they can function without magnetic stripes or sensors. These are known as Autonomous Mobile Robots (AMR) loaded with warehouse maps and the location of all the inventory stored in it.

AGVs also have safety scanners embedded in it such as 3D cameras, lidar, infrared, front and rear sensors, etc. which allow them to navigate without any mishaps following maps and the established routes within the warehouse. These are also known as self-driving forklifts.

#3 Cobots or collaborative robots

As the name suggests, these are robots that work collaboratively with human workers at the warehouse. However, these are quite efficient as they are semi-autonomous mobile robots that can move around a warehouse with their human pickers.

Usually, these cobots follow the human pickers so that they can drop picked items in the bins carried by these robots. This improves efficiency amongst warehouse workers and also reduces or eliminates the effort of physically carrying products.

Cobots have sensors so that they can identify any obstacle or boxes in their way and enable them to navigate carefully through the warehouse. Cobots are picker staff best friends as they can speed up their order fulfillment capabilities.

#4 Automated storage and retrieval systems

Automated storage and retrieval systems (AS/RS) are automated technologies used in warehouses for speedy storing and retrieving of goods. This system consists of multiple technological machines such as shuttles, cranes, carousels, vertical lift modules, unit loads, and mini loads.

Since all AS/RS are computer-controlled systems, they are integrated with the warehouse management system so that it can process order fulfillment as soon as orders are received.  AS/RS systems are used for moving a high volume of loads from in and out of storage.

AS/RS systems save time and effort of picking staff since in this “Good to Person” order picking, the worker does not have to physically move from one place to another to pick items. A mini-load crane, shuttle or AMR retrieve the products as per order and deliver it directly to the worker for packing and shipping.

#5 Aerial drones

We have been fascinated with the idea of drones delivering packages to our doorstep ever since Amazon began this practice. Drones have greater capabilities and we still have not fully explored their usage.

Drones are already being used in warehouses for locating and tracking inventory. They make the work much easier, quicker and can reach any nook and corner easily. In addition, a drone can be easily integrated with your warehouse management system making it an effective technology for tracking inventory and also lifting lightweight products for easy picking and packing.

Drones are autonomous and customizable, and with their cameras and RFID, drones can easily scan products, do inventory checks, conduct tracking, and map inventory.

Benefits of using robots in the warehouse

“To be or not to be” is a challenge faced for the usage of Artificial Intelligence (AI) in the manufacturing industry. Some are uncomfortable with the overall implications of AI taking over manual tasks, but recent statistics of intelligent automation capabilities are gaining attention, and therefore, cannot just be ignored.

“85% usage of intelligent automation will be seen in Supply Chain Management by 2021,” as per an IBM Report.

It is essential to stay globally competent in today’s dynamic market and using robots and artificial intelligence in the warehouse is the way to go! Here are a few of the benefits of using robots in the warehouse.

Reduces manual labor

Robots can take over work that is dangerous or time-consuming and thereby help warehouse workers to stay safe while working in coordination with robots.

Robots also help save time and effort by replacing manual scanning, picking and packing, and inventory counting. Also, it can be a very strenuous activity for the warehouse workers to keep on moving one rack to the other to fetch items ordered by customers. But autonomous mobile robots can perform these physical tasks and help workers to focus more on other order fulfillment tasks that require human intervention.

Improves warehouse accuracy and efficiency

Artificial intelligence helps in reducing human error and improves the customer experience which is the key to success for any business.

Since robots are customizable and can be programmed for a specific purpose, there are few instances of mistakes. Robots are not prone to human error and thus they eliminate wasted time and effort in redoing an incorrect task.

Accuracy in tasks like product scanning, picking, storing, and transporting products positively affects the overall performance of the warehouse. Warehouse robots work with precision and allow operators to automate the most mundane and laborious tasks.

Reduces warehouse costs

As per U.S. Census Bureau data, an average warehouse worker spends almost seven weeks per year in unnecessary motion within the warehouse. The costs of such futile activity costs the industry more than $4.3 billion USD in annual revenue.

Also, robots perform dangerous tasks efficiently in the warehouse, resulting in reduced costs spent on worker’s compensation for safety issues. There are fewer chances of workers getting injured since robots are performing the tasks instead.

The number of workers required in the warehouse also decreases as robots can fulfill most of the tasks with accuracy, creating less wastage.

Efficient picking capabilities

One of the foremost usages of a robotic arm was to move materials from one place to another up to 12 feet away. But with the technical advancements, the robotic arm has now been developed into an autonomous mobile robot that can travel far and wide in the warehouse and pick items automatically.

Some well-known companies like IAM Robotics, 6 RiverSystems, and GreyOrange, have introduced their powerful mobile robotic picking solutions in the market increasing warehouse efficiency requiring limited human resources.

These machines are programmed to travel established routes and they typically carry carts in which the products can be stored and transported to human workers.

Conclusion

We hope this article has helped you understand how robots are changing the supply chain within warehouses. At this point in time, robot technology is just scratching the surface. In the future, robots will prove to be much more useful and advanced as technology advances.

To learn more about Cin7 inventory and order management software and to find out how our warehouse management system can help automate your operations, request a demo here.

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.

ModaConcrete | TerraFlame

A lot of new businesses have only one of two ambitions: either a nice solid start, or to set the world on fire. Lenny Vainberg wanted both — and not only is he pulling it off, he’s sharing his experience and formula for success. 

Lenny is CEO of ModaConcrete™ | TerraFlame, a brand he acquired from a private equity firm a few years ago. 

“We bought a brand, and essentially built a factory and set up a supply chain in Baja, Mexico to produce our products,” Lenny explains. “We adapted a factory that was set up to produce architectural precast and tooled up production to manufacture the most popular TerraFlame products. Later, we reintroduced the precast production as an online business supplying architectural precast to the trade. We now have two brands: ModaConcrete and TerraFlame coming out of the same factory, serving two divergent but complimentary markets.” 

“TerraFlame,” Lenny says, “is the leader in clean-burning gel fuels, and fuel burning appliances. Our Pure Gel Fuel is the ‘razor blade’ which is available in select retail stores, online retail and through our subscription plan. You basically pop our fire fuel can into our fire bowl or fireplace and enjoy. Each TerraFlame fuel can generate 3 hours of warm, ambient , golden flame for about three hours and costs about $6. And they are food safe, which makes them perfect for Smores.” 

ModaConcrete™, on the other hand, sells architectural precast concrete products that are designed to create fashionable and beautiful hardscape environments, sold and fulfilled factory direct to trade and design / build channels. 

The TerraFlame brand designs and markets clever consumer products, while ModaConcrete overlaps from home owner to the trade. Both brands produce great products, but the real innovation is in what Lenny has done to grow the company by a truly astonishing margin in the two short years.

“The key is to build a capable and scalable systems foundation as early as possible”, he says, “a functional ERP for supply chain, manufacturing and inventory management.” Tying it all together is Cin7. 

Cracking the cool consumables market without going up in smoke

When Lenny bought the company, it had a couple of “really cool” products that were getting good traction in retail. But, beneath the surface, big cracks had formed. 

The products might have been good, but revenue was nowhere near the level they’d expected it to be. It was difficult to fully understand the true product and operating costs with little visibility between manufacturing and fulfillment. Compounding the problem was that the operations were in a very raw state.  Before Cin7, the company didn’t really have any inventory management — not even the basics. 

“There were no systems,” Lenny says. “It was napkins and spreadsheets and nobody knew what was going on operationally. They were looking at things without understanding the true cost of goods, because they really had no way of doing that. And filling more orders, means throwing man hours towards more manual entry. None of it was scalable.” 

ModaConcrete and TerraFlame needed to find a hard fix — fast. And from previous experience, Lenny  knew exactly what they needed. The only problem was that the kinds of ERP systems he’d worked with prior required significant time and capital resources, a huge investment for a company at this early stage.  

“We needed to find some kind of effective ERP system that we could use to not only manage our inventory and manufacturing, but also integrate our EDI and forecasting,” Lenny says.  

They considered a few other options — Lenny’s previous company had run a substantial NetSuite instance, with its own internal development group. But being new and running on a relative shoestring, the company didn’t have the time or budget to support that kind of deployment. Eventually, his search led him to Cin7. 

“When we found Cin7, and started seeing the capabilities and features, we were very surprised and impressed with the functionality and the breadth of what the system could do.”  

Today, ModaConcrete and TerraFlame are using Cin7 from the beginning to the end of the product journey — and it all starts with manufacturing. 

ModaConcrete has a solid foundation in Cin7

About 60 percent of ModaConcrete and TerraFlame’s business is products that they manufacture in-house, so visibility is critical. And before Cin7, “it was Quickbooks and spreadsheets,” Lenny says. “People would eyeball everything from mix design to sell through and that was it. There was no inventory control, no BOM management or production management, no raw material tracking, nothing” 

To manage the manufacturing, ModaConcrete and TerraFlame are using the Bill of Materials (BOM) functionality of Cin7. 

“We’ll design a new product, test it, create 3D models of it, develop the mold set, then it’s on to filling, casting and finishing the parts,” Lenny says. “We have several product types and about a dozen different concrete mix designs, depending what the products are for — and we set up those mix designs as BOMs in our system.” 

Essentially, every raw material that goes into making a new product is measured and tracked in Cin7 via the Bill of Materials. When the raw materials are combined into a product, that too is tracked in Cin7, where the new product can be added to inventory even as the materials used to make it are subtracted. This simplified manufacturing process management is standard in the Cin7 software. 

ModaConcrete is also making use of Cin7’s Made to Order functionality. One of their bigger sales channels is B2B sales direct to trade stores, construction companies, and job sites. Customers can visit ModaConcrete.com and select from a range of products, sizes, shapes, and colors.

This order information goes into Cin7, which tells the manufacturing operation exactly what to produce. Behind the scenes, ModaConcrete has ‘blanks’ ready to be modified into the exact items the customer wants, and once items are finished and shipped, the customer gets notified that their order is on the way. No matter whether a customer is big or small, Made to Order means they get exactly what they’re after, every time.

“Understanding Cin7 Made to Order has enabled us to build up preliminary stock to convert into finished goods a lot faster than trying to make them from scratch every time,” Lenny says.  

For a manufacturer, operating with this level of inventory control has huge advantages. Material costs can be carefully managed, and forecasting requirements gets vastly easier. Operations know where everything is, how fast it’s being used up, and when products will be ready to be sold. Manual inventory tracking tasks are reduced, and relieved of operational overhead, staff can get on with the job of actually making and shipping products. 

For ModaConcrete and TerraFlame, this was an increase in visibility by many orders of magnitude. Now, they have a clear understanding of costs from manufacturing to finished goods to shipping. “Now you can see what your true cost is, and based on that, you can make intelligent decisions on what you’re going to do,” Lenny says. 

Native EDI unlocks the freedom to scale

The other big item on Lenny’s agenda was EDI. First created in the 1960s, Electronic Data Interchange is a technology that allows the automated, computer-to-computer exchange of business information. It might be old, but it’s still one of the most-spoken languages of business — and if a company can’t speak it, it’s missing out. 

Cin7 is one of very few inventory management systems with native EDI integration capability, and it’s the secret weapon that’s allowed ModaConcrete and TerraFlame to grow as rapidly as they have, with their wares now available in all the biggest US retail outlets, including Target, Costco, Williams Sonoma, Amazon and more. It’s been a huge leap for the company, compared to how things were done before. 

“When we bought the company, we were barely doing 300 orders a week over multiple platforms, and as you can imagine, everything was manual,” Lenny says. “Every order required at least four manual touches. Staff had to download the order from each partner portal, enter it into Quickbooks, enter it into the warehouse ship requests, manually create the label, and then enter shipment tracking back into the portal, to close out the order process. The previous thinking was that scale required more people to work faster and harder to keep up with the paper pushing.” 

But all that was about to change. Once the company implemented Cin7, integrated ShipStation, and set up barcode scanning and labeling at the factory, things got much more efficient. They had a better system, instead of trying to make a broken system work harder. And after activating Cin7’s EDI capability, things went to another level again. 

‘I’d say that we multiplied our throughput by seven times. Specifically the same small team that struggled to supply 300 orders per week, can comfortably handle up to 2000 orders per week today,” Lenny says, casually. “And now we’ve got that EDI rolling, we won’t bring on a customer unless they’re EDI capable and integrated with our system. We rarely accept non-EDI integrations or orders.” 

It’s a bold step, but it’s one that puts them head and shoulders above similarly-sized product companies — and on the same playing field as the biggest companies in the United States.

“There’s not a lot of companies with less than $10 million in revenue requiring EDI compliance with their trading partners in order to drop ship for them, just because most of them don’t have those capabilities,” Lenny says. “But it’s these capabilities that are most important, because they give us the ability to scale. I think that’s the most important thing that came from Cin7.” 

Right now, ModaConcrete and TerraFlame are managing 16 EDI connections, end to end, in Cin7. They’re managing Costco, Wayfair, Lowes, Home Depot, all the major Internet retailers, as well as some brick and mortar retailers. They’re also managing inventory in four different locations, across two different product lines, and two direct to consumer websites, as well as a third party Amazon presence. It’s all being done with Cin7. 

“It gives us the ability to operate on the level of a much bigger, more capable company, despite being a small operation,” Lenny says. “We have a 10 person team in-house in Southern California where we do sales, marketing, and web strategy. And we have 60 people at our factory in Tecate. Cin7 enables that 10 person team to look and operate as a much more sophisticated company, when it comes to our trading partners.”