The U.S. Census Bureau News reported that the retail ecommerce sales for the first quarter of 2022 crossed $250 billion, an increase of 2.4% from the fourth quarter of 2021. It represented 14.3% of the total retail sales. The B2B2C model is the latest addition to the ecommerce scene. Let’s learn some more about the B2B2C model.
You have seen businesses that operate on the business-to-business (B2B) model. You have also seen companies that work on the business-to-customer (BTC or B2C) model. Both the models have been successful in their own ways. Now, a new model is creating waves in the ecommerce market – business-to-business-to-customer (B2B2C). If the B2B and B2C models were successful, why should you involve another business between you and the customer? Let’s talk some more and find out about the B2B2C model.
What is a B2B2C commerce model?
A B2B2C commerce model is where one business (B1) involves another business (B2) to sell goods or services to its customers (C). If any of the involved companies use the internet to sell goods or services, it is called the B2B2C ecommerces model. In the B2B model, the businesses sell their goods or services to other companies. And in B2C, the organizations sell their wares directly to the end consumers. The B2B2C commerce model is the culmination of both these models.
So, what was the need to involve another business in the channel?
The market was limited when business was done mainly through physical channels. But with the development of ecommerce, suddenly, the markets became wider and the possibilities for business unlimited. However, it was not possible to have it all without a little bit of assistance. If one company had the product and the other company had the means to reach the consumers, they could join hands to increase the business multifold.
The following figure shows the concept of the B2B2C commerce model:
The first company provides the goods under its brand name, whereas the other company provides additional services, including lead generation, transport, credit, maintenance, and digital payment services.
In Figure 1, you can observe the following steps happening:
- The manufacturer provides goods to the network seller to sell.
- The network seller provides customer information and sales platform to the manufacturer in return for annual fees.
- The network seller uses the services of a payment gateway to receive payment securely.
- The customer buys the goods from the network seller, fully aware that the seller is not the manufacturer.
- The customer makes payment and receives goods from the network seller.
- The network seller makes the payment to the manufacturer.
This is a classic example of the B2B2C ecommerce model. You might have gone through a similar process when buying goods from sellers, including Amazon, Flipkart, or eBay.
How are B2B2C and white-labelling different?
One shouldn’t confuse B2B2C with white labelling. White-labeling is a process where the company manufactures the goods without its brand name and sells them to other businesses. These companies sell the goods under their own brand names. So, basically, the consumers are unaware of the origin of the goods. On the other hand, in B2B2C, the customers know the goods’ origins well.
For instance, some drug manufacturers provide generic medicines to other organizations. These organizations pack the drugs under their own brand name and sell them to consumers. Consumers are unaware that the drugs of two or more brand names come from the same manufacturer. They purchase goods trusting the brand name. This is called white-labelling. And in turn, the brand holder ensures the quality of the goods. On the contrary, if you are buying Nike sneakers from Amazon, you know that Nike is the manufacturer, not Amazon. This process is called B2B2C ecommerce.
Examples of real-life B2B2C commerce models
If you think that B2B2C is a concept in its initial stage, you might want to rethink it. Many organizations use B2B2C ecommerce in today’s market. Here are some of the examples:
Intel manufactures computer processors. Intel has teamed up with original equipment manufacturers (OEMs), including Dell, HP, and Lenovo, for marketing/branding purposes. The synergy brings trustworthiness among the customers and thus increases sales.
Amazon is an online platform for trading any type of goods. The sellers can retain their brand name while using the network base, logistic facilities, and payment gateways provided by Amazon. This increases their turnover. In return, Amazon gets fees for the facilities they provide.
Apple has devised a plan to help its customers download reliable applications and games from an Apple-approved space. It is called the App Store. It ultimately allows Apple to earn more revenue.
The US giant Affirm is a financial organization that facilitates the customers in buying goods at present and paying later. Affirm collaborates with men’s and women’s fashion, sports and fitness goods, jewellery, electronics, and furniture brands to assist consumers in buying.
UberEats partners with the local restaurants to deliver food to the customers. The customers can enjoy the food served by any restaurant from their homes. The restaurants make more sales than they can do remotely. Uber Eats gets a commission from every delivery they make.
What are the advantages of the B2B2C commerce model?
Many companies are morphing their businesses with others to reap the benefits of the B2B2C commerce model. Every organization has something to offer to the other and two organizations would merge depending on their strengths and weaknesses. Although the advantages of the B2B2C model vary in every synergy, here are some of the common ones:
The primary goal of any business is to maximize profits, and scalability is a way in which they can achieve their goal. Scalability represents the ability of an organization to increase the output by adding resources. Instead of trying to do everything on their own, companies can adopt the B2B2C model to achieve scalability. They can partner with an existing company already providing the given services to increase growth.
Digitalization is the way to scale your business. You can widen your customer base by taking your business online. However, going online needs additional setup and management capabilities that are not available to everyone. Partnering with other companies specializing in these fields is a way to go forward. For example, instead of selling on your website, you can start selling on ecommerce platforms like Amazon or eBay to test whether you receive a good response. They can give you access to a client base you didn’t have before.
In the B2B2C commerce model, you can sell your goods with your brand name. As your customer base grows, your brand image grows too. More and more people will recognize your products, and their reviews can bring in more customers. You can take on any competition when your brand value increases.
Scaling begs for massive investment. Instead of starting an in-house unit, if you collaborate with another team to provide the facilities you require, you can save on setup and maintenance costs. Moreover, the cost of consumer data collection can be shared by all the relevant parties. Start-up costs, marketing costs, distribution costs, and customer acquisition costs can be controlled drastically by employing the B2B2C model.
When the manufacturers team up with the maintenance companies, the customers can get faster services. This will encourage the customers to buy from a company that provides faster after-sale services. The same principle applies to the companies that can deliver the products faster.
The customers benefit significantly from the B2B2C models financially and otherwise. The companies can transfer some of the cost-saving to the customers as discounts. The customers also get the facility of dealing with just one company for their multiple needs. So, it becomes more accessible and more straightforward for them. For example, if a customer buys a television from a store and gets the facility of paying in installments from the same store, they would prefer it. Some banks and financial companies provide such facilities to customers in association with the stores or manufacturing companies.
What are the challenges to set up a B2B2C commerce model?
If you are a B2B business or a B2C business transitioning to the B2B2C model might take some time and effort. However, once you are done, the benefits are numerous. Marc Benioff, the chairman, and CEO of Salesforce.com Inc. said, “We really see every B2B company and every B2C company becoming a B2B2C company.” Some of the challenges faced by the businesses in setting up B2B2C commerce or B2B2C ecommerce model are as follows:
Identification of area for B2B2C partnership
As a business owner, you should know whether you can benefit from the B2B2C model. Some products are not suited for such models. Secondly, you should determine whether you can cope with increased demand. If you cannot produce more to keep up with the increased demand, you might face embarrassment in your business circle.
There are mainly two types of business integrations – horizontal and vertical integrations. Horizontal integrations mean increasing the capacity of the pre-existing unit and producing more of what you are already manufacturing. On the other hand, vertical integrations involve taking up one or more stages of the supply chain in addition to the existing one.
One of the significant decisions you should be making is the area where the other business can help you. You should identify the area in which your organization needs support. For instance, if you can sell your product with an extra warranty, or you can sell more if you have a logistic partner, or if you need access to customer databases to identify your customers. By identifying a particular niche, you can narrow down on potential organizations that can help you achieve your goals.
Management of inventory
When you sell on multiple channels, it becomes cumbersome to manage inventory in real-time. Imagine a scenario where you have a brick-and-mortar store and sell your goods on multiple ecommerce platforms. If you run out of stock while simultaneously operating on all, and the stock on ecommerce platforms is not updated, you might find yourself in some soup. You might actually sell more goods than you have on hand. Therefore, inventory management is one of the crucial challenge areas of the B2B2C ecommerce model.
The solution – adopt a reliable inventory management software that will help you maintain real-time inventory of all your products. An inventory management software can help you keep real-time stock of all your goods in your locations.
Sharing the advantages always comes with sharing the limitations. When you adopt the brand name, it might also lead to the issues it faces. And, you don’t want yourself marked ‘guilty by association.’ It is advisable to check every aspect of the company before entering into a contract for B2B2C. If the company’s goals are not in sync with yours, you might want to reconsider the association as your brand image is online.
When two businesses merge, they both must have IT systems compatible with each other to transition without any hindrance. If not, you should hire an IT expert who can assist you in morphing the two systems seamlessly.
Both the companies should agree on and lay out clear boundaries of contributions towards the achievement of the common goal. The agreements should be reached with mutual consent and followed by all the parties involved.
In the case of B2B2C commerce, the businesses involved getting access to private information about the other business. There should be clearly defined legal agreements to protect the stakeholders’ privacy and sensitive information. Legal teams representing both parties can work out solutions that are to be adopted for more robust security.
Final thoughts on B2B2C commerce model
B2B2C commerce models are the way forward in today’s economy. If the businesses want to tackle competition by expanding their prowess, B2B2C models are the perfect solutions. These models provide customer satisfaction akin to B2C models and growth like B2B models. B2B2C ecommerce models can help you elevate your profitability and margins by combining the best of both worlds.
Automating the B2B2C ecommerce model on Cin7 can help you maneuver the process in a simple way. You can click here to know more about the Cin7 software.
A retailer’s mark of expertise is shown when they stock items people want to buy and have them in the right quantities to meet demand. But this skill is not an exact science. Even with the tracking and forecasting capabilities of inventory management systems, surveys, and knowledge of the market, mistakes are made. Sometimes stock can’t be sold; sometimes it just goes out of style. And then there’s the factor of safety stock, having a little bit extra to make sure orders can always be filled. While it’s important to have safety stock, there’s a limit to the amount of it a company should carry.
The point is that no company wants to end up holding inventory they can’t sell – obsolete stock. This blog is going to explore how companies end up with this obsolete stock, give suggestions to get rid of any you have, and put forward ways to prevent this overstocking from happening in the first place.
What is obsolete inventory?
When you’ve ordered a lot more of a particular item than there’s a demand for, or miscalculated the market and added items no one wants to your inventory, you’re left stuck with it. It’s become obsolete because you can’t sell it. Obsolete inventory takes up valuable space that could be used for items that shoppers want. And depending on what it is, it may also need attention, in which case it’ll be taking up your employees’ time without benefit to you.
This situation doesn’t happen overnight. Usually, sales for these items will gradually drop off until they stop altogether. Sometimes it can take years to realize this useless inventory is still there gathering dust; sometimes a retailer may have decided to hold onto something in the hope that they’ll be renewed interest in it at a later date.
Reasons inventory may become obsolete
1. Poor inventory forecasting
Nothing is foolproof, but sometimes people don’t use the data available to them as assiduously as they could. They don’t do enough research on past sales histories, market trends, or customer demands to gauge future needs, and they don’t take enough notice of the metrics they do gather.
2. Inadequate inventory management
Sometimes, retailers are left holding excess stock because they didn’t follow the movement of their stock through the supply chain closely enough. They didn’t exercise inventory management, which provides details on items they’re holding in the warehouse prior to sales and the number of items that are sold, details that are used to make the right decisions when ordering more.
When it comes to omnichannel sales — sales from several different online platforms and physical stores — keeping tabs on the level of inventory that needs to be held is complex but vital. Every sales channel is different, and a product that does well on one may not sell on another. Guesswork has no place in this model — a company has to have the right goods in the right amounts at the right place at the right time, or they’ll end up with that obsolete stock somewhere.
3. Lack of inventory control
Inventory control describes having a thorough oversight of each item in the warehouse. It differs from inventory management in that it focuses much more on the actual number of each item held in storage, ensures the right levels are there at all times, and keeps on top of purchase orders. If this isn’t done with enough care, overstocking can occur, and there’s a danger of that becoming obsolete.
4. Long lead times
When it comes to managing inventory, the lead time refers to the period it takes to receive a stock item after ordering it from a supplier. Because these lead times can vary, decisions about what to order when can be a bit of a head scratcher. If the lead time is lengthy, a sales company will have to order way in advance of needing the items, and if demand for those items eases off in the meantime, they could become redundant by the time they arrive. They’ll be obsolete stock.
5. Inappropriate products
If bad buying decisions are made, sellers will end up with products no one wants. Conversely, if a company is offering items that can be found everywhere else, there’s a chance they could be stuck with them. Either way, we’re talking obsolete stock.
How to avoid ending up with obsolete inventory
1. Do thorough inventory forecasting.
Make the data work for you. Dig deeper into those past sales histories, market trends, and customer demand. A robust inventory management system like Cin7 Omni can do the heavy lifting for you. The software produces reports, insights, and advanced analytics you’ll find invaluable when making decisions about buying new inventory. When you base your buying decisions on information like this, you have a much better chance of having best-selling items in stock and avoiding those slow movers that can end up being obsolete.
2. Automate your inventory.
An automated system tracks your inventory, keeping tabs on its levels in the warehouse and maintaining records of the numbers that are sold. And it will do this in real time. With detailed information like this, there’s less chance of your buying decisions coming back to haunt you.
It’s actually difficult to see how businesses that sell on multiple online channels and physical outlets and run several warehouses can function without an automated system to fall back on. Cin7 Omni’s inventory and order management software connects your warehouses, online sales channels, and offline stores into one automated system, tracking the level of inventory at each place and taking note of what is selling where. It’s how you ensure having what you need where you need it without being stuck with too much of anything.
3. Make sure your teams coordinate with each other.
If the different teams in your sales company work in their own separate silos and don’t exchange information, mistakes will be made, mistakes like bad buying decisions. The way to avoid this is by giving every department access to information like purchase and sales orders. This means the warehouse team working with the purchasing team and the purchasing team working with the receiving team. Likewise, the inhouse teams should be working in tandem with suppliers and shippers. It’s supply chain management.
A cloud-based inventory management system like Cin7 Omni can do the coordination for you. It will send those purchase orders to your suppliers and those sales orders to your customers through one system, and the fact that it centralizes its data means that all departments can access information and be in the know.
How to get rid of obsolete inventory
Here are some tips:
- Throw a clearance sale and sell the goods you’ve been stuck with at discounted prices.
- Bundle items with similar products and sell at a competitive price.
- List clearance sales on online marketplaces.
- Offer customers an incentive like free shipping.
- See if you can return items to your supplier, if not for cost, at least for a lesser amount.
No one wants to be stuck with obsolete stock, but it can happen. Automating with a system like Cin7 Omni can help prevent it.
To learn more about our software and how it can be advantageous for you, click here to schedule a demo with one of our experts.
Guesswork plays no part in today’s business world. Every decision that’s made, every action that’s put into place is based on verifiable needs, and this verification comes from precise data. When manufacturers order raw materials for the products they make, they do so with a knowledge of the quantity they’ll need to complete their orders. And when retailers get items from their suppliers, they do so using models that tell them the number they’re expected to sell. In other words, they plan.
Unforeseen circumstances aside, this planning eliminates the chances of being left with unwanted inventory – overstocking – or finding out too late that there isn’t enough of it – stockouts. If the latter happens, the ramifications could be damaging. When orders can’t be filled, reputations are put on the line and customers could go somewhere else. A retailer that sells on Amazon could even have its ranking lowered if it can’t fill orders. On the other hand, being stuck with too much inventory is a wasteful use of resources, including financial.
Companies get the data they need for this planning from software that oversees and manages their supply chain. When it comes to getting the right inventory levels, this information is used to make predictions about upcoming needs — that’s demand forecasting; and when actions are taken on these predictions, we have demand planning. These are the areas that we’re going to look at today. And we’re going to look at them with an emphasis on how the combination of these two impacts the supply chain and overall profitability of the company.
Demand planning overview
As outlined above, demand planning is about taking the expectations for future inventory needs gleaned from forecasting, and acting on them. In other words, if forecasting predicts that x number of a particular product is going to be needed, planning will issue the sales orders for them.
To parse that out and explain it more, forecasting gathers data from the company’s historical sales, consumer buying patterns, and market trends, and then combines that with variables like weather conditions, shipping issues, and lead times to get an accurate picture of future needs: which items they should order, the amounts they should order, and when they should order.
Demand planning, then, is putting this forecasting into operation. It’s putting in the sales orders for the right items in the right quantities to prevent overstocking and stockouts; it’s making sure there’s enough space in the storage area for them; it’s making sure there are enough cardboard boxes in the shipping department to get them out the door; it’s making sure every section of the supply chain is ready and can process orders with as little downtime as possible and with the least amount of waste.
When demand planning is done right, the supply chain is humming. Inventory is at optimum levels and orders can be filled in good time, efficiently, with the least amount of expenditure.
Components of demand planning
1. Analyzing sales data across multiple channels and locations
Analyzing the sales history across sales channels tops the list. However, when you sell on multiple online platforms and have your physical stores at various locations, gathering and analyzing all the sales data can take time and effort. And it’s also not productive to do it manually, as you have other important things like your business expansion and customer satisfaction that need your attention.
Cin7 Omni’s inventory and order management software connects your online and offline sales channels, enabling you to access all the sales data at your fingertips. You can view the sales history of each customer from every sales channel on Cin7 Omni’s homepage dashboard. Thus, you can understand the customer’s purchasing behavior, buying pattern, best-selling products, and slow movers and target the customers with relevant products.
2. Calculating inventory turnover ratio
The inventory turnover ratio indicates how efficiently your company uses its inventory and your overall business performance. With Cin7 Omni’s insight tools and precise inventory and sales data reports, you can accurately measure Cost of Goods Sold (COGS) and inventory turnover ratio. You can intervene earlier if you find any excess inventory or lag in your sales and put things back on track the earliest. You can also derive competitive price offerings to stand out from the competition to meet existing customers’ demands and attract new customers.
3. Independent Demand
The demand here refers to the end product. For manufacturers, this means finished pieces; for retailers it means the items shipped out to customers. Knowing the quantity of end product needed is the first step in demand planning.
4. Dependent Demand
This is about the components that make up the finished, or end, product. Basically for a manufacturer, the planners have to make sure they have all the bits and pieces and raw materials needed to put whatever it is they’re producing together, and they need them in the right quantities to satisfy the independent demand.
Cin7 Omni’s inventory and production management software is a useful tool for dependent demand planning. It can generate a detailed Bill of Materials (BOM), which is an itemization of the raw materials needed to put particular goods together and the quantities they’re needed in to fill a particular order. It can also produce weekly reports on both materials used and the progress production is making, statements which allow you to check that your demand planning is on target. As a bonus, the digital system can even instruct the machinery on the shop floor to start up, and it can do this as soon as it detects that there’s a predetermined minimal amount of orders in the works, a predetermined level set by you.
5. Monitoring the production process
If you’re a manufacturer, monitoring the raw materials, tracking the finished goods, and keeping the production time down is mandatory to run a successful business and meet the customers’ demands on time.
6. Monitoring, tracking, and managing inventory
Stocking the right inventory levels across your sales channels is mandatory to meet the customer’s needs on time. Besides stocking right, having optimal inventory control is crucial — preventing inventory from turning obsolete, maintaining goods at optimal conditions, and ensuring no discrepancies are all a part of managing inventory.
With Cin7 Omni’s inventory management software, you can readily conduct regular stock takes to ensure your stock is in optimal condition. You can also assign a batch or serial number to track the goods and dispatch the old stock first. Thus, you can minimize the risk of your inventory turning obsolete and sell goods on time at better profits. The right inventory at the right levels at the right place at the right conditions ensures a smooth supply chain.
The software also supports product bundling, enabling you to bundle relevant products and sell them at a competitive price. To top it all, you can rely on Cin7 Omni for managing your returns as well.
7. Internal processes demand
Here, we’re talking about demand planners making sure there’s no hitch in the supply chain. It’s about ensuring there’s enough space in the warehouse or storage area to place items for those projected orders as they come in from the suppliers. It’s about ensuring that everything is in place to move items from the warehouse to the end consumer — the right equipment, the right level of packing materials, the right shipping services. And it’s about having enough spare parts on hand to cope with machine breakdowns along with enough staff to keep everything flowing smoothly.
8. Managing product portfolios
Demand planning requires businesses to understand their products and lifecycles from introduction to phase-out. Product portfolio management is a part of demand planning that involves maintaining the entire portfolio of products you sell. Products are often interconnected, and the sale of one product affects the sales of another. Maintaining a product portfolio is helpful, especially when you add new products to your portfolio, as it helps you understand how the new product impacts the sale of existing products.
9. Analyzing current trends
Besides internal factors, external factors like weather, health, or economic crises impact business performance. Thus, apart from analyzing sales data and other internal factors, considering these external factors are also vital. Having a dedicated team to acquire external data on current events like health crises or natural disasters will help your business to promptly adapt to market volatility and prevent possible supply chain disruptions. A transparent system like Cin7 Omni will help you stay connected with your suppliers and track your goods during uncertain times. Therefore, you can efficiently manage the supply chain and ensure the timely delivery of products to your customers.
10. Managing trade promotions
While marketing and promotions may seem tangential to demand planning, arranging for advertising, discounts, and giveaways is an actionable part of the sales cycle and so should be included. The same goes for trade shows. In effect, this is because publicity attracts interest and helps sell the products and goods a company offers.
Cin7 Omni can be a great help in this area. It can set up discounts and set start and end dates of a particular promotion, and it can apply those promotions to whatever of your products you choose.
Demand planning and supply chain management
Demand planning affects supply chains in the following ways:
It streamlines inventory management.
- It puts relevant sales strategies in place.
- It makes sure all resources are used efficiently.
- It encourages companies to negotiate with suppliers for better deals.
- It results in high levels of customer satisfaction.
Having the right amount of everything in place in the right quantities when it’s needed is at the heart of a well-run business, and why getting demand planning right is so crucial.
Cin7 Omni is a great way of maintaining flow from one stage of the process to another. It has features that can make supply chain management hassle free, and the data it produces can be put towards forecasting and, as a result, better demand planning.
To find out more, click here to schedule a demo with one of our experts today.
To quote writer and editor Stewart Brand: “Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road.” Wise words in this day and age when more and more aspects of manufacturing and ecommerce are being automated, computerized, and digitized.
In supply chain management, an important technological development for retailers has been the creation of supply chain as a service, or SCaaS. We’re going to unpack this concept, explaining what SCaaS is, how it works, and how it impacts businesses for the better.
Supply chain as a service (SCaaS) explained
An SCaaS company is basically a company that specializes in providing cloud-based, supply-chain-related software and, increasingly, other order fulfillment services. It means that instead of a manufacturing or ecommerce entity taking out subscriptions to the cloud-based software they need themselves, they’re able to access them through an SCaaS company, which they hire for that purpose. These third parties can take care of anything from inventory management and warehousing to reverse logistics, or returns. In fact, with the right SCaaS company, you’ll be able to track your entire order fulfillment process. In other words, you’ll have supply chain transparency.
SCaaS companies are great for small retailers and manufacturers, especially those that are starting out, because they save these businesses from having to pay for the software they need themselves. For more established outfits, SCaaS will become an increasingly important resource as business practices become more complex. This is especially so because SCaaS companies can also offer valuable information and advice; they can be a partner.
A myriad other ways an SCaaS company can be a good resource
As a manufacturer or ecommerce business owner, you can outsource your entire supply chain management or any part of it to an SCaaS provider. Almost as a bonus, these third-party providers can be useful in other, related ways. Here are a few examples:
1. Finding and getting the raw materials you need
SCaaS companies can help you get what you need at the right price because they have information about suppliers. They also know about shipping companies and shipping regulations, an expertise you can tap into to ensure getting what you need in good time.
2. Facilitating coordination between retailers and their manufacturers
To make sure retailers get their stock from the manufacturers in the right quantities and at the right time, it’s important for them to be on top of the producers’ production processes, lead times, inventory levels, and quality inspections. SCaaS companies can take care of this. They have the technology and industry expertise to provide real-time updates on the manufacturing process and lead times, ensuring that retailers are in the know at all times.
Some SCaaS providers offer warehousing. They have the technology to streamline operations from receiving and slotting to picking and packing. Add this to their inventory management capabilities and you have a more efficient and resilient supply chain altogether.
In addition to being able to suggest shipping companies, an SCaaS company can work out the best logistics for you when you need to move inventory from one location to another. It can identify the kind and size of transportation you’ll need — truck, rail, or cargo ship — and the capacity of each needed. Plus, the company can work out the best routes that should be taken.
Possible challenges to implementing an SCaaS model
Your SCaaS’s technology might not be shared by all your partners
As good as the technology and infrastructure SCaaS companies offer is, if your internal teams and trading partners aren’t up to speed, they won’t be able to communicate with your third-party providers. You have to make sure your stakeholders’ technology can interface with the kind your SCaaS uses.
Not knowing how and when to use SCaaS
In the complex world that is today’s marketplace, a company has to work out what part of their supply chain it can handle itself and which sections are best outsourced to an SCaaS. Retailers and manufacturers must also be flexible enough to adapt this model as the need arises, either taking on more themselves or outsourcing more.
Finding a good logistics partner
This can be difficult. First you have to find a third-party provider that has the top-notch infrastructure and digital programs you need, along with the right background and expertise in your area to be a good partner. When you’ve got that down, you can figure out which areas of your business to outsource.
Benefits of using SCaaS
SCaaS can redefine supply chain management in the following ways:
- Agility: Access information and analytics from any Internet-enabled device and make data-driven decisions quickly.
- Seamless communication: Easily share information and stay connected with stakeholders through every stage of the supply chain.
- Scalability: Add or reduce the logistics services that are outsourced according to customer demands.
- Transparency: Have more control over the supply chain because information is updated consistently and available in real time.
- Sustainability: There’s no need for you to invest in a complex IT infrastructure.
SCaaS is a revolutionary model that’s the next iteration for supply chain management, and our Cin7 Omni system can help you determine the best ways to leverage it for your business.
How can it do this? Well, our Cin7 Omni’s inventory and order management cloud-based software seamlessly integrates with various 3PL companies, connecting your online and offline stores, warehouses, and distribution centers in one platform. Through this connection with 3PL companies, you’re able to analyze them and understand which company and services are right for you.
To find out more, click here to schedule a demo with one of our experts today.
Logistics was coined by the military to describe the complicated organization involved in moving troops and equipment from one place to another. Similarly within the supply chain, logistics is about getting everything from goods to equipment to people from one place to the other. Logistics is no easy matter. Things have to be in place when they’re needed, and they have to be there in the right quantity.
Vast in scope, both the supply chain and the logistics within it involve all the departments of a company and outside entities. This includes manufacturers, suppliers, distributors, wholesalers, and retailers. A great deal of information has to be passed back and forth between all of these entities. Basically instructions, this information is about the goods and raw materials needed, the quantity they’re needed in, where they’re needed, and instructions about transportation. These instructions take the form of purchase orders (POs), invoices, shipping notifications, insurance documents, licenses, and more. For large-scale logistics operations, transmitting these documents between companies is best handled electronically, through a digital system called Electronic Data Interchange (EDI).
What is EDI, and how does it work?
EDI enables businesses to send digitized documentation directly from the computer of one company to the computer of another company. In order to be able to do this, and to do it instantly, EDI software converts these digital documents into a standardized format that allows them to be first transmitted, and then read, by the computer system of the receiving company.
There are three stages to EDI:
- Preparing documents, making them EDI ready.
- Converting the EDI-ready documents into EDI documents.
- Transmitting the converted documents to the receiving company.
Preparing in-house documents
The POs, invoices, and shipping instructions are either digitized or collected from their digital storage and converted to an electronic file that has the information needed for EDI. This makes them EDI ready.
Converting the EDI-ready documents
This is done with an EDI translator, software that puts the documents’ data into globally-recognized EDI formats. While there are quite a number of these formats, there are four that are used the most: X12, EDIFACT, TRADACOMS, and ebXML.
Transmitting the EDI documents
For this to happen, EDI messaging protocols are used. Examples of these are AS2, OFTP, and SOAP. For the EDI system to work, both sender and receiver have to be using the same protocol.
The role EDI plays in logistics and the supply chain
It saves time.
EDI software gets documentation to the relevant companies and departments within companies quickly, keeping them on the same page and the wheels of the supply chain running efficiently. This speedy communication makes it easier to forecast needs and results in better business decisions being made.
It makes the supply chain process more efficient.
With EDI, suppliers, distributors, shippers, and every other entity that’s part of the supply chain can communicate with each other in real time. This cuts out chances of delays happening in receiving, dispatching, warehousing, or transportation.
It makes it easier to monitor and track goods.
Because EDI uses a uniform format, it’s easy for relevant parties to search for information, and it’s easy to track and keep on top of purchases, orders, and bills of any kind. As a result of this, you can reduce errors in purchasing and shipping.
It streamlines logistics and the supply chain.
EDI is able to retrieve data from internal computer systems instantly and send it out securely. When you automate POs, invoices and the like with EDI, it speeds everything up and reduces errors, streamlining your supply chain.
EDI software integrates seamlessly with in-house systems like Enterprise Resource Planning (ERP), accounting software, your Warehouse Management System (WMS), and Customer Relationship Management (CRM) software.
How Cin7’s EDI helps supply chain management and logistics
Cin7’s EDI capabilities are robust, and the system has a large EDI network. A one-stop-shop, Cin7’s system will get you:
1. Automated workflow
Cin7 EDI automates order processing and shipping by:
- Setting triggers for automation and reducing manual data entry.
- Using an advanced messaging system that streamlines integrations with your trading partners and 3PL warehouses.
2. A one-stop-shop automated system
Cin7’s inventory management software has it all, inventory management, order management, and EDI. When businesses set up their EDI with Cin7, they can:
- Seamlessly manage orders and scale up your business.
- Reduce shipping costs and save time by optimizing cartons. Print Serial Shipping Container Code (SSCC) and generate Advanced Shipping Notifications (ASNs).
- Keep their product catalogs up to date and track orders in real-time with a centralized and intuitive EDI dashboard. You’ll have absolute inventory control, and your order fulfillment will be at its optimum level.
3. Multiple fulfillment models
Cin7 EDI supports ship-to-store and 3PL.
- Integrate with product distributors, 3PL providers, and commerce channels.
- Fulfill orders effortlessly with an intuitive EDI dashboard.
- Fulfill several orders simultaneously with a cartonization feature that picks the right box for items.
4. Prebuilt-in EDI mapping and protocols
- Map order workflow between yourself and trading partners around the world.
- Send EDI documents with these protocols: X12 American National Standards and EDIFACT- European Standards.
We’ve shown how EDI facilitates both the supply chain and the logistics that move it along by producing and transmitting documentation quickly. EDI eliminates mistakes that can be made when people input data and ensures that different players in the supply chain are kept in sync by getting the same information, at the same time.
To learn more about Cin7 EDI, book a demo.
If you are a business owner, you must communicate with other organizations, including your suppliers, customers, and stakeholders. Communicating in an old-fashioned way using a ton of paper is slower, less secure, and less efficient. With the world moving towards digitalization, business communication should also be digitized. This will not only improve the speed, security, and efficiency of communication but will also leave a legitimate document trail for future reference. So, if you are considering EDI software for your business, you are in the right place.
The electronic format for these basic business exchanges is called Electronic Data Interchange, or EDI.
What is EDI?
Electronic Data Interchange (EDI) is an automated system that puts documents like invoices, shipping bills, purchase orders, and payment confirmations into a standard digital format that can be read by both the senders’ and recipients’ servers and transfers the files directly from one business’s computer network to another.
What are the benefits of EDI?
When you’re ranking the advantages an EDI system can provide you with, speed probably comes out on top. EDI-generated documents go from being produced to the intended destination in practically the blink of an eye. The automated system saves time, and as a consequence, money.
EDI streamlines and improves the tasks it takes care of. It also sharply decreases human intervention to make the whole process of sending and receiving documents much more efficient. What’s more, it’s the level of efficiency in communication that impacts all the other areas of an organization. With EDI, employees can do other things, like focus on activities that will grow the company; communication gaps become virtually nonexistent; and more business can be generated.
Most companies that have not yet automated their business management systems, use basic spreadsheets, like Excel and Google sheets to maintain inventory records. Documents are sent to various stakeholders via emails or printed hard copies. Although this method is cheaper and simpler in some ways, it has its drawbacks.
Inventory management software, like Cin7, can offer EDI benefits by securely transporting the required data to other networks using standardized and encrypted methods. Cin7 also builds two-way connections and our experts carry out compliance testing for you.
Climate change isn’t something that can be ignored anymore, and any steps taken to mitigate it count. EDI can be considered one of those steps. It cuts paper use to practically zero since it does away with the need for mail or transport systems to get documentation from one company to another. This reduces the carbon footprint of the organization significantly and contributes to making it more sustainable.
How does EDI work?
Put very simply, a document is first put into a digital format that makes it readable by another computer system; then it’s converted into a format that will actually get it to the other computer system.
Step 1 – making documents readable:
One company might conduct business in one currency, another might use a different one; similarly, measurement systems may differ – metric vs. imperial. EDI overcomes this by giving documents a standardized format that creates uniformity. While there are several of these formats, the rules they adhere to are recognized globally.
Called EDI standards, these formats are:
- American National Standards Institute (ANSI): ANSI defines the standards for products, services, processes, systems, and personnel in the United States.
- United Nations/Electronic data interchange for administration, commerce, and transport (UN/EDIFACT): UN/EDIFACT is a standard developed for the United Nations and approved by the International Organization for Standardization (ISO) as ISO 9735. It provides syntax rules for data structure, standardized message format between multiple countries and industries, and interactive exchange protocol (I-EDI).
- Trading data communication standard (TRADACOMS): TRADACOMS is an older UK standard that is on the brink of being obsolete today. However, it is still in use in the UK.
- Electronic business extensible markup language (ebXML): ebXML is an exhaustive standard for secure business communication. After a couple of upgrades, ebXML is presently in its 3.0 version.
Sometimes, of course, the company sending a document may use a different standard than the one receiving it. For cases like that there’s EDI translator software. This puts the document into an EDI standard that allows it to be transmitted; the computer that receives it is able to convert it into the format it uses and recognizes.
EDI follows an envelope structure. Rather like paper envelopes, this structuring of the data puts one piece of information inside another. A design that has security in mind, the outer envelope shows the sender and receiver along with general information about what’s inside.
Typically, there are three types of envelopes: interchange, functional group, and transaction set. The first contains several documents; the second several of the same type of document, like associated invoices; and the third has something transactional inside.
Step 2 – Getting one computer system to speak to another
This is done with what’s called EDI protocols. The most popular of these protocols are:
- SFTP – secure file transfer protocol
- SOAP – simple object access protocol
- AS2 – applicability statement 2
For the interchange to work, both systems have to use the same protocol.
Transmitting documents with EDI
EDI uses the Internet to transmit documents. It does this in two basic ways:
- Direct connection: This is a point-to-point connection. Put simply, a document goes from a computer in one company to a computer in another. The secure protocols described above are in place during this.
- Value-added network (VAN): VAN is a third-party intermediary, an EDI broker that converts the original document into EDI data and then routes it to the receiver. Again, a secure protocol is used.
How to make your business EDI compliant
In essence, this means adopting an EDI system that lets you communicate digitally with your trading partners. Trading partners include all the organizations you exchange data and documents with: your suppliers, customers, and contractors. Many large corporations have specific EDI requirements for their trading partners, and if you want to do business with them, you’re going to have to comply.
Did you know Cin7 inventory management software is equipped with built-in EDI that’s EDIFACT and X12 of ANSI compatible?
To sum it all up…
If you are considering EDI software for your business, you are not alone. When you’re aware of the speed, efficiency, transparency, and security digital gives you, you’ll wonder what took you so long to convert.
Cin7 can be the right stepping stone for you. Book a call with one of our experts by clicking here.
It’s common practice for retailers to have a bit more inventory than they think they’ll need. It’s for contingency, and it’s called safety stock. The reason for doing it is sound: it means never having to turn a customer away.
But sometimes miscalculations are made. Items may go out of style or something in the market may change. Either one of these instances will result in a business being stuck with the extra inventory, and when that happens the goods turn from safety stock to deadstock.
In this blog, we’re going to look at deadstock in detail – how you end up with it, how to deal with it, and how to avoid prevent deadstock in the first place.
Deadstock – the definition
If you have inventory in stock that’s been gathering dust on a warehouse shelf for a long time, you’re holding deadstock. It’s stuff you can’t sell and are probably never going to sell.
How good stock becomes deadstock
1. Not enough demand
An item was selling like hotcakes before it wasn’t, or items you thought would do well didn’t. Alternatively, outside forces like extreme weather or a downturn in the economy could have impacted your sales.
2. Too much competition
You’ve stocked up on the same products that everyone else has. Maybe you’re a small player that can’t beat the prices of larger competitors, or maybe the market has become too flooded with those particular items.
3. Slow reactions to the market
You waited too long to react to slow sales and didn’t offer discounts when you should have.
4. Not getting customer input/not doing research
Someone didn’t put enough effort into getting feedback from your customer base through methods like emails or online reviews, so you weren’t aware of the kind of products customers wanted to buy.
5. Low-quality products
Some of your products were of low quality, customers were not happy, and they returned them. Or maybe the low quality resulted in bad word of mouth.
6. Predictions weren’t right
Maybe data and research told you that particular items would be good sellers, but the information didn’t take everything into account.
Good reasons to do something about deadstock
Deadstock can have negative effects on your business. Here are a few of them:
- It occupies space you can and should be using for items that move.
- It stops you from buying new items.
- It ties up your cash flow – money you could to buy more popular products.
- It increases your warehouse costs, like cost for employees and storage space.
Ways to prevent deadstock
If you’re in the business of sales, you know that getting inventory planning right is important. What to order, when to order, how much to order, the list goes on. If you get any of these areas wrong, you’re in danger of ending up with deadstock. It can happen to anyone, but there are steps that can be taken to make it less likely.
1. Invest in inventory management software.
Ditch your spreadsheets. They’re not only old school, they’re time consuming and prone to error. Automating your buying decisions with the data inventory management software (IMS) gives you is efficient and much more accurate.
The precise data, reports, and advanced analytics you get from IMS software does more than help you identify best-selling items, it will also separate out those that aren’t selling quickly. When you have that information, abra cadabra, no more deadstock.
2. Improve your forecasting.
Product forecasting analyzes competitors, works out pricing strategies, studies market trends, and “learns” customer preferences. Put together, this information gives you an invaluable forecast on your market, and when you have this information, you’re much more likely to acquire inventory that’s going to sell.
3. Use your buyback option.
If you have an agreement that allows you to sell unsold items back to the supplier, this is a good time to use it. If you don’t have such an agreement in place, try to get one. Of course, you should always check to see if buyback is even an option during early negotiations with your suppliers.
Keep in mind that those manufacturers and suppliers that do offer buyback are usually the more reputable ones, and that the products they handle are usually high quality.
How do you get rid of deadstock?
If you do find yourself saddled with things you can’t sell at their standard price, there are things you can do:
1. Have a clearance sale.
This is the time-honored method for reducing unsold stock. You don’t want these goods tying up your storage space for years, so anything that has been hanging around for six months should be discounted. You could start this at 20% off and increase that amount if you have to.
Advertising clearance sales and other discounts on your website and social media is the best way to get the word out. Sending emails about the event to your mailing list should also get good results. And depending on the size of your company and the market you operate in, you could consider investing in local radio and television advertising.
While this strategy should help you clear out a lot of deadstock, it’s still way better to avoid having it in the first place. If bad inventory management has been the cause, it’s time you consider a good automated inventory management system like Cin7.
2. Take advantage of the fear of missing out.
There is a marketing term called “Fear of Missing Out.” It’s about creating a sense of urgency in shoppers, letting them think that if they don’t buy something right there and then, they’ll be missing out.
Marketing strategies for this usually boil down to putting limits on offers. These could be in the form of an end date to a sale, or letting customers know that there’s only a limited number of items on offer. In other words, you could advertise an “end of sale by Thursday,” or “50% off this week only,” or offer “last (x number) of products left.”
When it comes to presenting deadstock as a deal in this way, the underlying point is that you’re appealing to customers who are more interested in getting a bargain than the product. That doesn’t matter, though; you’ll still be offloading your old, otherwise unwanted, goods.
This option is about grouping similar products together and offering them at a special price.
By using this technique, you could combine something in your deadstock with top-selling items. You won’t get top-dollar for everything, but you will greatly minimize your losses.
Deadstock is a drag in more ways than one, and it’s important to minimize it. Technology is the best and most reliable way of doing this. So why not invest in a robust inventory management system like Cin7?
Cin7 inventory management software is an ideal choice for businesses of any size. By automating workflows and stock levels in real time, you’ll always know what you have and can ensure you’re stocking the right amount of the right product. That means an end to deadstock. And if that’s not enough to streamline your business and improve your bottom line, the software also connects all your storage locations and marketplaces – online and offline – into one system.
If you’d like to know more, contact our Cin7 team and arrange a demo today.
For an online sales business or a manufacturing company, it’s all about the supply chain. It covers everything from the procurement of items for sale, or raw materials for the production process, to delivery of the items or products. Controlling the supply chain and keeping oversight on it is, as would be expected, supply chain management (SCM). Order processing is the central pillar of SCM; in a way, it’s the heart of the whole fulfillment process.
In this blog, we’re going to take a close look at how order processing works, and explore its importance to supply chain management.
What is order processing?
Order processing goes into effect the minute customers select and pay for goods online and continues until those goods are received. Broad in scope, it follows defined steps to get to that end point.
Here’s how the process breaks down:
Step 1: Orders are received
As soon as customers have filled their online carts and paid for their goods, their orders are transmitted to the warehouse or fulfillment center. Here they’re broken down into their component parts, which means product, quantity, size/color (if relevant), etc.
If the sales or fulfillment company is large enough, these order details are processed by an automated inventory management system (IMS). This sophisticated software will know if customers’ goods are in stock, and if so where they are. In essence, the system is able to determine the best warehouse to route the order to; and if some items aren’t available right away, it will give instructions to send them as, and when, they are. In addition, if a customer has put in more than one order, the IMS can consolidate them into one package.
Step 2: Items are picked
Picking describes the actual job of collecting items for an order from their storage spaces. Pickers do the job. Warehouses can be large—some are gargantuan—so getting organization into this process can be complicated. Picking can either be done on an individual-order basis, by warehouse zone, or in bulk – which means picking for several orders at the same time.
Irrespective of the method used, the whole process starts with a picking list that itemizes everything according to its storage location and sets out a route round the warehouse for the pickers to take. The aim, of course, is to cut down the picking time.
Step 3: Orders are sorted out
After picking, items are taken to a sorting area. If they were picked in bulk or by warehouse zone, this is the area where they’ll be sorted into their individual orders. This is also the time when items are checked against the original orders to make sure everything is there, is in good order, and of high quality.
Step 4: Order are packed up
Making sure the appropriate packaging is used is trickier than might be thought. The box itself should be the right size for the items and strong enough to hold them during shipping, and the padding inside should be enough to protect the contents, but light enough to keep transportation costs down. Sometimes this padding has to be specialized. If food is being packed, for instance, it might have to be kept cool with gel packs or dry ice.
After being packed up, shipping labels are attached.
Step 5: Orders are shipped
We’re now near the end of order processing. After boxing and labeling, shipments are organized by geographical location and assigned to their respective delivery trucks. Size and weight might also be a consideration when selecting transport: extra heavy items, or those that need refrigeration, will need specialized trucks. At this stage, the type of delivery a customer paid for also has to be taken into consideration. Expedited delivery, for example, will be given priority. The point is that it’s important to deliver an item at the time the customer expects it.
Step 6: Orders are delivered
Order delivery is the last step of the order processing system. The customer can choose a particular time to have their order delivered, or they can leave special instructions, like having the package be left with a neighbor. If a customer has opted for Cash on Delivery (COD), the delivery drive will be the one who collects the payment.
The importance of order processing in supply chain management
Order processing is the core, the beating heart at the center of the supply chain system that everything else more or less has to service. In essence, for any sales, fulfillment, or manufacturing entity, processing orders – getting them together and getting them to the right customer in time – is what they’re about. It’s true that without proper management in any area of the supply chain businesses won’t perform at their best, but when it comes to order processing, its efficiency, speed, accuracy, and cost-effectiveness are actually the determining factors of success and, ultimately, profit.
Whatever way you look at it, though, supply chain management is a complex operation. That’s why it’s a good idea to automate it.
The upsides of automation are:
- maximized profits,
- minimized costs,
- improved customer satisfaction,
- increased market share,
- reduced workload for employees, and
- an overall boost to the company’s brand and reputation.
Final thoughts on order processing and its importance to the system as a whole
Having looked closely at the complete supply chain, we can see that everything centers on the order processing part. Putting orders together and getting them to customers is, in effect, the commercial activity that reasons for the company’s existence.
Automating all or some of the areas of supply chain management with an inventory management system can be of great benefit to a company, both logistically and financially. Cin7 is one of the best.
To learn more about how Cin7 can help your business, you can book a demo from one of our experts by clicking here.
Like a lot of the best product ideas, Lockabox® grew out of a simple day-to-day frustration.
When he was living with hungry roommates, founder Peter Morris found himself asking that question a lot more than he’d have liked. After a long night, Peter would wake up and shuffle to the refrigerator looking for a slice of last night’s pizza for breakfast — only to find that someone had gotten there before him.
“Who stole my lunch?”
The solution Peter came up with was simple: a combination of a simple three-digit combination lock with strong polycarbonate construction. In short, a lockable storage container. Manufactured in the UK, these portable, lightweight boxes are today used for much more than food storage. Their primary product, Lockabox One®, is used by elder care facilities to store patient medications, and office admins are putting desk sensors in Lockaboxes® to gauge office traffic and optimize floor plans.
With annual sales of £2M GBP, Lockabox® expects to grow from a small product seller into a major player by investing in R&D over the next 12 months and expanding the Lockabox® product range. They’re moving from success to success — all with the help of Cin7.
Cin7 and Xero provide a single source of truth
Lockabox® Operations Specialist Rory Fitz-Gerald says he’s “relieved” to have put Cin7 into action in early 2021, especially as the company creates new SKUs and sales increase. Their old system, Rory, says, simply wasn’t up to the task.
“Our previous system was very inaccurate. We could never really trust the information we were working with,” Rory says. “I feel like we can trust what Cin7 is telling us on stock. Which obviously, for a small business like ours, is quite a big advantage.”
Lockabox® relies on Cin7 to help them to reconcile their weekly inventory counts (stocktakes). Without Cin7, coordinating stock between 10 warehouses across the globe could be an incredibly complex task. Luckily, Cin7 makes everything much simpler. Rory easily runs weekly stock and sales reports from Cin7 to facilitate stock audits and reconcile any discrepancies. He says the software acts as the single source of truth against which he can compare manual counts, and that Cin7 on side, Lockabox® needs far fewer people than it would otherwise need to manage operations.
The efficiency boost from Cin7 is multiplied by its powerful integration with Xero accounting software, with invoicing and sales data shared between Xero and Cin7 in real-time.
“Cin7 gives us that extra accountability because all sales go through it,” Rory says. “With the reporting coming out of it too, we know where stock has gone, and we can better manage distribution.”
On the B2B side of the business, Rory credits Cin7 for expediting wholesale orders. Once a quote is generated, “having the ‘accept now’ button on the quote automatically flips the quote to a sales order, so our wholesale customer can make immediate payment.”
Cin7 helps avoid financial setbacks
Lockabox® leverages Cin7 to manage their multiple Amazon and WooCommerce sales channels, as well as third-party logistics (3PL) and fourth-party logistics (4PL) partners who are directly integrated with Cin7. The system proved its value when the operations team suffered a mishap that could easily have become a costly catastrophe.
One of Lockabox’s® 4PL partners failed to log a shipment of 700 units with a retail value of £30,000. Fortunately, Cin7 exposed the discrepancy during a weekly reconciliation, and Rory was able to investigate and determine what had happened.
Without Cin7, Rory explains, the operations team would have assumed that the warehouse had 700 more SKUs of one particular product than was actually being held. The warehouse would have run out of stock prematurely and Lockabox® would have suffered a temporary outage of product to sell.
“Cin7 is our failsafe system,” says Rory. “We were able to pin the 3PL to the wall and say ‘no, our stock numbers are correct – you have made the mistake.’ Having Cin7 alongside gives us the ability to keep accurate branch transfer data to catch human errors.”
Cin7 is the key to product business growth
Lockabox® says that Cin7’s flexibility is key to the future growth of the brand, and they’re already gearing up for expansion, with the introduction of a new and improved version of Lockabox One™ Shelf Packs which help to organize and partition contents. With their expansion into accessories, Rory says the team is looking forward to leveraging Cin7’s ability to support product bundles.
Here at Cin7, we’re excited to have Lockabox® join a family of over 8,000 businesses that rely on Cin7 to manage their inventory and online sales. Lockabox® is currently building a manufacturing facility in the US, and with Cin7 as their foundation, we’re going to enjoy watching them grow.
If your business could benefit from the extraordinary inventory visibility and increased efficiency that Cin7 brings, don’t miss out — book a demo with one of our brilliant sales staff today.
"Cin7 is our failsafe system"
Rory Fitz-Gerald, Operations Specialist, Lockabox®
If you are like most small businesses and startups, you work as a small team and collaborate with a few trusted suppliers. Even though you may know your suppliers well, you should still establish a system of using purchase orders (PO) for purchasing items. A PO is a formal document that can be referred to in cases of payment disputes or quality problems.
Once you are using POs regularly, the next step is to invest in an order management software that allows you to manage POs and other aspects of fulfillment such as tracking orders and expenses, resupplying stock and updating inventory. Read on to learn more about POs and Cin7’s automated order management system.
What is a purchase order (PO)?
A purchase order (PO) is a formal document issued by the buyer and sent to the seller listing all the required goods/services in desired quantities. The seller verifies the PO, delivers the goods to the buyer, and sends an invoice for the completed order. Thus, a PO acts as a legally binding document for buyers and sellers, as both parties can track the ordered items.
Ideally, a PO lists all the required items, their types, quantity, and prices in detail. This is important in case there are problems with the order. For example, if you order 15 printers and the vendor has only sent 14, you will have the PO for validating your order. On the flip side, POs are quite essential for sellers too, as POs will act as proof for the order placed by the buyer. For instance, if a buyer argues about the order quantity, the seller can always hand over the PO to the buyer. It’s a win-win for both parties.
What is a PO number?
A PO number is a unique number assigned to every PO. A PO number can help both buyers and sellers track the goods or transactions. In fact, it acts as a quick reference code for businesses to verify orders.
For instance, if a customer has a query and contacts your office, anyone from your accounts department can check their order just by entering the PO number. Businesses often use the PO number to validate the invoice against the purchase order for any mismatch.
What is a PO system & how does it work?
A PO system helps businesses create POs effortlessly and digitally.. All you need is to fill up your goods requirements in the desired amount and enter the supplier details. The system generates the PO with a unique PO number and sends it to the supplier instantly.
The PO system streamlines the entire order management process, including purchase requisition, supplier approval, receiving goods, getting invoices, and closing the payment. In short, a PO system is not only about purchase orders but also simplifies all the processes associated with order fulfillment. Furthermore, the PO system maintains the entire business transaction record that both parties can quickly refer to. Thus, businesses can track their orders, view order histories, keep their budget in control, and buy the right amount of stock.
A PO system is essential for any product-based business, regardless of size, as it manages inventory, purchases, orders, and invoices daily. Since the PO system aids transparency and accuracy in managing orders, you will have perfect inventory control, knowing what to stock and what to cut down on.
Why should small businesses invest in a PO system like Cin7?
Creating manual POs, maintaining spreadsheets, and following up with suppliers over the phone can be time-consuming and energy-draining. Cin7’s Order Management System offers significant benefits to your business.
1. Save time
Cin7’s OMS saves a lot of your time by simplifying purchasing processes and minimizing manual data entry. You can save the supplier details once and directly send your item list rather than manually entering the supplier details every time. You can readily refer to all the order details and transactions in the PO system. Plus, your employees need not spend time on calculations as the system does it accurately.
2. Gain better control over business processes
Cin7’s order management system is highly transparent, allowing you to view all the business activities in real-time. Hence, as a business owner, you can make data-driven business decisions. For instance, you can compare all the suppliers, their rates, quality, and sales movements. Thus, you can negotiate better deals with the suppliers while delighting your customers with beneficial products that add value to them.
3. Prevent overstocking and understocking of goods
Understocking goods can affect your reputation while overstocking items can dent your profits. With Cin7’s order management system, you can maintain optimal inventory levels at all times. You can automate the system to send POs to suppliers when inventory falls behind certain limits. Can replenishing goods get any easier? Thus, you can ensure you have the right amount of goods at the right places.
Giving your employees a feature-packed tool like Cin7s order management system will allow them to work more efficiently as the software streamlines the entire backend process of managing orders. Additionally, Cin7 integrates with accounting software like Quickbooks and Xero, and you can import all your business data into it and keep track of your business’s finances. Thus, you can gain real-time insights into your business and intervene earlier to grow your business faster. Talk to Cin7 experts today to learn more about Cin7’s features and functionalities.
Cath Kidston is known for an extensive product line of nostalgic, hand-painted floral print fashion, bags, kids wear, and home furnishings. Founded by fashion designer Cath Kidston and headquartered in the British Isles style capital of London, the company began by selling its unique and distinctive prints in their first retail store in 1993.
The company grew from success to success, and by 2011, there were 41 physical Cath Kidston shops and franchisees, selling vintage and British-influenced fashion apparel and accessories. On top of their own branded outlets, they also sold wholesale to high-end retailers like John Lewis. In 2010, a majority stake in the company was sold to private equity investors, and the company grew even further. In 2014, there were 136 Cath Kidston retail outlets all over the world.
But the last few years have been challenging for Cath Kidston, as they have for so many businesses. By early 2020, facing several commercial challenges including the onset of the Covid-19 pandemic, Cath Kidston closed 60 of their UK and Japanese retail locations. For most brick-and-mortar businesses, that would mean the end. But for Cath Kidston, it was a new beginning.
What made Cath Kidston’s story different? They credit their successful pivot to ecommerce – powered by Cin7 inventory management software.
Replacing an incumbent solution
Sébastien Poinçon is the Head of IT at Cath Kidston. His long list of responsibilities include evaluating third party software and maintaining the various app integrations that keep Cath Kidston’s retail business running. He oversees corporate and business systems, operations, support, network infrastructure, and store systems, and generously agreed to share with us the remarkable journey the company has been on.
After closing their physical locations, and letting the waters calm, Cath Kidston took stock, and made the decision to relaunch the brand – this time as a direct-to-consumer (D2C) ecommerce business whilst still maintaining its B2B franchise and wholesale operations.
“It was a massive shift for us, to operate on a smaller scale,” Sébastien says.
With this change in focus, Cath Kidston had to find an alternative to the complex and expensive enterprise resource planning software (ERP) they’d been using.
In addition to being costly and cumbersome, the ERP system lacked any technical documentation which made integration difficult. “It resulted in low user adoption across the organization,” Sébastien explains. “We needed a product that was more flexible and that was specifically built to support multichannel online sellers.”
He began searching for an inventory and order management solution that could help guarantee a successful transformation into a full-fledged ecommerce business – and they found it in Cin7.
Leveraging Cin7 to transform a business model
Cin7 was critical to Cath Kidston’s ability to rebound and transition into ecommerce, which today accounts for 85 percent of their sales.
After Sébastien and his team compared Cin7’s cloud-based feature set to competitor offerings, Cath Kidston implemented the software in April 2020. They chose Cin7’s powerful feature set to manage the company’s sales, inventory, and fulfillment, both for ecommerce, and in its remaining global brick-and-mortar locations.
Cin7’s wide array of over 700 built-in integrations to other applications specific to retail and fulfillment were the secret ingredient in Cath Kidston’s remarkable transformation. “The ease with which Cin7 connects to the Salesforce Commerce Cloud platform is the most beneficial aspect of the software for us,” Sébastien says.
The move to Cin7 has also allowed the Cath Kidston team to do cross-channel stock reconciliations, making sure that the inventory count across retail, wholesale and online outlets stays consistent. Cin7 has also allowed them to connect to their main fulfillment warehouses in the UK and Hong Kong, for true end-to-end visibility.
What’s more, Cin7 has given the business something every product seller needs – a trustworthy source of inventory truth. With their previous ERP software, Cath Kidston could never be truly confident in the integrity of their inventory data.
“It was one of the major challenges we had with our previous vendor,” Sébastien explains. “But Cin7 has significantly improved our stock accuracy and has really helped us to consolidate our visibility into stock levels. Now that we have a handle on inventory management, we have seen improved process efficiencies.”
The path to future growth
Cath Kidston’s future plans include expanding their online marketplace presence, and increasing their wholesale business to include a drop-ship model with UK retail powerhouse John Lewis. They plan to adopt additional Cin7 features such as built-in EDI connections to start selling to wholesale customers like Marks and Spencer.
Perhaps most exciting is Cath Kidston’s plans to begin opening new brick-and-mortar stores again, with Cin7’s proprietary point of sale (POS) module in use across all of their stores.
Cath Kidston’s smart approach has paid dividends. The market no longer sees them as a discount fashion retailer, and their mission to upgrade their products and offer more innovative selections has been well-received by customers. With increasing revenue, and Cin7 on their side, Cath Kidston’s future looks bright.
“Cin7 has really helped us,“ says Sébastien.
Don’t miss out on the extraordinary inventory visibility and increased efficiency that Cin7 brings — schedule a demo today with one of our experienced sales consultants.