How your safety stock helps to avoid stock-out incidents
Carefully calculating your safety stock provides a way for e-Commerce businesses to avoid out-of-stock incidents. They can fulfil customer orders following a sale, deliver quickly and maintain a good reputation.
But calculating your safety stock level for each item is not always enough to avoid stock shortages. In addition to this, there are a number of methods and best practices you can use to ensure optimum stock levels and to optimise your inventory:
Tip no.1: Keep a watchful eye on developments in the marketplace and the legislative environment at a global level
The latest news can affect supply chains and cause disruption. During the Covid pandemic for example, cargo ships were blocked out at sea, delaying shipments... and causing multiple inventory shortages! Hence the importance of keeping a close eye on market trends, from the prices of raw materials to transport and logistics costs. You should also keep track of changes in the law, and as far as possible, anticipate any problems that could slow down the delivery and reception of your products.
Tip no.2: Diversify your suppliers
Having several suppliers in your contact book can help avoid inventory shortages. Let's say one of your suppliers suffers delays in production or delivery: it's better to be able to rely on an alternative supplier when this happens, in order to ensure you are re-supplied!
Take the time to build good business relationships with all your suppliers: find out how they operate in order to achieve a better understanding of what you require of them in the event of unforeseen circumstances.
You should also find out how important you are to your supplier: how much turnover do you represent and where will you stand in your supplier's priorities in the event of business trouble?
Tip no.3: Analyse your previous stock reports
Are you regularly out of stock? While the occasional inventory shortage is normal, if it occurs frequently this should serve as a warning. It might be worth examining them, in order to limit them and maintain a decent inventory level.
To do this, you can study your stock reports. They will tell you what stock is available, and the number of items sold. Is your stock dangerously low? You may need to order new products from your suppliers.
We can also learn a lot from the data on orders previously placed. How many products have been ordered but not yet dispatched? Taking account of this quantity, is a stock shortage incident likely?
Finally, take a close look at your sales reports to identify both your bestsellers and less selling products. Safety stock calculations will not apply to all your product references in the same way. For example, you’ll have a higher required service level for your bestsellers than for your lower-rotation products.
Tip no.4: Use the services of a 3PL provider
Why not consider outsourcing your logistics to a logistical service provider like GEODIS eLogistics?
A service provider can help you manage your e-Commerce logistics more effectively and support your growth through improved distribution. You will benefit from digital solutions enabling you to monitor your business in real time, optimise your stock, monitor order preparation and dispatch, and manage returns.
Thanks to these useful resources, you’ll be able to monitor your stock with the utmost precision, with details of the overall stock as well as the reserved stock (orders yet to be dispatched). You’ll be able to adapt your purchasing policy, item by item.
The eLogistics solution from GEODIS, an expert in all Supply Chain activities, supports the growth of your e-Commerce business thanks to a team of experts. Including cyclical calculations, estimates and optimization... they’ll work with you to ensure that your stock levels are always optimal. During operational meetings, they’ll provide you with their analyses of your customers’ order behaviour and stock levels for each reference, optimizing your logistics in as far as possible.