2. This course will explain:
• The basics of inventory management
• Showcase how effective management of inventory can help sellers save cost and
time and avoid losing sales due to out-of-stock items
• Help sellers identify and solve key issues to create a more organised approach
Learning Objectives
3. Customer places
order
Seller receives
the order
Pick the product
from warehouse
Pack and
confirm order
▪ Customer delight
▪ Customer loyalty
▪ Good ratings and reviews
Picked &
shipped by
logistics partner
Product delivered
on time to
customer
Order Fulfilment
4. Customer places
order
Seller receives
the order
Pack and
confirm order
Picked &
shipped by
logistics partner
Product delivered
on time to
customer
Order Fulfilment
Product out-of stock
Procurement from
supplier
Material received
– GRN (Goods
received note)
▪ Chances of delay in
delivery
▪ Negative ratings and
reviews
▪ Customer
dissatisfaction
Delay
in delivery
5. Customer places
order
Seller receives
the order
Pack and
confirm order
Picked &
shipped by
logistics partner
Product delivered
on time to
customer
Order Fulfilment
Product out-of stock
Unable to procure
the product
Order cancelled
▪ Unhappy customers
▪ Lesser chance of
revisit
Delay
in delivery
6. Customer places
order
Seller receives
the order
Pack and
confirm order
Picked &
shipped by
logistics partner
Product delivered
on time to
customer
Order Fulfilment
Product out of stock
Unable to procure
the product
Order cancelled
Procurement from
supplier
Proper inventory
management ensures that
such situations are
avoided.
Material received
– GRN
7. Customer places
order
Seller receives the
order
Product delivered to
the customer
Pick product from
warehouse
Pack and confirm
order
Picked & shipped by
logistic partner
Inventory and Order Management
In Focus: Inventory & Order Management
8. Inventoryis the quantity of stocked goods that a
business holds for the purpose of sale.
Inventory Managementis a set of processes
that will help a seller to determine the quantity of
products they should have on hand in order to meet
consumer demand.
Inventory & Order Management
9. Inventory Management
When to order?
Decide the reorder point (the level of
inventory which signals a need to
replenish the stock)
How much to order?
Determine the quantity to be ordered
Is concerned
with
Inventory & Order Management
10. Excess
Inventory
Shortage
of Inventory
Optimum inventory level ensures
that such situations are avoided
▪ Capital block
▪ Unwanted inventory
holding cost
▪ Chances of obsolete
▪ Inability to fulfil
customer’s demand
▪ Loss of sale
Importance of Inventory Management
11. Order fulfilment on time
Avoid sending the wrong
product
Protection against
uncertainties of suppliers
Meet the fluctuating
demand
Avoid losing sales due to
out-of-stock items
Stay competitive in the
growing and dynamic
ecommerce industry
Advantages of Inventory Management
13. Estimate future sales
▪ Review historical sales records
▪ Track current market trends
▪ Consider seasonality factors
▪ Plan for a buffer
Purchase the necessary products
▪ Select the products
▪ Make an accounting budget
To further understand how you can plan your inventory, let us understand a few related concepts
through an example.
Plan Your Inventory
14. • At point 0 on time line, stock in hand = 10,000 units
• This quantity of stock lasts for 30 days
OnHandQuantity(units)
10000
0 30
Example
Time (days)
• Stock consumed per day = (10,000/30) = 333 units
15. There can be a situation when order placed by the seller to vendor does not arrive on time. To meet such uncertainty, the seller
maintains a buffer stock which is called ‘Safety stock.’
OnHandQuantity(units)
Time (days)
2500
10000
0 30
Safety Stock = 2500 units
Example: Safety Stock
16. There can be a situation when order placed by the seller to vendor does not arrive on time. To meet such uncertainty, the seller
maintains a buffer stock which is called ‘Safety stock.’
OnHandQuantity(units)
Time (days)
2500
10000
0 30
Safety Stock = 2500 units
Example: Safety Stock
▪ Maintaining Safety Stock can come handy in the following situations:
▪ Returns due to damages/defects
▪ Requests for exchanges, replacements
▪ To meet shortfalls caused by irregular production
▪ Sudden rise in demand
▪ Peak selling season
▪ Promotion programs
17. • Time taken by supplier to deliver an order to the seller = 15 days (This is the ‘Lead Time’)
• Stock consumed in this time period = (15x333) = 5000 units
• Seller wishing to keep the safety stock = 2500 units, should place the order for new inventory at stock level =
(2500 + 5000) = 7500 units. This point is the ‘Reorder Point.’OnHandQuantity(units)
Time (days)
2500
7500
10000
0
Safety Stock
15 days
Order
Quantity
Lead Time
30
Reorder Point
Seller sends an order
to supplier
Order received by seller
Example: Lead Time & Reorder Point
18. 0
(Today)
1-1-2-3-4
Holding capacity = 4 weeks inventory
(Maximum stock the seller can
maintain)
Lead time = 1 week
Current Inventory (units) = 100
In transit Inventory (units) = 50
Advanced Example: Stock in Transit
19. 0
(Today)
1-1-2-3-4 55 60 50 75
Average Sales = (55+60+50+75)/4 = 60 units
Forecast for next 4 weeks = (4 x 60) = 240 units
Holding capacity = 4 weeks inventory
(Maximum stock the seller can
maintain)
Lead time = 1 week
Sales (in units) for past 4 weeks
Current Inventory (units) = 100
In transit Inventory (units) = 50
Advanced Example: Stock in Transit
20. 0
(Today)
1-1-2-3-4 55 60 50 75
Average Sales = (55+60+50+75)/4 = 60 units
Forecast for next 4 weeks = (4 x 60) = 240 units
Holding capacity = 4 weeks inventory
(Maximum stock the seller can
maintain)
Lead time = 1 week
Sales (in units) for past 4 weeks
Current Inventory (units) = 100
In transit Inventory (units) = 50
Inventory level at this point
= 100 + 50 (in transit received)
– 60 (consumed)
= 90 units
Inventory level needed at this point
= 240 units, to fulfil demand for 4 weeks
Advanced Example: Stock in Transit
21. 0
(Today)
1-1-2-3-4 55 60 50 75
Average Sales = (55+60+50+75)/4 = 60 units
Forecast for next 4 weeks = (4 x 60) = 240 units
Holding capacity = 4 weeks inventory
(Maximum stock the seller can
maintain)
Lead time = 1 week
Sales (in units) for past 4 weeks
Current Inventory (units) = 100
In transit Inventory (units) = 50
Inventory level at this point
= 100 + 50 (in transit received)
– 60 (consumed)
= 90 units
Inventory level needed at this point
= 240 units, to fulfil demand for 4 weeks
Inventory to order today (will be
received after 1 week)
= (Inventory to meet the demand for 4
weeks) – (Actual Inventory level after
1 week)
= (240 – 90) units
= 150 units
Advanced Example: Stock in Transit
22. ▪ Label all your inventory location
▪ Ensure that all labels are unique
▪ List all the labels in an excel sheet for
tracking
▪ Provide clear and well defined
item descriptions
▪ Provide item numbers ▪ Ensure consistent units of
measurement
Organise Inventory
23. Storing Inventory
▪ Have specific location for each inventory
▪ Number the shelves/bins so it can be
found easily
Monitor Inventory Levels
▪ High level means additional cost
▪ Too low could cause loss of sales
▪ Eliminate old and unsold goods
Maintain Inventory
24. • Keep small quantities of inventory if supplies are readily available
• Keep a larger inventory in hand if:
• Reordering and delivery takes time
• There is huge demand for the product
• Keep only saleable goods in hand
• Have plenty of stock in advance of any promotions
General Tips to Maintain Stock Levels
26. After the buyer places an order on online marketplace, the seller is responsible to provide the
ordered product to the logistics partner and get it delivered to the customer
Order Management System
The various processes involved after an order is placed and until the shipment is delivered to
the buyer are all controlled under the ‘Order Management System’
Order Management System
Process Order Placed Shipment Delivery
27. Buyer orders the product Online marketplace platform reviews and
approves the buy
This marks the beginning of SLA period
Delivered in 3-5 business days
Delivered in 3-5 business days
Service Level Agreement (SLA) Period
28. Approved orders then have to be packed by the seller, followed by pre-dispatch processes
which includes:
Pre-Dispatch Process
Filling
Shipment
Records
Print
Invoice
Label
Packing
List
30. ▪ Shipment dispatched to the buyer by the online marketplace logistics partner
Shipment Dispatch
31. Know your inventory status:
Have updated and readily available status of inventory
Centralize your inventory
Assign a unique Stock Keeping
Unit (SKU) code to individual
products
Smooth Order Processing
33. Prepare a pick and pack list:
▪ Pick list: a single list of all the products to be
picked from warehouse to meet all the orders
on a specific day
Product Units
A 3
B 4
C 4
D 5
Order/
Customer
Online
Marketplace
Platform
Product (units)
A B C D
XYZ123 MARK1 2 1
BZA124 MARK2 1 4
CYQ125 MARK3 1 1 2
RTP126 MARK4 1 3
▪ Pack list: a single list assigning all the picked up
products to specific orders/customers
sum
Smooth Order Processing
34. Product packing:
A lot of processing time can be saved by having a systematic packing process in place
Different materials (carton, bubble wrap, etc.)
needed for packaging should be readily available
Optimum stock of packaging material is
maintained
Ensure adherence to standards and
guidelines Shipping labels and invoices are printed in advance
Smooth Order Processing
35. Delivery status and customer notification:
Seller Buyer
DeliveredIn Transit
Keep a track of orders in transit and orders delivered
Send timely notifications to customers
regarding the order status and also
share the tracking id
In case of delayed delivery, ensure to
flag the issue before the promised
delivery date
Smooth Order Processing
36. Perfect
Order Management
✓ Orders delivered on or before requested
date
✓ Product quality and authenticity
✓ Correct invoice and receipt
✓ Good packaging
=
Perfect Order Management
37. ✓ Have products ready or available within hours after
orders are confirmed
✓ Ensure all parts of the product are packed
✓ Cross-check shipping address
✓ Ship the right product on time
✓ Continuously monitor order & shipping process
✓ Keep a record of all orders
Audit Orders
38. In this tutorial, you learned about:
• The basics of inventory management
• Showcase how effective management of inventory can help sellers save cost and
time and avoid losing sales due to out-of-stock items
• Help sellers identify and solve key issues to create a more organised approach
Summary
