Must Haves for Inventory Management in Apparel

Buyers and consumers love your product and are placing orders in line with or beyond your forecast. What a great feeling, and yet possibly a greater challenge! Keeping your customers engaged and coming back means it is imperative to fulfill orders accurately, on time, and maintain a healthy margin for your business.

In times of economic and supply chain uncertainty, you need to maximize what you have and what you’re producing and understand immediately how that translates exactly into what you are selling–this can only happen when you have an inventory management blueprint in place.

The common inventory control problem:

You either have too much inventory or not enough. Let's face it: the cost of having and storing inventory is high. Perhaps it’s a company’s largest expense. Without the visibility to manage what you need to make or purchase, you either tie up too much cash in excess product or lose customers by not having enough.

The delicate balance of knowing when orders are due against what’s in inventory and timing what you need to get into your warehouse can become unmanageable. As your business and sales channels broaden, it can become impossible.  When you add in keeping up with order fulfillment, it will all come to an unpleasant crossroads once it’s time to ship product–the risk of stealing from Peter to pay Paul, so to speak may be a constant specter looming over operations. However, successful suppliers understand that a comprehensive inventory management solution and corresponding strategy plays a tremendous role in optimizing fulfillment and keeping those operations running smoothly.

8 Crucial Elements to Advanced Inventory Management

The objective: To have the right inventory at the right time at the right costs. The outcome: Repeat customer business, lower overhead costs and wider margins.

Here are 8 must haves to support a successful inventory management strategy:

• Order Management
• Allocation
• Warehouse Management
• Available to Sell Analytics
• Product Configurability
• Visibility
• Costing
• Forecasting

1. Order Management

It all begins here. Whether forecasting what will sell or responding to customer commitments, proper order management is crucial. In a perfect world, companies have a “make to sell” business model, which allows only what a customer commits to buying to get produced and then shipped. Seems straight forward, right? Then add the complexity of multiple retailers, a myriad of delivery dates, supply delays and restrictions, and suddenly it’s not so easy. Whether it’s hundreds or thousands of units, manually scrutinizing these details becomes a paid position on your workforce. Having a system that does all of that ‘big picture’ work for you saves time and money. Knowing in advance what might be late allows companies the opportunity to proactively respond, such as using air freight delivery instead of common containers on the water. Perhaps customers can be contacted early enough to grant an extension on their order delivery date. Maybe a sales forecast was a bit overzealous, leaving excess inventory sitting in the warehouse. Better to know that sooner than later to get sales reps in motion, or to possibly work on a close out/discount strategy.

The sooner the bottleneck is identified, the more likely orders can be preserved. Having that clear picture of your supply chain-- what is happening and when-- can be a game changer for successful order management.

2. Allocation

When managing multiple customers, many orders, and likely more than one sales channel (wholesale and direct-to-consumer), allocation is an incredible tool. Pretend you have an aquarium with 4 different types of exotic fish; you have 2 types of fish food because some of the fish need different food. They also have different feeding schedules, varying amounts of food that need to be fed, and some fish that are more likely than the others to die if not fed on time and correctly.

Now imagine putting all the food into a special funnel, and that funnel knows exactly which fish to feed at what time, and how much food to dispense. The funnel also knows that it needs to dispense to the more endangered fish, first because rules of what to dispense and when have been set up for the funnel. Once the rules are set, the funnel automatically takes over, the heavy lifting of fish management is left behind, and the fish owner now has time for other things.

Allocation works much the same way. Once the allocation system knows the rules of a customer and/or an order that are most important (customer priority, order dates, order fulfillment percentage, etc.), allocation will marry the right customer orders to the correct inventory. More importantly than just the inventory on hand, allocation will also reserve the inventory due from a manufacturer before it even arrives. Allocation also reports the details of order fulfillment, such as when an order is past cancel, on credit hold, or no inventory is on hand or due in so that it can be fulfilled. It’s about understanding the rules and executing them so that no order is shipped too soon or too late.

When allocation cannot meet all orders, a company knows why. Given the high-stakes, allocation takes the guess work out of the business of order fulfillment.

3. Warehouse Management

A smart warehouse system is a huge factor in successful inventory management. Streamlined receiving to ultimately fast shipping-- and all that happens in between-- should not be a manual effort. Not only should you be able to easily see what’s in the warehouse, but you should also know where to find what you’re looking for, when to replenish pick locations, when to cycle count, and when and where to pick product.

Adding barcodes to locations and inbound cases improves receiving and put-away processes; scanning barcodes for any type of inventory movement translates to a faster and more accurate warehouse operation. The ability to define how and where product should be stored is an indispensable function that is characteristic of a successful company. Whether it’s by size, product, or customer, the warehouse management system (WMS) must provide this kind of flexibility.

Like allocation, a worthy WMS should allow for waving; this is the process that funnels, distributes and optimizes warehouse activity for the pickers and packers. Additionally, a good WMS tracks each scan by warehouse worker to audit productivity and accuracy. Waving ensures the warehouse processes align with business priorities.

Customer compliance can be daunting when selling to big box retailers. So, an effective warehouse management solution should allow for different shipping labels by customer, shipment notification protocols, and any packing, ticketing or labeling requirements. Automatic integration with parcel carriers to seamlessly generate the order pickup, label print, and receipt of tracking info is another huge plus in a warehouse management system. A robust WMS is always tightly aligned with Order Management, boasting full visibility and integrated processing.

4. Available to Sell Metrics

Organization-wide at any time, you should be able to understand what is available to sell. During an array of activity and inventory movement, open manufacturing processes and procurements, it can be challenging to recognize just what is available to sell to your customer. Proper “Available to Sell” visibility takes everything into account: open orders, allocated orders, on hand inventory, work in process, reserved inventory, and picked inventory. Within the myriad of movements and statuses there can be inventory (on hand or in process) that isn’t waiting on an order-- this is available to sell. Knowing what one has and how one can sell it is an invaluable metric.

5. Product Configurability

A blue shirt size small has 100 units on hand in the warehouse and 20 of them have a different screen print design than the others. So, are they all the same blue shirt at this point? Probably not. Perhaps you’re keeping all blue shirts blank until an order comes in specifying the screen print design for the shirts. The ability to easily manage that blue shirt both with and without the screen print is vital. Maybe 50 of those blue shirts were already pre-ticketed for a customer. Would it make sense to pool those shirts with the other blue shirts? Probably not. For many companies, the days of having just a style/color/size defined as product are long gone, so handling product configurability is paramount in any business automation. The bottom line is that it’s important to be able to configure product in a meaningful way so that inventory and order management can be leveraged in the same manner.

6. Visibility

Seeing order and inventory data in an easy and configurable way is essential to streamline operations and make important decisions. Inventory Management relies on real time up-to-date information, as well as historical transactions. Empowering people, no matter their role, to see the data and metrics they need allows them to respond to demand and bottlenecks. This visibility can make all the difference in keeping orders flowing. Relying on a third party or a sole internal expert to generate reports ought to be a thing of the past.

7. Costing

Understanding all costs associated with a product is as important as knowing what product you have available. If inventory management tells you what you can sell, what you have, and how much it costs to have it, then being able to see, choose, and apply the best costing method for your products carries the same weight. Being able to track the component costs of a product as well as any duty, handling, storage, labor, shipping or other costs associated with it allows a business to ultimately determine profitability-- seeing actual product cost can help with better decision making. 

8. Forecasting

While seeing into the future is impossible, knowing the success or failure of a product is not! Whether there’s an external method used to forecast sales, forecasting based on historical sales of a product or a new product that shares similarities to something previously sold (or any variation thereof) is instrumental in proper inventory management. Forecasting not only helps companies decide what to buy or make, it also assists in determining how much product to generate and when.

Need More Info?

From concept to cash, the ABS Enterprise and WMS Solutions help companies rise above the demands and challenges in today’s apparel and footwear industry. 

The main takeaway: fully integrated and streamlined processes will promote a more efficient operational flow and an improved bottom line.

Who would disagree that automating manual tasks saves time, slashes costs, improves accuracy, and elevates business performance? Perhaps someone who is too buried in laborious tasks and deadlines to see the forest for the trees. We are here to help.