Inventory management of electronic commerce

The inventory management of e-commerce is a young science. Because the purchase and delivery of E-commerce in time, space is not synchronized, so inventory management and traditional retail industry, will become more complex and professional.

　　Although e-commerce is an emerging industry, but in essence it belongs to the retail sector. Aside from all sorts of factors, it's not going to change. This is a basic model for buying cheaply and selling at high prices. However, due to the new characteristics of electronic, networked and remote, electronic commerce differs from the traditional retailing industry.

In addition to Ctrip, E Dragon for the representative of the hotel, tourism service providers, to handle, the United States Group for the representative of the Service Information group buyers, E-commerce companies are facing the physical inventory management needs. The back-end of the procurement and Inventory control, as well as the corresponding inventory, logistics and after-sales service, are very professional and complex, traditional retail industry experience may not be suitable for e-commerce retail management.

Inventory, literally, refers to the inventory in the storehouse. For production-oriented enterprises, inventory can be divided into production materials and production results of two major categories. For retail-oriented enterprises, there is no production process, all goods are purchased from the upstream, stored in the warehouse, and then to the downstream sales. Stock is the sum of the goods in the storehouse.

But the inventory in the warehouse is not a generalized. Even a SKU is a different state. To cite a simple example, in the process of physical transfer, will inevitably occur bump, damage, these damaged products will not be normal sales, in the system management, it must be differentiated. E-commerce operation, because the purchase and delivery in time, space are asynchronous, customer orders to the delivery process, there are also time interval, and therefore must be the inventory structure to distinguish.

In order to adapt to this asynchronous sales process, E-commerce Enterprise Inventory, in the system structure, generally divided into the following parts:

A. Available Sales Inventory (S)

Sales Inventory (sellable Inventory) is the site's front desk display of inventory, but also the largest component of inventory. In most E-commerce enterprises, the foreground website will keep the data synchronized with the backstage WMS (Warehouse Management System) and make judgment. When "Can sell inventory >0", this product is available for purchase, the foreground site will show the product can be sold, and once "can sell inventory <0", the foreground site will show the goods out of stock. Generally speaking of out of stock does not mean that there is no inventory in the warehouse, but there is no sales inventory.

Most companies only show up in the foreground whether they have inventory, but this can actually be done in more detail.

For example, at the front desk of Jingdong, customers choose different receiving areas, the system will be based on the inventory data of each warehouse to show whether there is cash to help customers buy, to achieve a better customer experience (Figure 1).

And in the Amazon System of Excellence, when the available inventory is very small, will be in the foreground to prompt customers a small number of customers, please accelerate the purchase, improve conversion rate (Figure 2).

and customers buy goods, confirm the order, the front page will first send a request to the background system, check the order product quantity and the current available sales inventory quantity. If you can sell the inventory quantity > Order product quantity, then inform the foreground website success, otherwise will inform the front desk stock insufficient, reminds the customer.

After a new order is generated, the inventory purchased by the customer is reserved for subsequent shipments, the amount of available inventory in the system is reduced, and where is the reduced available inventory? This becomes the next part.

B. Order occupancy inventory (O)

When the order is generated, the amount of available inventory is reduced, and the number of orders occupied inventory (order occupied Inventory) increases, and the quantity that changes is the number of products in the order is easy to understand.

The reason for order occupancy is that the order generation and warehouse delivery are asynchronous in time. The advantage of this is: to ensure that the order has been generated inventory, this part of the customer can receive goods smoothly, and customers in the order to ensure that the product delivery. If you do not set up an order to occupy inventory, it will produce customers placed orders, inventory found no goods can be issued embarrassing situation.

When processing an order, the target is only the inventory that has been occupied by the order, and it has nothing to do with the sales at the front desk. After the order is out of the library, the deduction in the system is only the inventory occupied by the order.

C. Non-Sales Inventory (U)

Often speak to the theory of reality, this sentence applies to inventory management, that is, inventory of the system records need to correspond with the inventory.

In the example above, the product cannot be sold because of breakage and must have a corresponding state in the system. In practice, there are many reasons for normal sales, such as packing breakage, performance failure, model error and so on. For the theory to be realistic, this part of the inventory is also defined in the system as not being sold (unsellable Inventory).

There are two types of labeling methods for non-sales inventory in the system. The other is the use of different SKU codes to distinguish, for example, a normal product SKU code is 351038, it is corresponding to the sales of the SKU is 351038U; Another way is to use the same SKU, but specifically to open up a sales-only inventory area, Unified management of all non-sales inventory.

D. Lock Inventory (L)

In sales, often use a promotional method is to reduce prices, this way the effect will be very good, successful price promotion can be a short period of time to sell goods and empty, can sell inventory directly into the inventory of orders occupied.

But in some cases, the sellers do not want to sell all their inventory so quickly. Sometimes because all of the inventory for the cost of price promotion is very high, sometimes to prevent the malicious purchase of competitors, more often, it is hoped that the price of this product as a primer, the flow of the site and the overall sales, which will need to be promoted in batches.

In order to achieve the above goal, will use the lock inventory (Locked Inventory) the way. After the inventory is locked, it cannot be sold directly. Promotions for a period of time, the available inventory of 0, can not continue to sell, you must unlock the lock can be converted into a sales inventory, continue to sell.

E. Virtual inventory (V)

The above mentioned, all refers to in the physical in the storehouse of inventory. But the total volume of the storehouse is certain, it is impossible to expand indefinitely. According to the long tail theory, the biggest advantage of E-commerce is the almost unlimited product display and sales capacity. How can the limited storehouse processing ability and the infinite sale commodity contact come? Method has long been, virtual inventory (virtual Inventory).

There are some products, although there is no, or not many, but the supply channels are very smooth, can be sent to the warehouse in a very short time, into inventory, and some products, sales less, inventory management difficult, only when the order is generated, before the supplier procurement. This part is not in the actual inventory, but can quickly purchase the goods are called virtual inventory.

Virtual inventory exists in order to make the sales volume of the foreground website more than the actual sales quantity. When there is a virtual inventory, the electricity quotient inventory formula will become:

S=i-o-u-l+v

F. Allocation of occupied stock (T)

Many companies have more than one warehouse. A number of warehouse settings, mainly because the size of the development to a certain extent, the inventory is very large, it is difficult to store in a separate warehouse, in addition, often in the vicinity of customers to set up a warehouse to meet the needs of local customers.

Between the warehouses, there must be inventory allocation and allocation. When a redeployment plan is produced, a portion of the inventory is occupied, and this part of the inventory is referred to as the appropriation inventory (by Inventory). The nature of the allocation of inventory and order occupancy is similar. When there is an appropriation of inventory, the electricity quotient inventory formula becomes:

S=i-o-u-l+v-t

G. Redeployment inventory (A)

The allocation of inventory, there will be a period of time, the inventory does not exist in the allocation of warehouses, nor in the allocation of storage room, this part of the inventory is like floating in the air, known as the allocation of inventory (air Inventory). Set 1th warehouse for the allocation of warehouses, 2nd warehouse for the redeployment of the warehouse, in the allocation of goods before the two warehouse inventory structure:

I1=s1+o1+u1+l1-v1+t1

I2=s2+o2+u2+l2-v2+t2

I=s+o+u+l-v+t

If the warehouse from 1th to allocate a quantity of inventory to B warehouse, after the allocation of warehouse 1th, 2nd warehouse before the allocation, the inventory structure of the two warehouses are:

I1=s1+o1+u1+l1-v1+t1-a

I2=s2+o2+u2+l2-v2+t2

I=s+o+u+l-v+t-a

It can be seen that the total inventory of two warehouses has been reduced, the allocation of inventory in the road, can only be counted in the financial inventory, and can not be counted in physical inventory. The total inventory will be restored only after the transfer is completed and the inventory is entered into Warehouse No. 2nd.

I1=s1+o1+u1+l1-v1+t1-a

I2=s2+o2+u2+l2-v2+t2+a

I=s+o+u+l-v+t

The above is a general overview of some inventory structure, in different business models and operating processes, have their own particularity, will use more complex inventory structure to adapt to the actual situation of the company, here do not make too in-depth discussion.

The author of this article Luke for many years engaged in E-commerce Warehouse, after-sale, inventory management work, is currently serving in the Amazon Company excellence.