10 Fundamental Steps of Every Successful Stocktaking Process

Posted on June 3, 2017 by dearsyst

Performing a complete stocktake once or twice a year is absolutely essential for maintaining healthy inventory levels and minimizing losses in retail and wholesale businesses (not to mention keeping the accountants happy).

But they can definitely be time-consuming, energy-draining, and frustrating.

And without a clear plan for success, you face the risk of serious human errors – like overcounting or undercounting – that could cost you thousands of dollars and lost customers.

So, how do you stay organized and get things done quickly?

By developing a well-structured stocktaking process that employees and managers can follow together, thereby limiting the possibility of your staff making costly mistakes.

A well-structured stocktaking process will include all the steps required to keep your staff working efficiently to uncover discrepancies and inaccuracies while keeping them engaged and focused.

Here’s our list of 10 fundamental steps that you should include in your stocktaking process for maximum effectiveness.

1. Schedule Your Stocktakes to Reduce Impact on Business Operations

Try to find a time that works for you and your staff that won’t hurt your bottom line or create unnecessary distractions. A lengthy stocktake is best taken during a slow sales cycle or outside of normal business operations.

2. Clean and Organize Your Stockroom Before Performing Your Stocktake

A clean and well-organized stockroom will make it easy to find and count your stock to reduce the possibility of miscounting.

Another measure you could take to make the stocktaking process more efficient would be to create well-defined sections by labeling the shelves that stock is and should be stored on, along with using package labels that clearly identify what’s inside the package.

3. Organize Your Stocktaking Tools Ahead of Time

Before you begin the stocktaking process, you’ll want to make sure everyone has the tools they need to get the job done.

Here’s a list of the most common tools used for stocktaking:

– Clipboards

– Stock sheets

– Write-off sheets

– Pens

– Calculators

– Handheld scanners

– Mobile Devices (if you use cloud-based inventory management)

You might need more or fewer tools than the ones listed, but this should give you a general idea of what’s generally required for an effective stocktaking process.

4. Only Use Up-To-Date Inventory Data

The goal of a complete stocktake is to get an accurate count of the inventory you actually have so that you can compare it with your existing inventory data.

So be sure to exclude items that have already been invoiced to customers but haven’t yet shipped, as well as raw materials that have arrived but haven’t yet been entered into your inventory system.

Stock that hasn’t shipped is essentially not yours anymore. Processing materials that haven’t been added into your inventory management system is a separate task that doesn’t need to be done during a stocktake.

5. Give Everyone Clear Goals and Responsibilities

A supervisor should be overseeing the stocktaking process at all times. They should have a list of what needs to be counted and what ought to be in their warehouse so they can double check the work of the stocktakers.

The stocktakers should know what groups they’re in, what tools they need, how they’re going to count the stock, etc.

Also, supervisors should make sure that there are practically zero distractions – that stocktakers aren’t distracting themselves with their phones or with too much conversation.

At the same time, if your stocktake is going to last a long time, it may be wise to schedule breaks to keep everyone’s minds and eyes fresh so that they don’t make too many mistakes.

6. Know What Stock You’re Counting and How You’re Counting it

Whether you have a massive warehouse filled with various types of inventory or a small stockroom with just a few types, let stocktakers know which sections they’ll be counting in what order.

Then, create a clear system for how they should physically count your stock.

Here’s an idea for how to organize the actual counting part of the process:

– Each unit of stocktakers should be in groups of two—one person inspects the stock and calls out the amount, the second person records this and can double check the first.

– If you have multiple units of stocktakers, make sure they all have clear sections to work through that don’t overlap.

– Have your stocktakers to count in the same direction – i.e. top to bottom, left to right.

– Mark stock with a colored marker or pen as a visual reminder of what’s already been counted.

With a similar process, your counting should be well-organized and operate smoothly.

7. Open and Count Absolutely Everything—No Guesswork Allowed

If you have a box that says it contains 10 widgets, don’t just take that label on face value. Open the box and count all of its contents to ensure it does contain that exact amount.

Your stocktaking process should aim to deliver as close to 100{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} accurate readings as possible, which means you shouldn’t estimate or guess on any number.

And be sure to record any discrepancies between the counts listed on your stock sheet and the number of items you counted, as well as any mislabeled/packaged boxes for quality control.

8. Value Your Stock Correctly

Once you’ve counted all your stock, make sure you have the most up-to-date prices for all of it.

The price of your stock should match the market clearing price or the price that consumers are willing to pay for that item.

And be sure to include any depreciation as well.

If you purchased a certain raw material last year for $1,000 but now it is only valued at $750 then you need to change prices to reflect the lower price – the same goes for older products you’re now selling at a discount.

9. Develop Ways to Decrease Stolen, Broken or Slow-Selling Inventory

During your stocktaking process, you may find that items you thought were in your warehouse were actually missing, and that some items that have been damaged or spoiled were never reported.

You might also notice that some items are simply not selling.

With this data in hand, you can begin brainstorming ways to increase security measures to protect against thieves, improve warehouse policies to curb reckless behavior and implement new strategies for selling more stock.

One sure-fire way to help in all these areas is through inventory reduction – creating a plan for optimizing the amount of inventory stored in your warehouse.

10. Continually Improve Your Stocktaking Process

Your stocktaking process shouldn’t be a static set of procedures; it should grow and evolve every time you do it so it becomes more efficient over time.

Encourage your stocktakers and supervisors to suggest improvements, develop new procedures for a more effective workflow, and brainstorm ways to decrease your stock to manageable levels that reduce waste.

But if you really want to improve your process, then consider investing in new technology that can streamline your stocktake and make it easy to track your inventory throughout the year.

Start your free 14-day trial today

5 Proven Ways to Stop Shopping Cart Abandonment

Posted on May 27, 2017 by

Another casualty of shopping cart abandonment…

Did you know 69{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of online shoppers completely abandon their shopping carts before making a purchase?

That’s what the research says according to usability firm Baymard Institute.

Think about it like this:

Say 10 people walk into a grocery store, shop around for things on their list (and maybe a few things that aren’t – the bakery section is always calling!).

When all’s said and done in their shopping experience, 3 of them take their full carts to the checkout, smile as the cashier rings up their items, and pay the bill before heading home.

But for 7 of them, something happens between entering the grocery, starting to fill their carts, and the actual purchase.

Four of them were just taking a look around, they had some time to kill and thought they might like a snack; maybe they grabbed a couple things to think about them a bit, but ultimately they decided they weren’t that hungry and they needed to get a move on.

One of them put one or two items in their cart before checking Facebook, seeing their friends are meeting for drinks nearby right now, and deciding they don’t really need their items now – so they’ll come back later.

Another got all the way to the checkout line, but after waiting for 10 minutes in the crowded store with only 3 items to buy, they decide they’d rather just leave and come back later too.

And the last got all the way to checking out, but because the cashier gave them an unsavory look, they decided they didn’t quite trust handing over their money to them and just walked out.

Top Reasons for Shopping Cart Abandonment

In their study, Baymard makes it clear that 58.6{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of US online shoppers abandoned their carts within the last 3 months because they were “just browsing” or “not ready to buy”.

But these aren’t the shoppers you should be worried about – “browsing” is a millennia old part of the process, rooted all the way back in the hunter/gatherer days.

What you really need to know is why people who were ready to buy suddenly changed their minds.

Once you account for the “just browsing” segment, that last 10.4{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of abandoned carts is where you can actually make a difference in your sales.

And with research from BI Intelligence revealing approximately $4 trillion worth of merchandise is abandoned on a yearly basis – there’s a huge opportunity, as they also found that smart companies could recover 63{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of that lost revenue by streamlining their checkout process.

Top Reasons for Shopping Cart Abandonment or How to Grow Your Profits!

Based on testing of checkout processes from leading e-commerce sites – such as Walmart, Amazon, and Wayfair – Baymard found that 35{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of site owners can fight shopping cart abandonment by simply redesigning their checkout page.

Though you might not realize it, there are certain things you’re doing that might be scaring off potential buyers, and certain things you’re NOT doing that are psychologically proven to make buyers feel more comfortable with and confident about their purchases.

So, if you want to make more sales and keep more customers, then read on to discover our top 5 ways to reduce shopping cart abandonment in order of least to most effective!

5. Include Images of Products Throughout Checkout Process

This is a powerful way to keep the value of your products front and center in your customer’s mind (so powerful we added it to our list even though it wasn’t covered in Baymard’s research – free bonus!).

Think about the process of buying physical goods from a bricks and mortar store.

Throughout the entire shopping process, you’re subconsciously reassuring yourself every item in your physical shopping cart is a worthwhile by literally looking at it throughout your entire shopping journey.

Even if you don’t do it consciously (or that juicy pack of steaks is buried under all the other stuff you’re going to buy), you’re carrying each and every item with you the entire time, a subtle reminder that you’ve already committed to buying it.

And when you finally get to the checkout counter, you have to physically take all of your items out of your cart and watch them get scanned.

So how do you apply the psychology of these subtle commitments and reminders online?

The moment a customer clicks “add to cart,” you should reassure them it was successfully added in one of a few ways:

By displaying a number of total items in their cart (+ however many they just added)
By taking them to a “successfully added” page (like Amazon).
Or maybe even a small popup that confirms their item has been added and what else is already in their cart (like Amazon would do if changing its website didn’t cost billions of dollars).

Then, once they get to the checkout page, you should display a thumbnail version of the product picture.

Even if you have multiple checkout pages, keep the thumbnails of all their in-cart items listed on one side of the screen to act as a visual reminder of what they’ll get when they complete their purchase – so they’ll be less likely to allow a distraction keep them from getting the products they want from you!

4. Use Trust Badges on Your Checkout Page

18{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of shopping cart abandonment occurs because users don’t trust the website their shopping on with their credit card information.

Baymard found that many people believed certain pages were more or less secure than other pages; even if this isn’t technically true – for example, if your entire site is secured with HTTPS – most people don’t have the technical insight to understand exactly how your website security works.

So especially when it comes time to enter their credit card info, people will look for any signs that your checkout page is tightly secured with a recognizable trust badge.

As we just mentioned, a common way to signal a secure checkout is with HTTPs, an SSL certificate, and some sort of badge that signals your website is secured this way.

But while it’s most common, HTTPS/SSL isn’t the only way to tell your visitors you care about their security and privacy.

You can also install other security software such as Symantec, Comodo, or TRUSTe.

These go a long way in protecting your customer’s data and making your business look (and actually become) more legitimate.

While security should be a top concern for ecommerce companies, there are other forms of trust badge.

Visual Website Optimizer ran a test for one of their clients and found that by adding a simple trust badge that read “100{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} money back guarantee” they increased their conversion by 32.57{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}.

While not website security related, money back guarantees still offer the peace of mind that comes with knowing if for any reason they don’t like the products they’ve bought, they can return them at little to no cost.

Ultimately buyers need their fears dispelled in order to feel comfortable enough to make buying decisions. So help them realize they’re making a good choice by using trust badges on your checkout page!

3. Reduce Checkout Form Elements

Baymard also found that 27{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of shopping cart abandonment occurs for a relatively simple reason:

The Checkout process is “too long/complicated.”

Their usability tests showed that the ideal checkout flow should be restricted to 12-14 form elements, yet the average amount of form elements used by US ecommerce sites was 23.

That means that by cutting their form elements in half, most site owners can see significant reductions shopping cart abandonment.

And, if you can, stop using multi-page checkouts; just like too many form elements can be overwhelming, so too is trudging through page after page just to get to the “order now” button.

Instead, try to condense your entire checkout process to just one or two pages, and if you must have multiple pages for checkout, use a progress bar that displays how far along your shopper is in their checkout journey.

Recent research from Statistic Brain suggests that humans now have lower attention spans than a goldfish – so each and every task you ask someone to complete is another second they’re losing interest and becoming more distracted.

Fewer fields to complete and “you’re almost there” progress bars can help keep them engaged while gently guiding them closer to the sale. And remember: by making your checkout process shorter, you’re making 27{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of online shoppers more likely to actually buy from you.

2. Ask Users to Register for an Account After the Sale, Not Before

35{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of shopping cart abandonment occurs because ecommerce sites make customers create an account in order to make a purchase.

Requiring a customer to create an account on your site before being able to make a purchase is sort of like a tax on their time – you’re making it more difficult for them to make a purchase without really adding value to their order (sure, next time it might be easier to purchase by logging in, but there won’t be a next time if there’s not a this time!).

Why lawmakers raise taxes on tobacco products (besides revenue)? To deter people from buying them.

Do you really want to deter potential customers from buying through from you?

We’d guess not.

So instead, offer a “guest account” option that streamlines the checkout process and makes it easy for the customer to buy first. Then, on the “thank you” screen, offer to create an account for them in order to make checkout even faster next time.

This is a win-win for 2 reasons:

You’ve made it easy to purchase from you at all.
You’re offering to make the checkout process even easier to purchase from you next time.

In a time and attention strapped world, easy sells.

And as an added bonus, by creating accounts and capturing emails from actual customers, you’ll be able to build an email list that you can turn into a valuable resource going forward.

1. Reduce Your Shipping Cost (aka Make It Free)

Well, you’ve finally made it to the last thing any business wants to do, even if they know it will increase customer conversion – lower their prices.

It’s a hard fact to swallow, but the biggest reason for cart abandonment is high hidden costs like shipping fees and taxes. 61{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of potential buyers will abandon their cart if you try to slyly tack on additional costs at checkout.

But as a smart,web-savvy business, you’re not going to do that (at least, not anymore).

The most important step to take here is to be completely honest about extra costs.

The moment your customer adds something to their cart, you should calculate tax and display it with their total. Being transparent beats being sneaky in the long run because you build trust before the sale – which makes that sale more likely – instead of breaking what trust you’ve built up right before someone is ready to buy, which results in losing both the sale and a customer.

The second step is to try and offer free shipping (even if it costs you).

The big ecommerce retailers have been doing it for so long it’s no wonder most consumers expect everyone, including small businesses, to follow suit; a 2011 Comscore study suggested that 61{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of consumers are likely to cancel their entire purchase if free shipping is not offered.

If you absolutely can’t afford free shipping for each and every one of your items, then create different bundles of products or have “free shipping on orders over $x” to make enough money to cover shipping on all products while still making a profit.

At the very least, offer free shipping for special holidays.

Either a 1-day or 1-week free shipping offer can easily spike sales during peak buying months.

Now as an added bonus, we have 1 more step you can take to reduce shopping cart abandonment:

Always have enough stock to meet customer demand.

Make Sure Shoppers can Fill Their Carts… Even if They’re Going to Abandon Them

One of the quickest ways to damage your reputation and bottom line is greeting would-be customers with the dreaded “out of stock” sign.

Are you able to easily and automatically track your products from raw good to sale in order to always have just the right amount of stock?

If not, you need a better way to manage your inventory: one that offers better metrics on your customer’s buying decisions while helping you keep a close eye on your inventory levels across your warehouses and sales channels.

Automate tracking, integrate product info with major ecommerce platforms, and keep track of your sales throughout the year with cloud-based inventory management software.

Ready To Take Back Control of Your Inventory?

Experience the automation and real-time reporting benefits modern cloud-based inventory management software offers by starting your free 14-day trial of DEAR Inventory today!

Try DEAR for Free

No Credit Card Required

Inventory Reduction: Grow Your Bottom Line Through Better Operations

Posted on May 20, 2017 by

Overstocked Warehouse in Need of Inventory Reduction

Large volumes of inventory don’t just lead to more management headaches – they can cut into your profits as well.

Of course, you don’t want to have too little inventory and risk losing sales through stock shortages.

So, in starting your company, you’ve erred on the side of caution and just order more than enough to meet your needs.

But storage space, shifts in demand, and lost/damaged goods are all contributing to the costs that eat into your bottom line.

Most businesses have 20-40{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of their working capital tied up in inventory – so if you’re closer to the 40{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} end, it’s probably time to create an inventory reduction strategy.

The goal is to find your inventory sweet spot – where you have the lowest possible inventory levels without being understocked – in order to maximize growth and profitability for your business.

By following the 3 methods we’ve outlined below, you’ll be able to reduce your inventory while retaining just enough to meet fluctuating customer demands and supply chain availabilities.

Lower Lead Times

Lead time is the amount of time it takes for raw materials to reach you after placing a purchase order. They vary widely depending on your supplier’s location relative to yours, their means of shipping, and the types of products you’re buying.

Lead times from local suppliers might be less than a week, while international purchases can take up to a month or more to reach you.

Keeping inventory on hand is the natural method to gracefully handle these fluctuations, but it’s not the only way.

Here are a few ways you can work with your suppliers to lower lead times and reduce your need to keep inventory:

Track Your Existing Lead Times

Track how long it takes for key raw materials to reach your business after placing your orders. Through this, you’ll be able to identify suppliers with the highest lead times and either ask how you can work together to lower them or begin searching for a replacement vendor.

Share Sales Data With Your Suppliers

Sharing sales data allows your suppliers to understand your average order size and frequency, so they’ll be able to anticipate your regular orders and plan ahead to expedite your shipments.

Reduce Minimum Order Quantities (MOQs)

Reducing MOQs allows you to order more frequently so your inventory levels can more closely match the demands of your business, which get’s you one step closer to the whole grail of modern supply chain management – just-in-time manufacturing.

In addition to tracking and working to lower lead times for your raw materials, eliminating obsolete inventory is another great way to reduce your goods on hand.

Eliminate Obsolete Inventory

Inventory carrying costs are generally between 20-30{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of the cost to purchase inventory, and for most businesses – especially resellers and wholesalers – roughly 20-30{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of inventory is obsolete.

If your company has a carrying cost of 20{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}, and your total inventory value is $500,000, then your spending around $100,000 a year holding that inventory.

And if you can reduce 10{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of that inventory by getting rid of obsolete goods, your business could save $10,000 a year.

How do you eliminate your obsolete inventory?

Rework or Modify

If you’re carrying a set of older models of some of your products, can you have them reworked into the updated model?

Or, can you have inventory that’s been worn from sitting too long refurbished to look and function like new?

While this strategy won’t work for many products, if the cost to modify your stock is less than 25{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}, and you’re fairly certain it will sell after it’s modified, then reworking it could save you a lot of money.

Offer a Discount

If you can’t rework your stock into an updated model, then your best bet is to slash the price by at least 25{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}. If you’re still not selling as much as you need to, then keep increasing your discount until you hit the market clearing price or the lowest possible price you can afford to sell at.

While selling at a high discount will negatively impact your revenue in the short-term, over time you’ll lose less money in wasted inventory while clearing more space for higher value inventory that can be sold more quickly at a higher price.

Donate For a Tax Credit

If you can’t modify your products and they’re not selling at discounts you can afford, you might still be able to reduce your losses by donating your excess inventory for a tax credit while saving the cost of waste disposal.

For example, EALgreen is a 501(c)(3) nonpartisan nonprofit that connects companies who have obsolete, outdated, or overstocked goods with Colleges and Universities in need of those goods.

By working with a service like theirs, you’ll get the maximum possible tax write-off and they’ll handle the logistics of delivering your dated goods where they can be put to good use. Win-win!

Improve Inventory Forecasting

By effectively tracking and monitoring your purchasing habits, inventory levels, and sales figures, you’ll be able to more accurately predict the ebb and flow of market demands.

To do this, invest in reliable inventory management software.

This will help you gauge your best-performing products, figure out which times of year you sell the most of your products, and decide where and when you can safely reduce your inventory without risking stock outages.

But what features should you look for in an inventory management software?

Real-Time Tracking and Reporting

Your software should be tracking all purchases, sales, and inventory flows to generate up-to-date reports on all stock sold while automatically updating your inventory levels as raw materials move through your process to the sale.

Integrated Communication

Real-time inventory data is best used by keeping everyone throughout your supply chain is up to date. This helps ensure all your key team members and suppliers are on the same page, your goods will be consistently delivered to your customers, and you can avoid costly stock issues and distribution delays.

Large Volume Inventory Management

Inventory reduction relies on an inventory management system that can effectively track each and every piece of your inventory – especially if the demands of your growing company include ever increasing volumes of raw goods and stock. Your software should help you organize and monitor your entire operation by allowing you to create product families, track thousands of unique SKU’s, and manage multiple warehouses to get a complete picture of all your inventory.

Inventory Reduction FTW

Inventory reduction is absolutely necessary to run a successful wholesale or retail business.

Focusing on reducing lead times from your suppliers, carrying less obsolete stock, and better predicting your future requirements will help you maximize your profits and minimize your losses when it comes to inventory management.

If you want to do all 3 of those steps more effectively…

Reduce Your Inventory with Cloud-Based Management Software

The right inventory software will integrate all your purchasing, inventory, and sales data into easy to use, actionable reports that help you better manage your business by enabling you to make smart decisions – like increasing working capital through inventory reduction.

Start your free 14-day trial of DEAR Inventory today!

Try DEAR for Free

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3PL Providers Can Make Your Business More Profitable

Posted on May 13, 2017 by

3PL Providers Increase Profits by Making Logistics Easy

3rd party logistics or 3PL services are rapidly becoming a crucial asset to businesses who want to be more efficient and productive by focusing on their core competencies.

A 2016 study revealed that 70{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of businesses who use 3rd party logistics say that it has contributed to improved customer service, and 75{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of all businesses polled say that 3PL providers offered new and innovative ways to improve logistics effectiveness.

And according to consulting firm Armstrong & Associates, 86 percent of domestic Fortune 500 companies use a 3PL provider.

Despite the growth the 3PL industry has seen over the last few years, many companies – perhaps yours included – are still confused about what exactly 3rd party logistics has to offer and are concerned it may not be the best fit for their business.

So we’ll give you a brief overview of the benefits of outsourcing your logistics to a third party and a few steps for finding and hiring the 3PL that’s right for your business.

But first, let’s make sure we’re on the same page about what exactly a 3rd party logistics provider is.

What Is a 3rd Party Logistics Provider?

A 3rd party logistics provider can handle anything related to logistics in your supply chain, such as:

Warehousing
Picking and Packing
Packaging
Transportation
Freight Forwarding
Inventory Management

3PL services can specialize in one of these in particular, or they can offer a bundle of them.

But is hiring a 3PL firm right for you?

Like so many things in business, it depends.

Most major companies do outsource at least some of their supply chain management. If you have a large stock, or you’re a retailer with a quickly growing business, then handling tasks like warehousing, packing, shipping, etc. can become way too much to handle internally.

If you’re a smaller company or lean startup, then a 3PL may not make sense financially, yet. Spreadsheets are cheap and may get you by for now, but as your business grows in size and complexity, you may want to take a second look at outsourcing to a 3rd party logistics service.

But, if you think a 3PL might be the right solution for your business, let’s look at some of the benefits they have to offer.

Benefits of 3PL Providers

The 3rd party logistics is growing so quickly because large and small companies alike recognize the need to reduce non-essential and inefficient in-house operations and processes. And 3PLs can help you do just that!

Let’s check out a few benefits of using a 3PL provider.

They Reduce Overhead and Labor Costs

This is the big one for many companies.

If you handle all your logistics in-house, you’ll have to pay for:

Employee hiring and training
Worker’s compensation and liability costs
Warehouse space
Transportation vehicles and fleet maintenance

But with 3rd party logistics, you pay the provider a single agreed upon rate to handle any and all of those details.

And since 3PL providers are experts at what they do, you won’t be spending money on costly mistakes made by inexperienced employees or operational failures caused by wear and tear on your equipment and facilities.

They Offer Lower Rates for Shipping

3PLs also have access to a large network of distribution resources. Since they ship thousands of packages each year, it’s essential for them to develop close relationships with other service providers to operate their business as efficiently as possible.

And a huge part of this is negotiating lower freight rates, lower shipping costs, and better discounts on the services they use.

It can take you years to build up the same network that an established 3PL provider already has by yourself, not to mention the opportunity cost of dedicating your time and attention to more important activities – which means outsourcing your logistics is a sure way to save on shipping costs.

They Have a Distributed Network of Warehouses

Even a relatively small 3rd party logistics service could likely have warehouses in California, Illinois, and Florida.

This puts them in a position to more efficiently distribute your stock for faster shipping throughout the states.

And if you find a 3PL that has warehouses in other countries, they could help you break into new markets through lower overseas shipping rates and more effective expediting of packages when needed.

They Allow You To Focus on Your Core Competencies

The rise in 3rd party logistics is being driven by the need for newly launched and established businesses alike to become leaner by focusing most of their efforts on core competencies.

Hiring a 3PL allows your team to focus on what you’re best at whether that’s manufacturing, marketing, selling, or all of the above, that doesn’t likely include logistics.

And by narrowing your focus, you’ll be able to provide better products and services through more efficient operations.

3 Steps for Hiring a 3PL Provider

3rd party logistics companies can differ dramatically from one another; this isn’t the case where you can take a relative shot in the dark and expect the majority of the benefits 3PLs can provide.

To find a 3rd party logistics service that truly maximizes your ROI by catering to your unique business needs while also adhering to industry standards, follow the steps below!

1. Choose the Right Kind of 3PL Service

Your business’ particular needs – the products you sell, where you sell them, and how fast you need your products shipped – will all determine which type of 3rd party logistics company you should choose.

Some are warehouse specific companies that also provide trucking services
Some are strictly freight shippers who also offer warehouses.
And others handle the managerial and technological aspects of your logistics while outsourcing shipping to a different 3PL

To help you find a logistics company that will best cater to your needs, check out this helpful list of 3PL providers in your area.

2. Request a Quote on All Services Provided

Once you have a list of 3PL providers you’re interested in, you’ll need to send a request for a quote.

The company you hire should be able to handle every requirement you have at a price you can afford, which means you’ll need to gather a list of requirements from your team to send to your potential 3rd party logistics providers.

Make a list of everything you think (or better yet, know!) makes sense to outsource and the details related to these, which might include:

All of the facilities that you’ll need to ship to and from.
Your average number of shipments per month.
Your current warehousing capacity.
Any special transportation requirements.

This list should be as detailed as possible. By giving a potential 3PL provider as many details as you can, you’ll be able to get a more accurate estimate and begin to build a strong working relationship.

3. Integrate Their Services with Your Systems

All 3PL providers have particular operational processes to maximize their efficiency, but you’ll also likely want them to adopt some of your systems in order to satisfy your unique requirements.

The best 3PL providers will use a “mix and match” strategy that identifies your current issues and works with your existing procedures while blending in their own strategies for success.

Perhaps most importantly, they should fully integrate with your inventory management systems so both of you know how much has been shipped, how much needs to be shipped, and how much you have in stock to ship.

To streamline this integration as much as possible, you should invest in a cloud-based inventory management system that makes it easy for both of you to automatically track orders and integrate your sales processes with their distribution systems.

With the right software, you’ll be able to easily send any orders you receive directly to your 3PL when they come through and they’ll be able to begin the fulfillment process in the shortest possible time.

Finding and integrating with a 3rd party logistics provider won’t be without its headaches, but for many businesses, the benefits far outweigh the costs.

And by following the steps we’ve listed here, you’ll be able to find a 3PL provider that helps you save money, improve efficiency, and expand your business.

Get Your Business Integration Ready

With a cloud-based inventory management system that automatically tracks all your sales, purchases, and stock levels, provides you real-time reports, and easily integrates with top business services, you’ll see time and cost savings both now and when you’re ready to bring on your new 3PL provider.

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8 Ways Cloud-Based Inventory Management Saves You Time and Money

Posted on April 15, 2017 by dearsyst

Fully Stocked Warehouses Need Cloud-Based Inventory Management

Let’s be honest: all-night stocktake blitzes and over complicated excel spreadsheets are painful to use, unnecessarily labor intensive, and incredibly outdated.

Why torture yourself and your team when there are cheaper and faster options available online?

Sure, you might run a small business on a tight budget and can’t justify big, fancy new software.

Luckily for you, cloud-based inventory management is actually MORE affordable than the old-school methods you’re currently using – and that’s just one perk.

Below we’ve compiled 8 reasons cloud-based inventory management is a smart investment for your business.

Let’s dive in.

1. Upgradeable and Scalable Software

Starting a business today doesn’t require starting with giant budget and staff; small and steady growth over time is better than overreaching at the start and failing early.

This is not only true of the size of your team, but also the complexity of the software you use to run your business.

When you buy software that has to be installed on each and every one of your computers, it often comes loaded with extra features that make getting up and running complicated, drive up the purchase price, and may increase your need for costly new hardware.

Together with the purchase price, these hidden, ongoing costs are known as the Total Cost of Ownership, or TCO.

Research shows that the price of a computer is only 20{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of it’s TCO – technical support, maintenance, labor costs, etc. account for the remaining 80{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}.

Check out this chart from Gartner, Inc. that shows an unmanaged PC can cost you over $5,000 a year:

Unmanaged TCO Can Be Costly

But hidden and unnecessary costs don’t just apply to computers – they’re also found in the software you run on them.

Unlike locally-installed applications, Cloud-based inventory management software allows you to pay for the features you need now and seamlessly upgrade when you need to in the future.

You’ll pay a single, predictable subscription fee for a “package” that best suits your particular feature needs and team size; then, upgrading is just a few clicks away when your business growth justifies a more powerful platform.

On top of stress-free upgrades, cloud software companies work in the background to make sure things continue to run smoothly, and should you need any questions answered or breaks fixed, they’ll have a support team standing by to assist you.

And the best cloud platforms are easy to setup and use – so there’s no extra IT hassle, new equipment, or expensive training classes.

2. Faster Installation and Easier Employee Training

The old way of doing business required you to install software on each and every computer your team uses and have a dedicated IT department to keep that software running.

This cuts into profits, slows down training time, and increases labor costs.

Cloud-based software doesn’t require any additional employees or special hardware – you just log in and get to work!

And since they don’t rely on dedicated in-person training to teach your team how to use the new software, most cloud companies have streamlined their software’s learning curve so that everyone can understand the basics and start using it on day one.

3. Real-Time Inventory Control

Easy stock control is one of the most exciting benefits of cloud-based inventory management.

Instead of combing through piles of reports from different systems and departments or worse – making “educated” guesses – cloud software lets you view up to the minute data on inventory levels through easy to understand reports and dashboards.

And instead of relying on special, manual stock-takes that require extra labor and could interrupt your operations (costly for growing businesses and large, multi-location companies alike), cloud-based inventory software often includes features like QR code tracking that allow you to actively measure stock as it flows through your operations – which can save you much more than the cost of a monthly software subscription.

But the time-savings don’t end there – the automation cloud inventory systems bring can drastically reduce the number of costly human errors you and your team make.

Ray Panko from the College of Business Administration at the University of Hawaii conducted a study on inventory management using Excel spreadsheets.

His results were astounding:

Students who worked alone estimated their error rate to be 18{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}. Their actual error rate was 86{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}.
Groups predicted a 13{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} error rate, but in reality, it was 27{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}.

The results are clear – we humans just aren’t that good at catching our own errors.

With automated cloud-based inventory management software, though, you’ll not only save the time of taking stock and compiling reports, but you’ll also reduce human errors that can have serious business consequences.

4. Up-To-Date Inventory Reports

If you’re a savvy business owner, you probably know your top 5 best-selling products – but do you know your lowest-selling? You may notice how well you sell during Christmas, but do you know when demand actually peaks and troughs?

Questions like these are answered by inventory reports automatically generated by cloud-based software.

By knowing your lowest-selling items, you can make strategic decisions like upgrading those products, changing your marketing tactics, or ditching them altogether to focus on something new.

And knowing when demand for your products is actually at its peak, you’ll be able to order enough stock without overdoing it, saving money and storage space while also maintaining enough safety stock to prevent “out of stock” notices that cost you customers.

With the inventory reports you’ll get from cloud-based inventory software, you’ll be able to deeply understand last quarter so you can effectively forecast for the next, which means better customer service and faster business growth.

5. Barcode and QR Code Tracking Systems

QR and barcodes are essential to modern inventory management; if you’re not using them, you’re practically living in the supply chain dark ages.

Paired with the right cloud-based software, they provide detailed, real-time insight into your inventory levels across your operations, saving you from ordering too much (which forces you to sell at clearance prices) or ordering too little (which forces you to break out that costly “out of stock” sign).

Business software review site GetApp.com recently took a poll of business owners asking them how they decided to reorder inventory, and found 46{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} decided on information from previous months.

While this is a more effective strategy than depending on educated guesses, with a reliable cloud-based inventory management system that uses QR or barcode technology, a few simple changes to your production processes can provide much more accurate data that lets you know exactly how much inventory you have in stock – saving you hours of time and reducing human error.

6. Seamless Ecommerce Integration

Can you imagine manually entering all the data from your ecommerce platform into your inventory management system, and then again into your accounting software?

If you operate like many other businesses, you might not have to imagine it – that may be your day-to-day reality.Fortunately, you can sidestep or end that nightmare with cloud-based inventory management software.

By automatically syncing data across multiple top business applications like Shopify and Xero, modern inventory management software can save you a ton of time spent on manual data entry.

This allows you absolute control over your operations across all channels, enabling you to see where your inventory is currently held, the status of your purchase and sales orders, and ensure your accounting is up to date and accurate all from one place.

7. Manage Multi-Site Operations from Anywhere in The World

While there are many benefits of cloud-based inventory management, one of the most important for the busy entrepreneur is being able to operate their business any time, any place.

With cloud software, you can manage multiple warehouses wherever you are, allowing you to buy, sell, and manufacture with ease.

If your team operates remotely, then your product manager in Detroit can update your distributor in New York in real-time.

And you can generate reports on the spot for a trade show in LA or for a business presentation to new investors in Hong Kong.

24/7, anywhere accessibility makes cloud-based inventory software perfect for startups without a physical location and international companies alike.

8. No More Losing Precious Data

Now we get to a crucial and often overlooked benefit of cloud-based inventory management: keeping your critical data safe, secure, and intact.

It’s so easy to accidentally delete files, visit an infected website, or suffer from inevitable hardware failure.

Paragon Software Group did a study on SMBs, revealing that more than 1 in 5 companies (22{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3}) have experienced data loss that caused a significant impact on their business.

What’s more staggering is that 20{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} of these companies don’t even do daily backups, and out of those, 42{cb377218d5687e54e8ee9149518f87201a393a7c1db5e8076e9d750029ec0dc3} think it’s an inefficient use of their time.

Modern businesses realize this is a potentially fatal mistake.

To keep your business protected, consider investing in a cloud-based inventory management solution.

It’s far cheaper than the price you’d pay to recover your lost data, or worse, lose customers and go out of business.

Upgrade Your Business With Cloud-Based Inventory Management

Today, there’s no good reason to use clunky, complicated, and error-prone manual methods of supply chain management.

With the right cloud-based inventory management software, you’ll save more than enough time and money to justify the upgrade.

Sure, you can stay stuck in the 20th century…

Or you can invest in the continued growth of your business by updating your inventory management systems today.

Ready To Take Back Control of Your Inventory?

Experience the automation and integration benefits modern cloud-based inventory management software offers by starting your free 14-day trial of DEAR Inventory today!

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