The Forrester Wave™: Order Management Systems, Q2 2023

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Become the Inventory Solutions Superhero

Identify Your mishaps, implement solutions

Do you know what causes inaccurate inventory data?

By Fluent Commerce Marketing

Mar 24, 2023

Are Inventory errors making you lose sleep? We wouldn’t blame you: Poor inventory management can be the stuff of nightmares. 

The best way to overcome your inventory challenges is to face them head-on. Before you can do that, you first have to uncover what is causing the inventory data errors.

Let’s take a deep dive into common causes of inventory inaccuracy. Then, we’ll help you rest easy by exploring the benefits of modern inventory management solutions

What causes inaccurate inventory data?

Most inventory data inaccuracies involve the following:

ERP misuse

Your enterprise resource planning (ERP) software is your do-it-all platform…or is it?

All ERPs are bad at one important inventory management task. They cannot efficiently consume data from multiple channels in near-real time, or the frequency needed in today’s fast-paced world. 

An ERP solution can track your static inventory, but once-per-day updates will no longer cut it. 

Putting too much confidence in middleware

Middleware lives up to its name a little too well. All it does is translate data into a new format so that the data can be relayed between systems. 

It applies generic methodologies, like first-in-first-out (FIFO), to your inventory data during the process. That methodology has its uses, but it can also contribute to inventory inaccuracies. 

We aren’t suggesting that you ditch your middleware. Just make sure that you are using it the way it was intended. Let it translate information into the appropriate format and leave the logical processing responsibilities to a dedicated solution. 

Clinging to legacy systems

Ready for a surprise? Your legacy systems may be contributing to inventory data errors. inventory data is constantly in flux, and old-school systems can’t keep up. That’s because they were never designed to talk to each other. All they can do is export bulky files that are days or even weeks old. 

If you want to compete in the modern retail space, you need up-to-the-minute data. To get that data, you need to implement a modern inventory management solution.

3 undeniable signs you have inaccurate inventory data

Here are three signs of an inaccurate inventory data problem that you can’t ignore:

Canceled order rates are high

How often do you cancel customer orders because the product is out of stock? If this is a recurring theme you have an inventory data visibility problem. 

Canceled orders not only cost you sales, but they ruin the customer experience. First-time customers may never return, and even loyal customers will grow weary of doing business with you if you don’t quickly remedy the problem. 

Frequently undersell due to stockouts

While solving your inventory inaccuracy problem by setting high safety stock levels may have seemed like a good idea, it can actually lead to underselling.

Setting a high safety stock level protects customers from canceled orders, but it also means that many customers will think an item is out of stock, even if you have plenty of it.

Disappointing some customers as a means of sparing others from canceled order frustration is not the answer. And you then lose out on sales. What can you do? Solve the problem at its source.   

Order rejection rates are high, and fill rates are low

If your online orders are frequently rejected after going to a fulfillment center, your fill rate percentage will plummet. 

High order rejection rates, as well as low fill rates, are typically linked to poor inventory data accuracy. Order rejections and fill rate issues can push back delivery times. If that happens often enough, you are going to have a lot of angry customers.

Order rejection also increases your cancellation rate. A staggering 38% of online shoppers will cancel the shipment if their delivery is set to take seven days or more. With that being said, you must streamline the delivery process by getting your inventory management right. 

What’s the solution?

Correcting inventory errors might seem like an impossible task. If you are managing inventory data with your ERP or middleware, it certainly can be. What is the solution?

Don’t use middleware as an inventory tracking tool. The same goes for your ERP software. Both are great at their respective jobs, but neither is cut out to track your inventory availability in real-time. What do you need? A distributed order management solution.

Wait, weren’t we talking about inventory data inaccuracies? Contrary to popular belief, an order management system does much more than orchestrate orders. They also:

  • Ingest inventory data at scale
  • Intelligently process the data (Sorry, middleware)
  • Virtually segment inventory 
  • Put you back in control of safety stock buffers

How a distributed order management system (DOM) can make all the difference

The right order management system can close the door on your inventory woes for good. 

With Fluent Order Management, you can automate workflows and process orders faster. On top of that, gain end-to-end visibility of your stock levels. Most importantly, you’ll be empowered to cut costs and manage customer orders with ease. Ready to learn more? Schedule your free demo today.

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