Month: June 2022

5 Common invoicing mistakes businesses make & how to avoid them

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Retail and wholesale-based businesses need to realize as many efficiencies as possible to survive in the marketplace. Today, success is dependent upon modern tech stacks with cloud-based software that best suits inventory-centric operations.

The adoption of cloud-based software has helped product sellers succeed in an industry that has been disrupted by COVID-19 and global conflict. By taking full advantage of the move to the cloud, thriving businesses are enabling their remote workforces, automating the increasing demands of digital commerce, and protecting their intellectual property with the latest in web security.

 

Avoid paying interest on cash borrowed from business credit lines to bolster cash flow

Few aspects of business are more critical than timely and accurate accounts receivable. Meticulous invoicing keeps cash flowing into the business. Leaving such a crucial function to error-prone, manual processes is a mistake that small businesses can no longer afford. And the process doesn’t end at sending invoices to customers. Accurate, real time data supports follow-up on receivables – also key to maintaining cash flow.

When it comes to invoicing, errors and delays lead to lost revenue so it is vital to understand what mistakes businesses often make and how to avoid them. We preface the following tips by generally advising that by adopting cloud-based accounting software from a respected vendor that is custom integrated with an inventory control platform ensures all financial data is managed on an accurate and timely basis. Here’s a comprehensive list of common invoicing mistakes businesses make and the solutions to ensure you can prevent repeating them.

1. Sporadic invoicing

When businesses send invoices to customers inconsistently, it’s easy to fall behind. Invoicing on different dates each month can also lead to receivable delays. This mistake is likely to occur because some businesses only invoice on specific days of the week.

This can be an issue for customers as well. Customers have difficulty planning their cash flow because they have no idea when to expect an invoice. Random invoicing results in delayed payments causing receivables to age beyond 30 days. To rectify this, select specific dates every month on the calendar to regularly send invoices. The best solution is to automate the process with invoicing software. Customers will be well aware and have enough time to arrange the payment.

2. Timely collections

Simply sending invoices doesn’t complete the job. It is essential to follow up with customers who haven’t made payments within agreed credit terms. Organization is key to success here and failing at collections hinders growth and long-term viability.

Once an invoice is sent, it is recommended to set a reminder to follow up on debts. When the time comes, a persuasive email that urges customers to take action immediately can be effective. Best practices encourage the use of accounting software that helps manage receivables and sends reminders of past due invoices.

3. Unclear terms of payment

Always clearly specify Terms and Conditions regarding payment terms. This should include details about late fees, pricing, and other details about products and services. State all payment policies on invoices so that customers aren’t confused and can make payments on time.

Be as specific as possible. For example, a customer may wonder if “net 15 days” excludes weekend days or not. Instead, specifying “net 15 business days” will offer clarity.

4. Lack of company branding

Company branding is an invoice element that can have an impact. Undoubtedly, branding is crucial for every facet of business, and invoicing is no exception. Including branding on invoices means customers can easily identify who the invoice is from.

Moreover, using a company logo and clear branding on invoices ensures that customers can easily spot invoices from your business. Each branding opportunity can help improve awareness in the marketplace. Leveraging the benefits of invoicing software like QuickBooks Online offers custom invoice templates and the ability to add branding elements.

5. Inconsistent back-ups

Invoice data is an important part of an overall back-up plan. Depending upon location, a business may be legally obliged to archive invoice data for a specified period of years. Furthermore, an ability to provide customers with archival invoice data upon request demonstrates that their account is being managed properly.

Every invoice sent should be backed up either as a physical copy or a digital one. Keeping a paper copy is not highly recommended as it is prone to be misplaced or damaged. Backing data up using a cloud storage service or adopting cloud-based accounting software are both compliant solutions.

 

Wrapping up

Accurate and timely invoicing is critical for long-term success and growth.

In this article, we have covered some of the most common invoicing mistakes and how they can hamper receipt of payments. If a business is reaching the point where it can no longer afford to rely solely on error-prone, manual data entry to manage invoicing, or relying upon legacy invoicing software, we suggest upgrading tech stacks to modern, cloud-based solutions.

Intuit and DEAR Systems have recently partnered to offer an Advanced Plan bundle that includes a subscription to both QuickBooks Online and DEAR Systems inventory and order management beginning at $375 per month. This offers the perfect opportunity for growing product sellers to easily enjoy the very latest cloud-based solutions to manage cash flow, inventory, and order fulfillment.

5 ways your inventory spreadsheet is hurting your business

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Collecting and storing inventory data is one of the most crucial aspects of your business. In fact, it’s essential to have an accurate understanding of what goes in and out of your warehouse at all times. Most businesses, especially while starting off, use spreadsheet tools like Microsoft Excel and Google Sheets to store their inventory data. However, as inventory grows, these businesses run into several issues because spreadsheets are not specifically designed to deal with complex inventory data.

Here are five reasons why you should not rely on spreadsheets to handle your inventory database.

 

Spreadsheets are inefficient

When you work with a spreadsheet to manage your inventory, you only have an x-axis and y-axis to represent your data. Sure, rows and columns may be enough for a simple database. But as your inventory expands, you’ll need much more sophisticated tools.

As your inventory starts getting more and more complex, you’ll end up creating multiple spreadsheets that you have to refer to. Eventually, you’ll have a lot of data overlap between these sheets. Each time you update your inventory you’ll have to update each spreadsheet — which becomes more and more time-consuming, inefficient, and inaccurate.

 

Spreadsheets aren’t secure enough

Simply put, your inventory data deserves more security than spreadsheets can provide. A spreadsheet is very lightly protected, if at all. They are easily breached by a seasoned hacker.

Moreover, spreadsheets get routinely corrupted for no apparent reason. Sometimes, files simply won’t open. Other times, data is deleted by the system, or careless users. You know how important accurate inventory data is. Why would you allow it to be so vulnerable?

 

Spreadsheets don’t allow for varying levels of access

An inventory management team typically consists of more than one person, and each person is responsible for collecting data from a particular area. Ideally, all of them should have access to the database so that they can input data from their respective vantage points.

However, this becomes increasingly difficult to do with spreadsheets as team size increases. Moreover, sometimes you don’t want the entire database to be accessible to all. Such complex permissions are not possible with spreadsheets.

 

Spreadsheets don’t provide enough analytics

When you use spreadsheets, you miss out on the most important feature of an inventory management system: data analysis. Yes, spreadsheets can help you create some basic analysis, but you have to learn complicated formulas and enter them manually into the sheets.

Without looking at high-level insights from your data, your data is practically worthless. Spreadsheets don’t give you the cohesive, easy-to-read analytics you need to run a successful business.

 

Spreadsheets are prone to human error

Spreadsheets require users to manually input data into respective cells. Plus, most formulas have to be entered manually, too. This manual entry opens up a lot of possibilities for human errors that can be disastrous for your inventory management.

 

Is it time to switch to an inventory management system?

Inventory management software is much more efficient, more secure, and easier to use than spreadsheets. It allows users to enter data in a much more efficient manner. Fields are clearly marked and input types are well-defined, making the management process smooth and efficient.

Furthermore, when you use an inventory management system, the chance for human error is substantially reduced.

The best part about inventory management software is that all formulas and calculations are done automatically, without any human intervention. Taking all this into account, do you think it might be time to switch from spreadsheets to an inventory management system? If you’re curious how Cin7 can help, book your demo today.

How to successfully launch your ecommerce brand

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The pandemic era and a massive shift to digital experiences have made the prospect of launching an ecommerce business very tempting. However, starting and sustaining an ecommerce business is easier said than done. You need the right business idea, suitable ecommerce solutions, a well-planned strategy, and more.

Still, if you’re thinking about starting an ecommerce business, you’ve come to the right place. This blog post will provide you with a step-by-step guide to start and run your online business. We’ll go through idea generation, technology options, online store management, maintenance, and more.

Here’s what you need to know to start and run your online business.

 

How profitable is ecommerce?

Trends show ecommerce business is becoming increasingly profitable. For established businesses and aspiring entrepreneurs, ecommerce is a profitable model as both the sole focus of a business and an additional selling channel.

Data shows that in three months, a new ecommerce store can make more than $63,000 in monthly revenue. In just one year, a successful ecommerce store can average $127,000 in monthly revenue. After three years, a successful ecommerce store can earn an average monthly revenue of $352,000, which is an increase of about 175% between years one and three. On average, your successful ecommerce company can make as much as $39,000 of revenue in the first month in business, and some jump up to $6.5 million in total after three years.

 

A step-by-step guide to starting your ecommerce business

The ecommerce business journey begins well before you launch your business. A successful ecommerce business demands tremendous research early — whether you’re starting an online store or doing an ecommerce integration.

Thanks in large part to the pandemic, there’s more competition than ever. To succeed in this market, you need to think strategically and act methodically.

Step #1: Research your business model

An online business is a big investment, and you need to take it seriously. Your ecommerce business isn’t a one-size-fits-all proposition— you must have a unique online business model. You need to map out marketing, manage inventory, coordinate shipping, and more. Because of all of these factors, research is extremely important. You should make sure to talk to an ecommerce consultant to ensure you have a viable plan. Look for an ecommerce development company as soon as you have a rough plan.

Step #2: Validate your target market

It’s time to identify your target market and the type of products you want to sell. Before finalizing your offerings, it’s essential to understand buyer personas. Begin with a few, well-defined product ideas. You can always expand gradually from there. Before you invest in products, you must evaluate them and think about leveraging low-cost methods like drop-shipping.

Step #3: Know your competition

Competitor analysis is crucial in any business. When you analyze your competition, try to understand them categorically. The presence of competition validates the niche you have selected.

For example, you must know all direct competitors and top players in the market. You will learn a lot from your competitors. Hence, analyze them and observe them closely. Take note of things you like and dislike about them. It’s also important to understand the kind of ecommerce platforms they use. For instance, if a competitor uses Magento ecommerce development, you should understand all the pros and cons that went into that decision.

Step #4: Create a brand name and register your business

It’s crucial to develop a brand name and logo that reflects your business model. In a world dominated by ruthless competition and brand identities, it’s impossible to succeed without a brand name. Make sure you’re sending the right message to your target audience through your brand image.

Register your business name and company name to get tax benefits, legal protection, and more. Make sure to apply for a business license, permits, and other certifications to operate without legal obstacles.

Step #5: Build your online store

The kind of online store you build determines a lot about your long-term strategy. If you want to build a customized online store, you need to make sure to choose the right ecommerce development company.

There’s a  large number of ecommerce solutions out there, and it can be overwhelming. The ecommerce platform you pick will impact your store’s performance and profit. It’s important to make an informed decision based on both comparison and research. Choose an ecommerce platform that suits your business needs. For example, smaller companies might find that Shopify solutions are the perfect selection.

For fully customized B2C and B2B ecommerce, we recommend Magento, which is popular among medium to large companies. While building your online store, you should think about mobile-optimized design, SEO, and secure payment gateways.

Step #6: Showcase your products

It’s important to display your products properly and professionally. You need to include well-written product descriptions and visually captivating images to entice your customers. Product pages should be custom-built and create an immersive experience for shoppers.  Reviews and testimonials are essential elements of your product pages, and you need to be strategic about displaying prices, too.

Step #7: Attract customers with great UX and marketing

Competition is more intense than ever, so you need to stand out and attract the right audience to your store. SEO plays a vital role in attracting the customers you want. The most successful ecommerce operators meticulously manage their brand and digital marketing strategies.

You can use paid marketing like pay-per-click or free marketing like content curation. Social media marketing is also huge for online store visibility. In order to be successful, you need to develop a loyal base of customers. Make sure to take advantage of loyalty programs, gift cards, coupons, and more. It’s important to keep your customers as engaged and loyal as possible.

 

How to launch a successful ecommerce business

The ecommerce economy is poised for significant growth in the coming years, but you can only expect to see results if you approach your launch the right way. The following tips are critical for a successful ecommerce launch.

Don’t rush the launch

One of the biggest mistakes ecommerce entrepreneurs make is rushing or forcing the launch of a website. You only get one shot to launch your website, so you shouldn’t mess it up.

It’s okay to purchase your domain name and throw up some sort of “coming soon” page, but you should avoid the big reveal until you lay some substantial groundwork (content marketing, SEO, social media, paid advertising, etc.).

Focus on your customers

Many ecommerce businesses fail because potential customers can’t touch, smell, feel, and see (firsthand) products before making a decision. Obviously, there’s no perfect solution to solve this problem. But you need to compensate for the lack of real-life experience in other ways.

Make sure you price your products well, offer free shipping, and make the checkout process as simple as possible. You need to make customers comfortable online if you expect to make sales.

Test everything

Invest in testing and analytics before, during, and after launching your ecommerce business. Think like a potential customer and figure out what works, what doesn’t, and the “why” behind those answers.

Leverage social media

An ecommerce entrepreneur who completely outsources social media is going to have trouble succeeding in ecommerce. Social media is the heartbeat of the business. It offers you an uninterrupted glance into the lives of your customers. While it’s okay to have a social media manager, it’s pertinent that you are involved with it, too.

Use testimonials and product reviews

Testimonials, product reviews, follow buttons, and social login options are huge in the world we live in. You need to leverage your customers, as well as their positive experiences, to make other customers feel comfortable enough to shop at your ecommerce store.

Make sure your mobile experience is seamless

Bill Siwicki of Goldman Sachs says, “Tablets will play an important role, as worldwide consumer spending via mobile jumped from $204 billion in 2014 to $626 billion in 2018.”

Those are huge numbers. And when you factor in the growth of the post-pandemic era, mobile is becoming even more popular. Simply put, you need to make sure that you are thinking about mobile shopping in every single decision you make.

Leverage SEO

As the ecommerce economy grows, more and more businesses will enter an increasingly crowded space. That means it will be increasingly important to stay on top of SEO and stand out from your competition. Connecting with a skilled SEO company can pay huge dividends in the long run.

Collect as much customer information as possible

Unless you plan to launch a single site and step away, you must collect as much customer information as possible. They will help with customer satisfaction, repeat business, and even future launches. Start building your customer database today.

Be flexible and adaptable

Never stop evolving. Technology, customer tastes, and trends all change. You must do the same if you want to succeed in such a fast-moving market.

Be creative with your brand

As you visualize your brand, try to be creative as possible and think out of the box. Mood boards, for example, are a fun and creative exercise that can help you visualize your brand’s overall direction.

Creativity helps keep you inspired and on track. Think about your brand’s fonts, images, and colors. What does it say about your brand? What will your customers think? It’s important to work with a designer to create a professional logo and other branding elements to use on the website and packaging.

 

If you’re consistent and focused, you will succeed

A lot goes into starting an online business, The process may be intimidating, but you can make it happen. Work through it step by step, and never worry about making things perfect right out of the gate. Most importantly, you need to learn by doing.

Success requires a lot of time, patience, and research. However, it’s also very important to have help along the way. Cin7’s inventory management software will make your ecommerce brand’s launch a lot easier and allow you to leverage useful integrations. Ultimately, we can save you a lot of time, money, and headaches. If you have any questions, or are curious about how we can help, book your demo today.

How to perfectly execute the 2022 holiday shipping season

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It’s no secret that the holiday season is one of the busiest times of the year for shipping and retail industries. In fact, It’s the most important time of the year for direct-to-consumer (DTC) brands. With increases in technology, ecommerce has become the driving force behind the yearly surge in sales. Shoppers spent $122 billion with online retailers alone in the past year. To keep up with the surge in demand in a short span of time, you need to have a streamlined shipping strategy and fulfillment process in place for the holidays.

These days, customers have high expectations when shopping online. They want free and fast shipping, free returns, and share-worthy unboxing moments. Businesses that are able to keep up logistically both bring in more customers and retain them better.

In this article, we will go through common challenges that DTC brands face during the holiday shipping season, and how you can streamline your shipping process for your online store’s success.

 

What is considered the holiday shipping season?

The holiday shipping season refers to the time of the year (Q4, or October through December) when order and shipment volume spikes, leading to more orders to fulfill and more returns to process. The holiday shopping season includes Black Friday, Cyber Monday, and general gift-giving that leads into Christmas.

In this period, supply chain management can get disrupted as online brands rush to keep up with demand, manage inventory, and fulfill a massive amount of orders. Shipping carriers get busier than usual and work harder to deliver packages on time.

 

When does the holiday shipping season start?

The holiday shipping season starts earlier than many people think. The shipping industry and eCommerce sales ramp up as early as October, and high demand continues until the new year. Here is an overview of major milestones and holidays that occur during the holiday shipping season.

Halloween (October 31)

Even if it’s an American holiday, Halloween is popular among consumers in Europe, too. Whether you’re selling “spooky” decorations, costumes, or other items, sales opportunities increase during this time. Many brands will try to capitalize on the holiday by running special promotions.

Thanksgiving (November 24)

Thanksgiving marks the beginning of the holiday shopping season. You have Black Friday, Cyber Monday, and Small Business Saturday all occurring over the same long weekend. That’s when holiday shoppers begin to search for the best deals and try to purchase their holiday gifts early.

Christmas (December 25)

Holiday shoppers expect to get gifts delivered before Christmas Day (or even Christmas Eve). You must take note of your carriers’ holiday cutoff dates and communicate those with customers. They want to know when they’ll have to place orders for on-time delivery.

New Year’s Day (January 1)

Although the holiday shopping season starts to slow down by this time, return volume is at an all-time high around January 1. This often requires more from customer service and logistics operations teams for smooth returns and exchanges.

Other important dates

  • Black Friday: November 25,
  • Small Business Saturday: November 26,
  • Cyber Monday: November 28,
  • Free Shipping Day*: December 14,
  • Super Saturday**: December 17.

*Participating merchants provide free shipping on all orders, with promised delivery by Christmas Eve.

**The last Saturday before Christmas is a huge shopping day for brick-and-mortar retailers.

 

Common challenges during holiday shipping season

Expected or unexpected, whenever there’s a major change in the supply chain, it can throw off inventory management, shipping, and more. That’s why it’s essential to find ways to build supply chain resilience and ensure a successful holiday shipping season — even if there are delays and disruptions. To prepare your supply chain for Q4, here are a few holiday shipping season challenges to be aware of.

Black Friday sales

One of the biggest challenges to growing eCommerce businesses is managing an increase in order volume. Obviously, this is most apparent during the holidays. Black Friday sales add even more chaos to the mix.

Partnering with the right 3PL can take fulfillment challenges off your plate and put it into the hands of experts (even if the volume increases by 1,200% in a couple of weeks). This is a great way to avoid making common holiday season mistakes.

If you decide to keep fulfillment in-house, you must prepare to hire more packers (and be ready to ask family and friends to step in as required). You should also plan your holidays around running promotions and fulfilling orders on time.

Supplier holidays and factory shutdowns

Many brands partner with multiple suppliers and manufacturers to ensure they are not at risk if a primary supplier can’t deliver during shortages or shutdowns. Whether it’s a planned shutdown like Chinese New Year, or an unplanned one like what happened during the pandemic, manufacturers can go through shutdowns at any time.

Unfortunately, this means that receiving and replenishing inventory can be significantly delayed or disrupted — which could affect your entire eCommerce supply chain. As part of your business contingency or continuity plan, partnering with various suppliers can help reduce the risk of the inventory shortage. You can even get ahead by ordering surplus inventory. This helps avoid stockouts and gives you some wiggle room for the holiday shipping season.

Inexperienced 3PLs

If you want to partner with a 3PL, make sure they have the expertise, technology, and experience to deal with the increased volume that comes with the holiday shipping season. The wrong 3PL partner can cause major disruptions in your fulfillment process and lead to mispicks, slower deliveries, and inaccurate inventory levels.

The right 3PL, on the other hand, will always offer visibility and transparency into the supply chain. That includes real-time inventory data, information on shipping and fulfillment performance, and much more.

 

How to perfectly execute the holiday shipping season

If you are curious about how you can perfect your shipping strategy during the holidays, here are a few things to try.

Break the shipping process down into smaller steps

How long does it take you to fulfill an order? If you can get accurate data on each element, you’ll be able to better answer this question. You can break things down into the following:

  • Time to pack a product,
  • Time to take out the packaging material,
  • Time to collect all items in one place,
  • Time to print shipping labels.

Once you know where every second of your time is going, you can streamline some of the processes and add some minutes back to your day. Small changes can lead to big improvements in efficiency and customer satisfaction.

Communicate effectively

Effective communication with customers is a huge part of your relationship with them. As you ship orders you should make sure they receive updates, shipping times, delivery notifications, and more. This practice keeps customers in the loop and makes them feel as though they know what’s going on with their shipment.

Give your customers multiple payment options

Allowing your customers to pay in multiple ways gives you an edge and provides your customers with the flexibility they want. Since many customers use wallet payment options, accepting payment via wallets can simplify your customers’ shopping experience.

Save time with labels

Did you know you can save a significant amount of time by printing shipping labels in bulk? You can also integrate orders with Cin7 to print your labels in seconds.

Keep an eye on your supply

Each seller predicts how many sales they will make during a holiday season. Suppose you offer 50% off on apparel. You’ll need to make sure you have adequate stock lined up to cater to urgent requirements. Print labels in advance and stock your supplies for shipping. Most importantly, make sure you don’t get stopped midway during the peak season. Purchasing supplies in bulk quantities saves you the cost and headache that comes with last minute sourcing and production.

Display a shipping rate calculator

If you don’t offer free shipping, you should provide your customers the exact cost they’ll pay while ordering any given product. You can do this by offering a shipping rate calculator. This is usually based on factors like the customer’s delivery location and is a very important part of the checkout process. In fact, 44% of customers abandon carts due to high shipping costs.

Set a free shipping threshold

Many eCommerce sellers offer free shipping during the holiday season. This can help increase sales, but it can also burden you with higher shipping costs. Instead, try the following:

  • Set a threshold order value before providing free shipping.
  • Set a countdown for free shipping.
  • Send coupon codes for free shipping.

Setting a threshold on orders may help increase your average order value and encourage customers to buy items they might not have previously. Plus, opting for lower-cost regional couriers might be a smart option, too.

Offer international shipping

Scaling your business to ship internationally could be an excellent opportunity for sellers during peak season. Even if you haven’t shipped internationally before, there is no reason why you should not ship internationally this holiday season.

Seasonal peaks are an excellent opportunity to expand your options — especially when audiences look forward to shopping outside their borders for holidays. There are many low-cost global shipping options from Cin7, so you can quickly ship with premium carriers like FedEx, Aramex, and DHL.

Partner with an experienced 3PL

Partnering with an experienced 3PL company can help make the chaotic holiday season more manageable, especially for businesses that are:

  • Transitioning fulfillment from in-house to third party,
  • Preparing to launch a new brand,
  • Looking for new inventory management options or a hybrid approach.

Fulfilling holiday demands by your own can be challenging, and leasing a warehouse can be time-consuming and expensive. The sooner you start with a 3PL, the easier the process becomes. Cin7 can help you get onboarded quickly to start preparing for the busy holiday season that’s right around the corner!

 

Conclusion

One of the best ways to improve customer satisfaction during the holiday season is by making sure your shipping is quick, organized, and transparent. If you want to build your brand, stand out from your competition, and win repeated business — shipping times is a great place to start. Cin7 can help you manage your supply chain and help you reach your goals. Our inventory management software makes the process easy, painless, and profitable. Book a demo now to get started today.

Supply chain resilience strategy: build and measure

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It is no secret that COVID-19 damaged the modern-day supply chain. From silicon shortage to toilet paper stockouts, the marketplace has seen it all. According to a survey from the Institute for Supply Management, 95% of the businesses had to endure operational troubles during the initial pandemic days in April 2020.

While businesses cannot prevent such disruptions, they can prepare themselves to persevere through them.

The Cin7 team has compiled a list of strategies to build a resilient supply chain for your business and help gain an edge over the competition.

 

What is supply chain resilience?

The origins of the supply chain resilience concept can be traced back to the work of C.S. Holling, an ecologist who coined the term “ecological resilience.” It refers to the ability of an ecosystem to maintain normal patterns despite being subjected to the damage arising from ecological disruptions.

Supply chain resilience is defined as an organization’s ability to recover from unexpected supply chain disruptions using its “ecosystem’s” existing capabilities, ensuring that the operations run smoothly and the customers remain satisfied.

 

Challenges and risks in building successful supply chains

The pandemic disrupted nearly every stage of an organization’s supply chain. The effect was global and prolonged.

As bad as the pandemic was and continues to be, it is just one of the many factors that disrupt the smooth functioning of the supply chain. Here are some scenarios that pose risks to the supply chain:

#1 Operational risks

Operational risks occur because of breakdowns in normal working operations. Both technical and non-technical reasons can pose this risk.

Example: Machine failure due to poor maintenance (technical) and mismanagement (non-technical). This risk can be classified as internal risk, i.e., it can be fully controlled and avoided by the organization.

#2 Financial risks

Delays from the supplier can cause delays in your production process. This type of risk emerges due to shortcomings in the suppliers’ finances and revenue.

Example: The supplier reduces the production of your raw materials due to their own financial woes or files for bankruptcy. To combat such a scenario, either extend them a line of credit or search for an alternative supplier.

#3 Legal risks

Legal risks arise when organizations are slapped with lawsuits, whether they are frivolous or not. Fighting lawsuits takes a toll on your time, money, and resources. Severe cases can also tarnish your reputation, leading to a loss in revenue and business development.

Example: If a lawsuit for an intellectual property violation is filed against your company or you are fined for breaking environmental laws, any suppliers who get trapped in either scenario can catastrophically disrupt the supply chain of your business.

#4 Geopolitical risks

Globalization has converted the entire world into a connected village, where consumers are no longer dependent on geographical boundaries to purchase items.

Producers benefit from globalization, as they are no longer restricted to sourcing their raw materials from the same region. Faster connectivity ensures that they can order from any corner of the world at a price that fits their budget.

Global connectivity also comes with its challenges. While businesses operate under the trade and commerce laws of their nation, working with partners from various countries adds various layers of complexity.

Situations like political turbulence, governmental policy changes, and war outbreaks can hinder your suppliers’ capacity to make timely delivery.

Example: The US-China trade war and Brexit are classic examples of geopolitical risks.

#5 Natural disasters

Hurricanes, earthquakes, and other natural disasters have been disrupting the supply chain for ages. Such disasters can be classified as external risks, as they are not in the control of the business. Regardless of the classification of risk, these calamities lead to port closures and cargo flight cancellations, in addition to creating capacity constraints and supply shortages.

Even climate change affects the operations of businesses. Research from the

United Nations Development Program (UNDP) suggests that rising temperatures could lead to adverse effects on the workers.

According to the UNDP, climate change’s economic impact on labor productivity could reach $2.5 trillion in global losses by 2030.

Example: In 2017, Hurricane Harvey and Irma—fueled by symptoms of climate change—hit the gulf coast in a span of two weeks. These hurricanes left a trail of physical and economic destruction, including a severe disruption to the regional supply chain.

#6 Cyberattacks

The rise of digitalization has also given rise to cyber security attacks. In fact, cyberattacks have become a leading cause of supply chain vulnerability.

The supply chain becomes a tempting target for hackers as vendors often possess sensitive data about companies or have enough access to allow for privilege escalation.

As attacks of such nature become more common, manufacturers must invest in cybersecurity proactively. This is for safeguarding them as well as their clientele’s data.

Example: Airbus is one of the world’s largest airline manufacturers, and they were subjected to a series of cyberattacks in 2018. The hackers gained access to the confidential documents containing the schematics for classified military transport planes through the attack.

 

Strategies to build a resilient supply chain

A robust supply chain resilience strategy requires two complementary supply chain pillars: resistance and recovery capacity.

Resistance capacity is the ability of a supply chain system to minimize the overall impact caused by disruption. It can be done in two ways:

  • Evasion: Entirely avoiding the factor causing disruption in the supply chain.
  • Containment: Minimizing the period between an event and the time when the supply chain starts to recover from the effects.

Recovery capacity is a supply chain’s ability to restore itself to the level prior to its disruption.

For organizations to achieve true supply chain resilience, they need to be prepared to confront obstacles before they cause any considerable damage.

There are seven distinct strategies to build strong resilience and ensure quick recovery.

#1 Creating buffers

Manufacturers should create buffers to build resilience against minor operational risks like employees calling out sick or shop floor machines breaking down. Building buffers and making them a part of your operational process reduces your dependence on the supply chain working at full capacity.

According to one survey, 21% of the supply chain experts consider maintaining buffer stock as a solid indicator of resilience. The challenge of maintaining high buffer stock can increase your carrying costs, so the optimal buffers need to be strategically planned.

#2 Optimized inventory control

If you are relying on a single warehouse for storing your inventory, consider the option to spread your inventory across different locations.

A natural disaster damaging the warehouse or a virus outbreak among warehouse employees would undoubtedly lead to fulfillment delays.

Splitting the inventory helps minimize the risk and helps expand your customer reach by reducing shipping costs and speeding the shipping time.

Another way to build resilience is to invest in technology that provides real-time visibility into your supply chain. It helps monitor your supply chain performance and identify any and all bottlenecks. Inventory management software assists you to make better inventory decisions and set up reorder points to ensure that you never run out of stock.

Investing in an integrated warehouse management system helps you with better inventory management while reducing the number of errors. Successful organizations devise strategies to manage the longer lead times and methods to counter the unexpected surge in demand, while building replenishment models to ensure that the goods are available when needed.

#3 Investing in human resources

Human resources are necessary to complete the work but having experienced supply chain managers with market knowledge helps navigate through unexpected disruptions.

Merely hiring exceptional people is not enough—the business also needs systems built and SOPs to establish production infrastructure. Your team should have personnel dedicated to fostering better supplier relationships and for commodity management.

Commodity managers monitor the market to scout for new products in demand, price changes, and the latest supply chain developments. This information helps ensure staying on top of market trends and aids in better cost management and decision making.

Helpful hint: The pandemic has been a catalyst to the remote working environment. Such work environmental changes affect the wellbeing of the workers, both physically and psychologically.

The mental well-being of the workers must not be overlooked. “Emotional resilience” is every bit as important as supply chain resilience.

#4 Having multiple supply partners

The concept of partnering with multiple suppliers for procurement is referred to as multisourcing.

One piece of famous investment advice is “Don’t put all your eggs in one basket.” Similarly, relying on a single partner for procuring materials is filled with risk, so partnering with multiple vendors will ensure that your proverbial eggs are placed in several baskets.

Multisourcing ensures that your supply chain does not get disrupted when your primary supplier fails to deliver on time, as you can source it from someone else. It also helps with incentivizing competitive pricing among suppliers so that you get the best returns.

The pandemic demonstrated that diversification is an integral part of building supply chain resilience. For example, China is lauded as one of the world’s leading raw materials suppliers but had production grind to a halt due to Covid-19. When the lockdown was imposed in 2020, manufacturers sought and partnered with different countries like Mexico and Vietnam to expand their network.

Helpful hint: While working with multiple suppliers, you should have a dedicated team for supplier relationships. The supplier relationship manager focuses on developing deeper relationships with suppliers by understanding their core strategies and approaching them with mutually beneficial opportunities. If the supplier is working on limited capacity, there is a good chance they will prioritize the business that has built better relations with them.

#5 Effective communication

Managing supply chains requires a cross-functional effort from all the departments. Businesses need to be agile and loosen the silo structure, which inhibits the flow of information.

As the trend for hybrid working increases, companies should allocate the necessary IT resources for smooth operations and orient them with the relevant tools for communication. Managing virtual teams is very different from conventional teams, so provide managers adequate training to lead them.

Helpful hint: Keep your employees and suppliers in the loop during any periods of disruption. Provide them with relevant company information to help them make informed decisions and minimize errors.

#6 Planning and forecasting

When introducing a new product to the marketplace, it takes approximately two to three years for product development, and the lead time takes approximately 25 to 40 weeks.

It means that to deliver a product during the holidays, a business must start the plan in March. However, businesses forecast demands using their historical data, yet no demand forecasting plan would have predicted that a pandemic would be declared in March, leading to lockdowns and drastically changing customer preferences.

A feasible way to combat such forecasting issues is to invest heavily in analytics and upgrade supply chain technology. A business continuity plan identifies all the potential risks, quantifies them, and then devises a plan to deal with them, while keeping the organization running concurrently.

#7 Developing ecosystem partnerships

Many eCommerce businesses lack the supply chain infrastructure to manage the inbound and outbound logistics. This is where third-party logistics (3PLs) come to the rescue.

Partnering with 3PLs can offer reduced costs, a warehousing facility, and access to a better transportation network. This can help streamline the fulfillment process and diversify the fulfillment process so that manufacturers can prioritize their core competence.

Third-party logistics partners also bring their years of experience to the table, helping you optimize your solid supply chain infrastructure and build resilience.

 

Measuring supply chain resilience

To test the efficacy of your planning, McKinsey recommends a stress test model. This model quantifies the supply chain resilience against five factors:

  • Industry attractiveness
  • Customer exposure
  • Operations exposure
  • Corporate resilience
  • Supply chain exposure

Apart from the stress test model, there are three core metrics that help in evaluating supply chain resilience.

#1 Time to survive

This metric refers to the time to resume business operations after a disruption.

For instance, the time to survive metric for some factories in China was nearly three weeks. It reflects how long it takes to establish the necessary safety measures (like offering personal protective equipment kits) and obtain clearance from the government.

In this phase, the companies need to answer some key questions around:

  • Compensating the people
  • Bringing people back to the workplace
  • Taking corrective measures to reopen their premises

In a nutshell, time to survive answers the question, “How long does it take to reopen the business?”

#2 Time to recover

Recovery time is how long it takes to return your business to the capacity it had before the disruption.

Even though the Chinese factories started to function again after the Covid-19 outbreak, they were only running at a fraction of their standard capacity. This occurred due to a lack of workers and loss of production time. It took an additional three to four months to recover.

Prepare and protect your business by examining how long it would take to get operations back in working order.

#3 Time to thrive

The time to thrive arrives after the recovery phase, but only after an evaluation of how the business confronted the crisis.

It juxtaposes the state of business before and after the crisis and determines if and how the company learned any lessons from the disruption and improved.

Regardless of what analysis emerges during this phase, businesses should be ready to pivot their offerings to match what the market demands now. For instance, many restaurants now offer home delivery or pick-up due to the consumers’ behavioral change caused by the lockdown.

Once a company determines how it has or hasn’t improved after facing the crisis, the time to thrive is not far off.

 

In summary

Businesses need to be agile and flexible enough to adapt to the changes caused by disruptions.

Building a resilient supply chain mitigates the risk and boosts operational efficiency. Companies that invest in supply chain resilience often see shorter product development cycles than those that overlook it, which can be a competitive advantage.

By partnering with Cin7, you can automate your workflow as well as get better analytics and insights about your inventory, which helps in data-driven decision making. You can also partner with the best 3PLs through our integrations.

The experts at Cin7 can help you build a resilient supply chain for your business. Book a call now to discover more!

7 considerations for EDI success

Posted on | by chrisqureshi | Leave a Comment on 7 considerations for EDI success

Technology has drastically improved how we interact with the world. Transportation has evolved from animal carts to fast cars; data transmission has changed from postal letters to instant emails. With the advent of the Internet, the world has turned into a connected village.

In such a connected world, your business needs to be able to share relevant information with stakeholders like suppliers. Thanks to technology, this process can be streamlined using EDI. You can electronically share information about purchase orders, invoices, and status information with your stakeholders using EDI.

In this article, we will discuss what EDI means and what challenges you may face while using EDI for your business. Let’s get started.

 

What is EDI?

EDI stands for Electronic Data Interchange, and it facilitates the computer-to-computer data transfer between two (or more) parties. In layman’s terms, EDI is similar to a chat messenger that delivers information from your device to your friend’s device.

The parties that exchange information through EDI are EDI trading partners. EDI software allows its users to create templates so that they can standardize documents shared with EDI trading partners.

Suppose you integrate EDI with your ERP (Enterprise Resource Planning) tool or inventory management system (IMS). Once complete, your EDI can automatically fetch the necessary documents from the ERP/IMS database and send it to trading partners as required. This way, you do not have to create documents from scratch.

In the absence of EDI, businesses had to rely on the postal service, faxing, or email all of which had drawbacks. Let us understand EDI better with the help of an example.

John runs an apparel business, and he replenishes the inventory by ordering goods from David – the manufacturer. In the past, his purchase manager would draft a purchase order, print it, and then postal mail to David to reorder stock. The order would be received by David’s sales representative, who would manually enter the items being ordered along with the respective quantity into the system to finalize the sale.

The process seems lengthy and time-consuming, right? With EDI, sending information takes seconds rather than its postal counterpart – which can take days (even weeks!).

John’s purchase manager simply needs to add order information – product specification, quantity – in his EDI software, which will be automatically forwarded to David’s (manufacturer) EDI software. David can easily integrate the EDI tool with his order management system, such that an order can be directly placed when John sends a purchase request through EDI.

 

 

Credit

It is evident that EDI can streamline the purchase process which is better than doing it manually. The manual process also has room for many errors; for starters, the sales representative can enter incorrect order quantities into the system.

EDI not only saves your processing time, but it also helps in boosting the accuracy as it minimizes human error.

EDI also brings labor cost savings, as you do not need to incur the charges of printing the order details and the cost of postal handling/faxing/email the documents. Even the recipient does not need to endure the hassle of sorting and storing the physical copies for the record.

 

Common EDI challenges

Now that we are clear about the use and benefits of EDI let us also discuss the challenges faced while implementing EDI.

#1 Compatibility with trading partners

Deciding to implement an EDI system involves revamping your database. This challenge can multiply if you choose to create and administer the EDI in-house. Even after successful implementation from your end, the challenges do not end.

As EDI facilitates the transactions between trading partners in real-time, it is essential that your EDI system successfully synchronizes with their system for accurate data transfer.

Another hurdle could be that some of your suppliers may not be so keen to implement an EDI due to a lack of knowledge and hesitation about data sharing.

Apart from the stakeholders, it is also essential to train your internal staff to work with the EDI system. You do not want your purchase manager to order 1,000 items instead of 100 accidentally! The repercussions of mistakes can be huge, and thus it makes sense to fully acquaint your employees with the relevant features of the EDI.

As the stakes are high, it is advisable to consult an EDI expert rather than trying to figure things out on your own.

#2 Standardized formatting

The complexity of EDI integration can be challenging when your trading partners customize the formatting guidelines to cater to their unique needs. For instance, the invoicing transaction code is referred to as EDI 810.

Some invoice fields are common across all trading partners. However, the partner may likely add some additional EDI segments specific to their business.

In such scenarios, compatibility can be an issue that can lead to transaction errors. Here the experience and support of EDI providers become crucial as they are experienced with handling such issues.

While doing B2G (Business-to-government) transactions, your EDI should be compliant with the document formats legislated by the government. For example, Since 2020, the majority of European governments have been mandated to accept invoices electronically. Even the federal German public bodies have stopped accepting unstructured invoices – PDFs, printed documents – and only accept e-invoices.

As your business expands, it is essential to comply with government standards to avoid penalties. The standards can be region-specific – like the VDA format in the German automobile industry – or industry-wide.

These are some widely adopted standards in the EDI industry:

  • UN/EDIFACT (Electronic Data Interchange for Administration) was devised by the United Nations in 1987. It created standards for the syntax and structure of the messages to ensure that EDI is compatible with multi-industry transactions.
  • GS1 is essentially a subset of EDIFACT, and it is widely used to standardize product data. It uses GS1 identification numbers to help identify each product, location, and trading partner. The GS1 identification numbers are usually in barcode format, which can be scanned to add the physical products into the database, and movement can be tracked.

You must also ensure that your EDI can accommodate various transmission protocols such as FTP, HTTP, SFTP, and AS2. AS2 (Applicability Statement 2) has gained popularity in the retail and consumer goods industry since its adoption by Walmart. AS2 is used to transmit EDI messages quickly, safely, and cheaply!

#3 Security considerations

Despite its wide adoption across various industries, some partners may still be concerned about implementing EDI due to the nature of information sharing.

These concerns may arise from various factors such as lack of trust and risk of information leak due to security breaches. International laws can further add to the challenges by introducing legal frameworks and data protection rules.

You must ensure that the information is shared via encrypted transfer protocols. It is best to discuss your security measures with your partners, to ensure that everyone is on the same page and comfortable with your business practices.

It should be noted that the sensitivity of the information varies, like your order data may not be as sensitive as the invoices (which can contain vital billing information). You need to take extra precautions while dealing with highly sensitive data – as with healthcare customers, for example.

A value-added network (VAN) is a hosted private network that is used to offer connectivity between EDI trading partners. It acts as the gateway to sharing documents between parties – in other words; it is like a digital postal service. You need to check the security certifications of your VAN network, like ISO 27001 accreditation.

#4 Rising EDI cost

EDI helps lower your operational costs and optimizes logistics; however, you need to spend to get started. A substantial investment to purchase the necessary infrastructure – hardware and software – for EDI transactions will be required. If you decide to build an in-house EDI, you also need a dedicated IT team for its maintenance.

If your EDI implementation does not go well, it could also tarnish your reputation amongst your trading partners. Your manufacturing vendors may even penalize you for incorrect ordering as it can impact their production lines.

To lower your costs, you can outsource to a cloud-based EDI system provider. In this case, you won’t have to invest in a dedicated set-up and transactions run in the cloud, leading to cost savings.

Additionally, a provider updates the EDI automatically, so it saves you from any hassle when scaling up.

#5 Data errors

According to a study by the University of Tennessee, 60% of B2B transactions are suspended or declined due to some anomaly in the data. This makes it crucial to take necessary steps for data governance, to make the most of your EDI’s potential.

The report further suggests that 16% of the orders placed in a month contain an incorrect price and 20% of orders are for items that are either discontinued or not available in stock. Surprisingly, 8% include a duplicate purchase order.

Such situations can be dealt with by adding EDI rules that monitor transactions for variables like price differences and PO validity. This way, the system can send alerts to your team whenever a discrepancy is found.

There are times when a manufacturer needs to increase the price of a particular product. Needless to say, it is crucial to alert the buyers so that they can alter their order quantity.

For instance, the purchase manager gets a specific budget (say $100) to order a quantity of goods. Presently, the manufacturer sells each unit at $10, so the buyer can avail of ten units ($100 budget / $10).

However, if the manufacturer increases the price from $10 to $20, the purchase manager will need to reduce the quantity from ten units to five units ($100 budget / $20). But if the manufacturer does not promptly inform the buyer about the price change, it could lead to disputes and damage their relationship.

Price changes are inevitable; to solve such issues, businesses use EDI 845 – the price authorization acknowledgment document. Vendors use it to communicate price changes to resellers. EDI 845 is used primarily in the pharmaceutical industry, but manufacturers and distributors also utilize it.

As your business operations scale, so does the volume of your EDI transactions. With greater volume, it can become challenging to avoid errors or spot missing fields. Popular EDI formats such as EDIFACT were not meant for humans to comprehend, and that is why spotting errors can be tricky.

Even if you somehow manage to do that, manual error inspection is time-consuming. Thereby, automating the error detection process can help you save time and increase your profit margins.

#6 Integration with your inventory management system

EDI should be flexible to adapt to your way of doing business instead of the other way around. The technical integration should allow you to use the formats that you prefer or commonly used by your trading partners.

Many businesses already use an ERP (Enterprise Resource Planning) system or inventory management solution to gain insights into their business processes. Look for an EDI that also integrates with your existing system so that you can directly process the EDI orders.

Instead of manually pulling the documents from EDI and then feeding them into your inventory system, you can do this in real-time by integrating them together. This helps you meet increased customer expectations.

#7 Offering transparency

As the complexities of the supply chain rise, the need for transparency between trading partners is more important than ever.

The functionality of EDI has evolved over the years. What started as a means to improve the B2B transaction process has now evolved into a tool that provides better inventory management.

You can adopt some EDI transactions that provide inventory information to boost transparency. EDI 846 can provide information about inventory levels, and EDI 214 offers buyers shipping status notifications.

With the right system, you can share alerts and notifications with your trading partners. Offering transparency ensures that information is not siloed and helps everyone to be on the same page.

 

Wrapping up

We live in a period where the supply chain is constantly getting disrupted by various factors – be it pandemics or political factors. During such a period, investing in technology that can help optimize your supply chain – such as EDI – seems an obvious choice.

Implementing EDI can be beneficial as it streamlines your B2B transactions and provides much-needed transparency. Choosing the right EDI that integrates with your ERP can do wonders for your organization.

Vetting the best EDI is also vital as it contains sensitive information that can affect your business’s overall profitability.

To learn more about Cin7’s built-in EDI capabilities, request a demo.

Posted in EDI

Sales order benefits and best practices

Posted on | by chrisqureshi | Leave a Comment on Sales order benefits and best practices

The sales order process is one of the most essential workflows for most businesses. Optimizing the process can save money and time as well as enhance the customer experience. Businesses with efficient sales order processing in place have recognized a boost in cash flow and productivity. However, an inefficient sales order system has direct consequences on business performance – data errors, inability to fulfill orders, and slow cash flow.

So, what exactly is a sales order? How does it benefit your business? And what steps are needed to optimize the process?

Sit tight! We’re going to take you through the entire process including:

  • What a sales order is and the sales order process.
  • Why you should automate sales orders.
  • What the benefits of sales order automation are for businesses.
  • What the best practices are to optimize sales order processing.
  • How Cin7 can help your business optimize your sales order process.

 

What is a sales order?

A sales order is an official document generated by the seller when a customer places an order for a specific product or service. It’s generated in response to a purchase order (PO).

Just as a refresher, a PO is created by the buyer and delivered to the supplier for specific materials at agreed upon terms and conditions. The sales order is confirmation of the PO issued by the supplier and given to the buyer prior to delivery. The purchase order creates the contract and the sales order approves the sale.

The entire process is generally completed in three basic steps:

  1. The buyer generates a purchase order and delivers it to the seller requesting a certain quantity of materials at a certain price. Other items on the PO can include delivery schedule, delivery address, and purchase terms.
  2. Considering the purchase order, the seller issues a sales order for the buyer. The sales order approves the sale, sets payment details, and confirms the items on the PO that are included in the sale.
  3. Once the seller processes the order, the seller generates an invoice from the sales order for final payment from the buyer.

For those businesses that generate a handful of sales orders every few months, the process can be done quite simply using a manual system. However, businesses with a high sales volume cannot successfully generate manual sales orders without risk of errors.

Using manual entry for every sales order increases your risk of human error. Mistakes in quantity and pricing on the sales order lead to accounting errors. Using an automated sales order process dramatically lowers the risk of human error and accounting mishaps.

A sales order is also a critical document used for inventory management. It maintains a record of orders and provides information on inventory status. Using sales orders also allows you to track products in stock and on backorder.

 

The evolution of sales order automation

In the “old” days, managing orders involved many hands and mountains of paperwork. The lack of automated order management software meant that individuals from different departments needed to work together to manage inventory through the sales process, maintain accurate shipping and receiving details, and generate purchase and sales orders.

Using emerging technologies and innovation, traditional sales order processing has quickly adopted digital solutions. Consumer-oriented sellers like online retailers are aggressively embracing new techniques to extract specifications directly from purchase orders, eliminating manual input.

Electronic data interchange (EDI) systems are fully automated sales order processing applications. EDI uses optical character recognition to extract the information from paper and quickly – and accurately – transform the information into electronic data. Information is automatically entered into a human-related format and flagged should something require a recheck.

This is a far cry from using CRM solutions to generate quotes, orders, and invoices. CRM tools are unable to create new sales orders. At best, they handle customer information and sales history – as well as work for their intended use of contact management.

 

Benefits of sales order automation for businesses

Using an automated sales order system makes it simple to manage and update orders using a single platform. Moreover, implementing digital solutions increases the capability to respond to orders from all channels. In contrast to traditional sales order processing, automation can offer a wide array of benefits:

#1 Process orders faster

Automation is up to 75% faster compared to using a manual process. Eliminating manual coordination and data entries from the process leads to faster processing. It helps streamline each phase of the process, allowing businesses to pick and ship customer orders more quickly, save on processing costs, and enhance the customer experience.

#2 Maximize productivity and profitability

Using inventory and order management software, businesses can easily automate the entire sales order process. With this software, you can instantly create sales orders, shipping orders, and invoices thereby speeding up your order to cash process.

Another benefit of using automated sales order software is that it automatically counts and tracks your inventory. Additionally, you can set automatic notifications to alert you when your inventory levels are low.

In a nutshell, the faster you process and ship orders, the faster you get paid. Automation is one of the keys to a healthy cash flow.

#3 Improve accuracy and reduce errors

Automation can minimize or eliminate human interference in sales order processing resulting in improved accuracy. Moreover, some sales order processing systems can automatically extract information from purchase orders and generate sales orders without any manual involvement.

These smart systems are integrated with such features that use keyword detection to prioritize urgent or important orders, ultimately resulting in greater customer satisfaction and fewer returns.

#4 Streamline workflow using cloud-based solutions

Whether you’re a single or multichannel sales environment, cloud-based inventory and order management software can streamline workflow. Cloud-based management solutions provide a central location for all departments, regardless of location, to have real-time access to inventory levels and sales orders. Additionally, cloud-based solutions eliminate the risk of data loss.

Undoubtedly, implementing an easy-to-use software solution to automate your sales order process is a brilliant way to boost productivity and cash flow.

Best practices to optimize sales order processing

There are definitive ways to improve your sales order process. To make the optimization process simpler and easier, many businesses opt to outsource to a company specialized in customizing sales order automation. However, if you are considering the process in-house, here are the best practices that you need to know:

#1 Invest in an order management system

As your business grows, workflow becomes more complex. That’s where implementing an order management system helps minimize manual inventory and order processing tasks to increase sales from multiple locations with complex workflows.

Switching to order management systems means having a single unified platform to manage inventory. It automates the entire order-to-cash cycle. A cloud-based system  is accessible anytime from anywhere.

Making the investment to secure an order management system can ensure better profits in the long run as it requires fewer involvement of internal resources. Automating the process with an order management system will facilitate better communication between teams, improve workflow, and enhance the customer experience.

#2 Automate the entire sale order process

Manual processing is vulnerable to human errors that can quickly turn the sales order process into an expensive blunder. Automation eliminates human error and repetitive tasks.

Automation is able to:

  • Generate the sales order when inventory is confirmed.
  • Show a flag or other warning when inventory level is low.
  • Send purchase orders to suppliers for restocking.
  • Send picking requests to appropriate warehouse managers.
  • Generate customer sales orders.
  • Schedule pickups and estimate shipping costs.
  • Communicate with customers to keep them in a loop.

To manage these processes, you will need to know more about inventory management software and order management systems. With the implementation of these two systems, you can handle the sales process, control inventory, and manage supplier requests from a single platform.

#3 Scrutinize your existing process

To optimize your process, you need to address exactly what you want or need to fix. Therefore, your initial step should be mapping out your current sales order process using a flow chart. Get into the details of each step to reveal all the nuances involved in the process. Include details about how long the process takes. Use this audit to easily address potential holes in your process.

These are just a few of the best strategies you can use to streamline your sales order process.

 

Cin7 can help you optimize your sales order process

Automating the sales order process can help establish a workflow that requires less human involvement and minimizes processing time – from initiating a sale through delivery. Automation fosters business growth. So, instead of implementing standard solutions, allow Cin7 to empower you with the flexibility to design a platform to match your business needs – and grow as your business grows.

Cin7 sales order management software makes it easy to manage your entire sales process from anywhere at any time. Offering a cloud-based system helps your team be more efficient and productive. By implementing Cin7 you can create automated workflows to keep your team connected and informed.

Want to learn more? Let a Cin7 representative walk you through the benefits of our order management software. Book a FREE demo today!

How to calculate handling fees on orders

Posted on | by chrisqureshi | Leave a Comment on How to calculate handling fees on orders

When ordering online, customers have many expectations. They want faster delivery, no transit damage, live order status, and most importantly, they expect to receive the correct item.

You’ll have to optimize your operations to meet these expectations, which comes at a cost. Shipping fees cover transportation. But what about the cost of packaging items so they don’t break in transit? What about the cost of safely storing and maintaining inventory in your warehouses?

That’s where handling fees come in. In this article, we’ll break down handling fees, show you how to calculate them, and explain why they’re necessary.

 

What is a handling fee?

A handling fee is an amount charged to a customer on top of the order subtotal and shipping fees. It covers fulfillment expenses such as:

  • Warehouse storage: The amount charged by the warehouse to securely hold your inventory, ensuring there is no quality deterioration.
  • Packaging: This includes boxes, tape, and protective material. It also includes other minor details you may add to make the brand stand out, such as branded tissue paper, gift wrap, stickers, etc.
  • Labor: The time it takes for your warehouse team to fulfill an order.

Helpful tip: Handling fees are charged once per order, not per each product in the order.

Handling charges may differ depending on whether deliveries are domestic or international. International orders might have additional expenses such as insurance or extra packaging to preserve the products throughout a longer journey.

 

How to calculate handling fees

Calculating the handling fee is a straightforward process.

Step 1: Determine the average number of minutes it takes to prepare each item for shipping.

This step will help you determine the time it takes for your employees to prepare a package for shipping. It includes the time needed to pick the ordered items from the warehouse shelves and package them. The more efficiently your warehouse team works, the lower this number will be.

For this example, let’s assume it takes approximately 15 minutes to prepare an order.

Step 2: Divide the result by 60.

Convert the time from minutes to hours. Continuing the example: 15 / 60 = 0.25.

Step 3: Multiply the result by the employee’s hourly rate.

Assuming the hourly rate of your warehouse team is $10: 0.25 x $10 = $2.50.

So for this example, the handling fee for the order is $2.50.

It is best to also include the packaging cost in the handling fee — after all, bubble wrap and boxes expenses. For this example, the packaging material for the order costs $1.50.

Total handling cost = $4 [$2.50 (handling fees) + $1.50 (packaging fees)]

If your handling fees are high compared to competitors or you have had customer complaints, you may need to assess your fulfillment costs and streamline your process.

Shipping costs

Shipping costs include postage, fuel charges, surcharges, and additional fees for certain shipping options like expedited delivery. The cost of shipping depends on package weight and location.

If you outsource your shipping to a carrier (e.g., FedEx or USPS), you should factor in their fee. Compare prices to find the ideal shipping provider.

Setting shipping and handling fees

While setting prices that keep your online business in the black, consider the fact that high shipping and handling fees may be enough to convince customers to abandon their shopping carts.

Some sellers roll the handling fee into the overall price, while others make it a separate line item on the invoice. If customers can see the shipping and handling fees at checkout, that may impact their perception of the product prices.

If you list shipping and handling as a line item, make sure it’s clearly labeled on the invoice. Cin7 inventory management software offers various integrations that allow you to customize your invoices easily and add or remove shipping and handling fees as needed.

 

Benefits of charging handling fees

Here are the advantages of charging handling fees:

#1 Fulfillment cost recovery:

A business cannot sustain itself without covering costs. Let’s better understand this with examples from the service industry. The service industry doesn’t deal with physical products but it’s common to see a “service charge” on services provided. This allows businesses to recuperate administrative, processing, or labor costs. For example, the service fee added to concert tickets covers the costs of offering venue security and mailing the physical tickets to the customer. A service charge added to meals and drinks at food and beverage establishments covers the cost of offering fine glassware and storing and serving wine.

If you don’t recover fulfillment costs with handling fees, you’ll need to compromise on fulfillment quality by using cheaper packaging or making other concessions in quality. In the long run, this will hurt your business’ reputation.

#2  Better pricing breakdown

If you do not charge handling fees, you will need to add the costs of packaging and fulfillment to the final price of each product. Instead, adding the handling fee as a line item separate from the subtotal can help simplify the pricing for single items.

#3 Possibility to upsell and cross-sell products

Handling fees apply to the entire order rather than individual items. This opens up opportunities to sell more and increase your overall profit margin.

Customers love free shipping — it can even be a deal breaker — so you can set up a minimum order amount to make orders eligible for free shipping and handling. This way, if the original order amount was $30 but an order is eligible for free shipping and handling at $40, a customer is more likely to spend an additional $10.

To encourage customers to spend more, use their order history to recommend specific products they might be interested in purchasing. They might buy something else and spend more to get free shipping, making a happy customer and raising your profit margin.

 

Use Cin7 to fulfill your orders with ease

After calculating the shipping and handling fee, you can set up the invoice template via various integrations offered by Cin7 inventory management software, such as QuickBooks Online, which will automatically add the fee to each online sale.

Cin7 has several other features that streamline your order receiving and fulfillment process, such as printing pick lists or batch tracking. Cin7 will help you set your business for multichannel sales and long-term success.

Are you interested in trying out Cin7 for your business? Book a free demo with our experts now.

The future of warehouse management systems

Posted on | by chrisqureshi | Leave a Comment on The future of warehouse management systems

When managing a warehouse with thousands of products and having to determine and organize inventory, monitor delivery dates for incoming stock, and ensure the correct delivery schedule, human error is all but certain to occur.

Thankfully, new technologies have emerged that are designed to specifically address warehouse management issues. With a comprehensive and an efficient warehouse management system, a warehouse operating at optimum levels is within reach.

Defining a warehouse management system

A warehouse management system manages and controls all activities, such as shipping and receiving, picking of goods, and inventory control, within the warehouse. Having such a system increases efficiency across all warehouse operations and inventory management, making sure products are handled until they are delivered or sold once they enter the premises.

What is a warehouse manager responsible for?

Warehouse management operations are complex and require attention to detail to keep business operations running smoothly.

The most common tasks that warehouse managers undertake include but are not limited to:

  • Managing and optimizing warehouse space,
  • Accurately calculating inventory,
  • Scheduling deliveries and purchase orders,
  • Managing fluctuations in product demand,
  • Managing return orders and damaged goods.

There are many more responsibilities that warehouse managers must perform, but, thanks to technology, warehouse management can be more automated and precise.

Future of warehouse management system

1. Warehouse management robots

The warehouse management robot is a classic example of an automated system, and they ease labor-intensive jobs to a great extent. From transporting goods from one panel to another to streamlining the warehouse operations, warehouse management robots seemingly do it all. They save time, energy, and help eliminate human error.

There are various types of warehouse management robots, but ones designed for picking, packing, and storage are:

  • Collaborative robots (“cobots”),
  • Articulated robotic arms.

Note: In fact, cobots also come with sensors that help them smoothly navigate a warehouse.

2. Drones for warehouse management system

We have seen drones being used at large functions such as weddings and corporate events.

Drone technology has improved so much that it can be used as a modern world application in warehouses. Drones are known to complete warehouse activities 50% faster than people can. The drones scan and record each barcode on every panel, capturing their product details, location, and relevant information.

As a result, organizations save a lot of time and effort by properly utilizing drone tech.

3. Smartphones for warehouse management system

Smartphones for warehouse management are also known as mobile warehouse management systems.

We have seen technology progress in the past couple of years, from tracking inventory through paper and pen to using computers (and then laptops). But now getting things done on the go is possible because of smartphones.

We can do all kinds of work with the help of our smartphones, like scanning QR codes, capturing data, tracking inventory and productivity, and installing workforce applications to unburden the working process.

This way, you can always track the most recent information, receive real-time updates, and have the warehouse management operations at your fingertips.

4. Real-time inventory management for warehouse management system

Real-time inventory management is an integral component of a sustainable and robust warehouse management system. With instant access to data on inventory, picking, packing, and shipping, an organization gets a clear picture of incoming and outgoing inventory, damaged goods, returned goods, and customer reviews. As a result, they know what products to order and when to order them, keeping the inventory flow running smoothly.

5. Wearable devices for warehouse management systems

Small, computerized devices fitted on the arms or wrists for easy accessibility is another area of innovation that enhances any warehouse management system.

What these devices lack in size is more than compensated for in robust software, voice recognition, and even Bluetooth applications. They help with the picking and sorting of goods, entering prices, and scanning products.

These wearable devices help with inventory management and increase productivity and efficiency along the way.

6. Smart forklifts and automated vehicles

Smart forklifts and automated vehicles have been a welcome addition to warehouses and organizations. Smart forklifts and automated vehicles have the ability to place the goods on their designated shelves and pick the assigned items from their allotted spaces for deliveries.

Like wearable devices, they have rapidly reduced the need for human resources and manual assistance, thereby ensuring smooth day-to-day warehouse operations.

In summary

Effective warehouse management will only help a business’s bottom line. Higher and more efficient productivity will improve profits.

It is imperative to monitor the latest trends and innovations in warehouse management. Doing the due diligence will help companies to better distribute their workforce and resources and concentrate more on generating revenue.

Get a demo of Cin7 today and see how a partnership with us can help save you money, time, and effort.

Wholesaling 101: Challenges and growth strategies

Posted on | by chrisqureshi | Leave a Comment on Wholesaling 101: Challenges and growth strategies

To avoid running out of stock, retailers need to constantly replenish their inventory. But have you ever wondered where shop owners get their products?

Many retailers get their products from wholesalers — who play the crucial role of bridging the gap between manufacturers and retailers. Thanks to wholesalers, manufacturers don’t need to worry about distributing their products. Instead, retailers are able to get their products from one place.

Wholesalers are an indispensable part of the supply chain, and the global wholesale market is estimated to reach around $64 billion by 2025. So, just how important a wholesaler’s role is in the supply chain? If wholesalers can’t do their job correctly, both manufacturers and consumers suffer. In this article, we’ll go through common issues wholesalers face and practical strategies to overcome those challenges. Let’s dive right in!

 

What is wholesaling?

Wholesaling is a distribution model where businesses buy items in bulk from manufacturers or distributors and sell them to other companies. Wholesalers are able to acquire products cheaply because they only purchase in large quantities. Essentially, wholesalers are the middleman between manufacturers and retailers.

Although wholesalers and retailers are very closely related and perform similar functions, they are different from each other. The difference between wholesalers and retailers can be explained with three terms:

  • Quantity – Wholesalers purchase in large quantities from manufacturers, whereas retailers purchase in small amounts from wholesalers.
  • Purchase intent – Individuals who purchase from wholesalers resell those items at a higher price to their customers. Conversely, individuals who buy from retailers plan to use those items rather than sell them to someone else. Retailers – who purchase from wholesalers – are not consumers; instead, they resell to consumers.
  • Transaction type – Wholesalers are generally business to business sellers (B2B), whereas retailers are usually business to consumer (B2C).

Alibaba is the largest B2B marketplace, and you can find plenty of wholesalers selling their goods to retailers there. In the United States, Orangeshine is a popular online wholesaling marketplace that allows fashion wholesalers to sell products.

 

4 reasons why wholesalers are essential

Reason #1: Wholesalers support manufacturers and retailers

Wholesalers purchase products in bulk from manufacturers. They assemble products from various manufacturers and then sell them to multiple retailers by breaking them down into smaller quantities. This helps distribute products from manufacturers to retailers.

Reason #2: Wholesalers help store products

Manufacturers have limited storage space, and it’s not feasible for them to continue producing items if their storage space is full. Wholesalers solve this problem by purchasing inventory in bulk and storing it in their own warehouses. This helps manufacturers focus more on production and less on worrying about inventory storage.

By taking care of storage on their own, wholesalers facilitate the assembly of products from various manufacturers and safeguard them in one place.

Reason #3: Wholesalers stabilize supply and demand

Since there is time between the manufacturing and consumption of goods, there can be a mismatch between goods demanded and goods supplied. Wholesalers help in striking a balance between demand and supply. They are able to store products when demand is low, and then they can sell products when retailers’ demand rises.

Reason #4: Wholesalers take on risk

Wholesalers are responsible for transporting goods from their warehouses to various retailers. If there’s any damage during transit or storage, wholesalers take full responsibility and cover that loss.

 

Wholesale challenges and how to overcome them

Challenge #1: Cutting out the middleman

Manufacturers and retailers often try to streamline operations and cut out middlemen to increase profit margins. And in this example, the wholesaler is the middleman. By cutting out wholesalers, retailers can save money, and manufacturers can make more money.

Obviously, this is a concern to your existence as a wholesaler. In these situations, your solution might be dropping your prices, which in return would reduce your profit margin. While this might be a viable option for the short term, there will always be another wholesaler who’s willing to offer even lower prices than yours. At that point, you’re simply in a race to the bottom.

Rather than focusing on decreasing your margins, you should focus on increasing the value that you bring to the table. You should ask yourself, “How can I better serve my customers — other than lowering my prices?”

For example, you can help manufacturers take care of logistics and distribution. Bulk purchases can get you a discount from manufacturers, and retailers can benefit by purchasing from you instead of manufacturers.

However, manufacturers are now exploring ways to handle shipping and logistics of their products on their own to increase profit margins. Some retailers are even searching for ways to connect with wholesalers themselves to find a better deal directly.

To offer more value in this case, you should try to leverage your existing distribution network. You might be able to convince manufacturers that they would get better returns by working with you, rather than experimenting and trying to handle logistics on their own. By offering quicker delivery to retailers, you can prove that you provide better value.

As you deal with large amounts of stock, tracking can turn into a nightmare. That’s why it’s essential to invest in a good inventory management system that tracks inventory in real-time and automatically places purchase orders when stock is low. This, too, can be a differentiator.

Challenge #2: Slow shipping

Delays from wholesalers can lead to stockouts for retailers, which can reduce customer loyalty. Modern consumers are accustomed to 1-2 day delivery thanks to Amazon. This has, in turn, also raised the bar for wholesalers. Retailers now expect wholesalers to quickly deliver products so that they can serve their own impatient customers.

The challenge for wholesalers is not just shipping more quickly; in reality, it’s both shipping quicker and making fewer mistakes. Inaccurate delivery affects wholesalers’ reputation and often requires paying a fee.

Accurate delivery can be a great value add-on for savvy wholesalers. If you successfully provide quick and precise delivery, you’ll be able to convince retailers to buy from you.

This is exactly why it’s necessary to invest in good order management software. Barcode scanners can also be implemented to cut down on packing and picking errors, too. You can scan items at multiple stages, which further boosts accuracy and speed of processing.

Optimizing your warehouse helps reduce storage costs and speeds up inventory processing — which in turn, leads to faster shipping.

Challenge #3: Inventory damage

Damage to inventory is also another huge factor in a wholesaler’s performance. The core function of wholesaling lies in storing inventory and distributing it to retailers. Property damage is a serious threat to any wholesale business, and it can lead to huge losses in both value and ability to store products.

There are several ways stock can be damaged — fire, earthquakes, flooding, and more. Transit can also damage items due to heat, or if the ride is too bumpy. Mistakes from workers can lead to damages, too. This is exactly why it’s so important to constantly troubleshoot both equipment and machinery.

It also might be a good idea to get your property insured to help cover losses when natural disasters do occur. Plus, employee-related damages can be reduced by offering adequate training on products and their use.

Lastly, you should make sure to check product quality as soon as you receive them. This way, you’ll be able to detect damage and return products before they become inventory.

Challenge #4: Slow growth

Every business aspires to grow fast and constantly improve sales. Fostering relationships with your partners is a great way to help in accelerating the growth of your wholesaling businesses.

International expansion can also aid in getting more customers. When you focus on building contacts locally and internationally, you can expand your customer base. The COVID pandemic has proven the value of an online presence and international supply chains.

Challenge #5: Fines and penalties

In the early stages of their career, many wholesalers do whatever it takes to get contracts with manufacturers.

While having a contract certainly offers assurance, it can also backfire. If contract guidelines are not correctly adhered to, manufacturers can legally penalize wholesalers. And these penalties have to be paid, whether mistakes occurred accidentally or intentionally.

Therefore, rather than signing a contract hastily, you should first consult a lawyer and get a comprehensive understanding of all the terms and conditions mentioned in the agreement.

A lawyer’s cost when going over contracts is negligible compared to the amount that could be paid in the penalties. Only once you are fully aware of the terms should you proceed with the deal.

If you have any concerns about specific conditions, you should openly discuss and negotiate with your manufacturer. If your manufacturer refuses to negotiate, you can always go to another manufacturer who meets your demands. Remember that a signed contract is the foundation of your relationship with the manufacturer — so it should be carefully considered.

Challenge #6: Theft

Employee theft and shoplifting led to retail sector losses totaling $61.7 billion in 2019. The wholesaling business is not immune to theft, either. Since wholesalers deal with large quantities of goods, theft can compound quickly and lead to significant losses.

Theft can occur in warehouses and transit, so investing in security is necessary. You can install security cameras to monitor goods on your premises regularly. You should also consider arranging for staff to monitor goods when in transit and when unloading inventory.

Challenge #7: Inaccurate data

Wholesalers need to know exact quantities for goods purchased, goods sent to retailers, inventory in stock, and more. Storing information manually in ledgers can lead to human error and cause severe losses, which makes it challenging to get accurate information about current levels.

Real-time data helps when trying to meet the demands of manufacturers and retailers. A manual counting process simply isn’t good enough when dealing with massive numbers. Therefore, the best option is to invest in real-time inventory management solutions.

One solution is Radio Frequency Identification Tags (RFID), but they can cost up to $50 per unit. Still, RFIDs allow you to accurately track inventory without employees having to enter any data. Since wholesalers already operate on thin margins, implementing RFIDs might not make financial sense.

A cloud-based inventory management system does the same job and offers real-time information about inventory without being as expensive. Plus, It also helps create a dashboard and generate reports to get important information at a glance. This allows you to make data-driven decision-making.

 

Grow by focusing on value instead of price

Wholesalers are an important part of supply chains — but they can’t get complacent about upgrading business practices. As retailers explore technological advancements like ecommerce stores, wholesalers must also upgrade their systems and processes to keep up with new challenges.

Ultimately, to survive in the long run, wholesalers need to focus more on delivering value, and less on lowering prices. That’s where Cin7 can help separate savvy wholesalers from their competition. Get in touch with the Cin7 experts to learn more about how we can help you with automation, data collection, and more.