15 January 2023 Discover 8 tips to prevent backorders and ensure an excellent relationship with your customers. Experience. This is the word that currently defines the relationship between consumers and brands, and if there is one situation that can directly influence this relationship, it is backorders, also known as backorders. We live in an increasingly hectic society, and just like companies, people also aim to optimize their time in the best possible way. Technologies have contributed to the formation of a new behavior and consumption model. Therefore, speed, efficiency, and commitment are essential values to develop within your warehouse, thus adapting your company to the new market. Today, could you say that your stock is ready to meet demand and offer the best experience to your customers? How are deliveries made by your suppliers, and how do they contribute to your company’s success and meeting consumer deadlines? Do you have control over the entire order flow in your distribution center? Some of these questions are indications that lead you to “turn on the yellow light,” a warning to rethink, adapt, and replan the actions of the warehouse order flow. And one point that must be considered is backorders. Before presenting tips to overcome this issue, let’s define the term: What are backorders? Backorders refer to products that are currently out of stock but that the seller promises to ship as soon as they become available. Basically, it is defined as a “back order.” In the past, it was simpler to manage this issue because the customer tolerated a small delay in delivery. Today, especially in e-commerce, buyers no longer wait. This means that if your supplier is not quick in shipping the product to your warehouse or if there is a bottleneck in replacing the item and shipping the order, this delay could affect the customer. And then the chances of losing them are high. That’s why it’s so important to have efficient management of both inventory and the processes that occur inside and outside the warehouse. To help you optimize stock levels and prevent backorders, we have put together 8 fundamental tips. Take a look: 1 Have good communication with your suppliers Communication is the soul of business. This statement, generally attributed to the Marketing and Sales sector, can also be applied to all sectors of a company. Communication noise is one of the main agents that cause wear in organizations. Keeping your suppliers aligned with your company’s guidelines, policies, and rules avoids delays in sending products to the distribution center, ensures excellent warehouse supply, and consequently prevents delays in deliveries to end consumers. Some of the benefits of establishing a good relationship with your suppliers are: Understanding challenges and suggesting the best solutions. Carefully monitoring deadlines and order receipt. Flexibility and better planning of delivery times. Avoiding the famous “headaches” and anticipating potential problems that may occur during the flow and supply of stock. Another way to ensure the receipt and maintenance of stock as desired and operate efficiently is to diversify suppliers. Think of hospitals, in a scenario where electricity supplied by hydroelectric plants is interrupted. It is unlikely they will stop functioning, as they rely on other sources, like generators. This strategy can also be applied to your warehouse. Having additional options that meet your stock needs ensures you always have stock to serve your customers quickly and promptly. 2 Discover what your customers want and need What are the best-selling products in your warehouse? Which of these items are sold seasonally? Which are consistent in searches? What sizes, colors, and formats are most in demand? The ways to understand what your customers buy and want are numerous and fundamental. Understanding information about maximum and minimum acquisition periods and quantities, in addition to other specific preferences, is the most efficient way to plan your inventory flow. Today, you can count on high-performance and intelligent systems that track consumer behavior and profiles based on sales history. In addition to understanding the target audience, you can anticipate and prepare inventory for high and low seasons, as well as optimize infrastructure and financial resources. 3 Invest in a good WMS and YMS Investing in high-performance management systems will prevent your employees from performing tasks 100% manually. This way, you can save time and artificial intelligence for specific functions, ensuring a more optimized, functional, and efficient operation. Two of the main software that will help organize inventory and increase performance from the receipt and organization of the distribution center, to picking, assembling, and sending orders are: WMS (Warehouse Management System) The WMS is designed to optimize flows, processes, and warehouse management, in addition to providing real-time support to DC operators and managers. The system has numerous features such as: the ability to control and manage stock – including the best storage and arrangement of products -, monitoring employee performance, generating picking and stock replenishment orders, organizing orders based on delivery priorities and stock availability for each employee, defining the best routes to perform a task, anticipating recognition and notification of issues during the flow, among other functions that will be crucial to avoid backorders. YMS (Yard Management System) Another system used to prevent order delays is YMS, a software that helps plan and manage yard flows. With it, you can manage, schedule, and organize deliveries, pickups, and dock availability, allowing for safe loading and unloading, helping to perform each employee’s work in the best way. With the system, you can integrate communication between suppliers and carriers, improve yard planning, reduce labor and infrastructure costs, optimize and digitize processes, as well as analyze and monitor process performance. 4 Track operational data in real-time When choosing management systems that optimize processes from the yard to inventory management and intralogistics processes, ensure they offer reliable real-time operational data. Simultaneously monitoring what happens along the order path is essential to verify changes and potential errors throughout the flow, to prevent backorders. 5 Demand forecasting Demand forecasting involves predicting the future of stock in specific scenarios. Excess stock, for example, equates to inactive money and, consequently, poor sales demand. From another perspective, high demand can be synonymous with empty stock, without sought-after and sold products. How to solve this situation? With excellent planning. Therefore, it is necessary to seek balance to maintain stock corresponding to order demand in each period of the year. Creating alerts, mapping product seasonality, and high and low sales seasons through historical data are fundamental actions to keep stock always adequate and well-planned, avoiding financial losses and also the occurrence of backorders. 6 Provide adequate training to your team An aligned team is an organized and efficient team. Investing in the necessary and adequate training for each sector and function ensures a cohesive and smooth flow. Just as trucks arrive at the dock, they need to receive instructions and as much information as possible, so employees need to know how the stock works: where to receive it, where to take it, when to replenish it, etc. Therefore, offer your team a good working infrastructure, a policy manual, and operational rules. Teach employees how to use management software and how they should behave in case of notification. Integrating your team contributes to a fast process, and the result is, without a doubt, customer loyalty. 7 Keep all order channels updated With the advent of the Internet and the democratization of new technologies, it is possible to make a purchase through different channels. On one hand, this situation has allowed companies to reach even more people and increase sales volume. On the other hand, there are companies that still feel lost when it comes to managing multiple channels almost simultaneously. To ensure that all channels operate according to inventory planning, it is important to invest in or keep management systems always updated and integrated. Whether it’s e-commerce, sales through social networks, marketplaces, retail, or telesales, all channels must be connected and have centralized information. It is also worth having OMS software, responsible for managing the order from start to finish. The OMS integrates with WMS, ERP, and YMS and offers a holistic view to meet requests. With this, you can immediately monitor your operations, stock levels, and order fulfillment speed. 8 Have an emergency plan One of the biggest and most recent examples defining the importance of an emergency plan was the Covid-19 pandemic, where we faced a scenario where many companies were unable to go through a moment of crisis. This situation alerted companies of different sizes and niches to the importance of developing an emergency plan, effectively planned in a set of strategies and attitudes to adopt in the face of unforeseen situations, involving fires, lack of basic resources like energy and water, work accidents, natural disasters, among others that can directly affect your stock and cause delays in order fulfillment. Therefore, it is essential to develop a plan that aligns with your reality and is fully applicable. Is it possible to reduce costs by operating with backorders? You may have already seen or read somewhere that backorders can be managed to reduce storage costs. However, the number of companies applying this strategy is minimal and is still supported by a specific logistics plan and an extremely efficient chain. How to Avoid Backorders and Optimize Inventory Levels Deagor WMS per ecommerce può aiutarti!