Overcoming the top three inventory management failures in ecommerce fulfilment

There are many things that can make or break an e-commerce business, and while inventory management is not top of the list is many people’s minds, it is both one of the easiest to fix and one of the most pervasive failures, especially in warehousing. Effective inventory management allows an ecommerce business to:


  • Identify which, and how much, of each inventory item to order
  • Establish the right time to place orders
  • Operate smoothly, recognising challenges in advance
  • Satisfy a customer base.


Given that 95% of companies recognise that they were affected by supply chain disruptions in 2021 and that 2022 has already given many organisations headaches in the areas of supply chain delays, difficulties in order fulfilment and logistics failures, optimising inventory processes can be a relatively simple route to success.


1 – Failure to master demand volatility


Planning inventory often feels like juggling blindfolded. There are so many factors to include and for ecommerce businesses they can be unpredictable. Ecommerce processes are interrelated and inventory planning affects and is affected by fulfilment, return processes and warehousing operations as well as being affected by supplier issues, weather, international incidents like wars and pandemics and local conditions such as roadworks or school inset days, which can affect last mile logistics and personnel availability respectively. On top of that, each of these factors may involve customers, suppliers and delivery partners – all aspects of e-commerce that the business as the centre cannot control.

ecommerce fulfilment


However, being able to establish when to accurately increase or decrease orders from suppliers, using data to create informed decisions and mining historical data to discover patterns are all ways to help you master volatile demand. Software can help and there are many effective warehouse management software systems on offer. The problem comes when companies simply don’t follow to their data – this is a very common blind spot which results from the organisation believing that its growth should be driven by one product, brand or set of products or brands when the data shows that revenue is being created by others. To increase profitability, an e-commerce retailer needs to focus on what the data says is creating growth and to segment inventory so most effort goes into the profitable stock lines. Without mastery of this potentially volatile area, the company’s bottom line is affected and that leads to lack of balance, including overstocking and bloating warehouse processes which can lead to writing off inventory at a later date.


2 – Failure to maintain good supplier relationships


It’s not always recognised that ineffective inventory management leads to distrust and disappointment along the supply chain. This can lead to organisations being unpopular with suppliers and being pushed to the back when orders are being sent out. Negative approaches to supplier communications include:


  • Sending demanding or begging communications asking for stock or rapid delivery rather than ordering the right amount of stock at the optimum time
  • Complaining about deliveries/stock when the supplier isn’t responsible for the issues
  • Failing to pay, or paying late because processes aren’t in place for adequate payment.


Supplier management software is one route to solving these kind of issues. Building personal relationships is another crucial component of having the kind of supplier relationships that encourage your supply chain partners to put you at the top of the list instead of the bottom. In start-ups and SMEs these relationships are actually easier to build and maintain, whilst in larger organisations there can be departmental divisions (eg procurement versus warehousing) that mean communications come from one place whilst demand is driven from another. Professional working relationships are essential, but moving from formality to engagement requires three components


Clear communication channels – do you need both internal and external communication channels and if so, should the same information be given to both? How do you share artefacts like documents – is that transparent to all parties in the communication or are some parts of the communication process using different systems and documentation to others?


No finger pointing – there is no doubt that both supply chains and logistics contain the possibility for many bottlenecks and blockages. It’s a natural response to try and pass the blame to others when something doesn’t arrive, whether that’s to the warehouse or to a customer’s front door, but applying a balanced view when such problems arise, creates the opportunities for better communications. Instead of blaming a supplier/logistics partner for a mess, an organisation that looks critically at its own communication style can learn a great deal and improve its standing with suppliers and customers.


Accept your place in the queue – this is a mistake that’s most commonly made by start-ups and very small organisations where each order feels like a make or break decision. Sadly, that isn’t true and any supplier is likely to be juggling the demands of many customers.  Where a start-up’s order is not that big or that urgent, it isn’t going to be be top priority, and demanding that it should be treated as such is what creates bad relationships and the reputation for being a ‘difficult customer’.  Just as irate customers can become unjustifiably incensed if their order doesn’t arrive on the dot, so companies can treat their suppliers’ fulfilment services like genies in bottles rather than hard-pressed systems doing their best for all concerned.


3 – Failure to invest in warehouse process automation


Over reliance on manual systems can increase the possibility of inventory errors. Knowing when to automate processes is the hallmark of many successful warehouse operations, and in turn, the basis of ecommerce success. Because any business’s warehouse is the pivot point of e-commerce fulfilment, excellent warehouse management is vital because it:


  • Keeps inventory up-to-date and current
  • Reduces errors in fulfilment
  • Smoothes out demand processes
  • Ensures the right personnel are at the right place at the right time


What is process automation? It’s a number of ways to streamline systems by reducing human involvement so that errors are reduced and task times shortened, which in turn minimises cost. Some examples: leveraging data helps with both inventory management and logistics, software can accurately identify SKU items and machinery can speed task completion. Automation can be applied to gathering data, managing repetitive tasks, linking up data with activities and feeding back on new processes to find out if they are fully optimised and efficient. In warehouse terms this might include personnel using smart phones to communicate, ensuring accurate data is shared through systems and investing in machinery for pick and pack that speeds up the process of order fulfilment.




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