How to sell nothing?
Corporations are increasingly focusing on the systems that help them manage their demand, their sales and ensure every connect converts to a sale and every sale is fulfilled.
As a supply chain consultant I discuss optimal processes and practices with companies. In meetings and solutions we propose lean inventory, order on demand and efficiency of process. As a consumer I go to multiple stores, e-stores looking for what I want, at the best possible cost and with the fastest in hand time.
How do various companies marry the conflicting needs of "right" inventory levels with the real time fulfillment demands of an increasing finicky customer? In a limiting case, how do I keep nothing on stock but still sell everything and get it to customers before they look elsewhere? (Of course, "nothing in stock" is hyperbole for optimal inventory levels)
This is akin to the revenue v/s margin conflict that a lot of corporations grapple with. How do we convert this conflict to a revenue and margin opportunity?
A likely solution for a retailer with access to multiple order taking and order fulfillment channels is:
- Identify the core (and dedicated) fulfillment channel that takes care of 90% of realistic planned demand.
- Identify overflow (and non-dedicated) fulfillment channels that can fulfill the remaining 10% of the realistic planned demand plus an overage of 20+%
- When the sales start coming in, create real time triggers that alert you when the core fulfillment channel has nothing left. Sales continue against your overflow channels.
- Based on the alerts, either stop selling the items, or raise procurement requests for further inventory, depending on your suppliers' abilities.
For instance, for sales flowing in through the call center, the call center fulfillment center is the dedicated channel. The overflow goes to the stores. The overflow from the stores go to the fulfillment center. And whenever the buyers see that sales are "overflowing" they can raise POs if they think that the overflow fulfillment channels may not have the inventory to physically fulfill the orders.
So, what could be other solutions to this challenge? How can I sell "nothing"?
