At TwinEngines, we optimize manufacturing value chains.
Sometimes that is your supply chain or value added activities to
fulfill orders from sales, through product configuration,
manufacturing and logistics. Sometimes, the value chain
includes accepting orders in your eCommerce website, picking and
fulfilling the order, and managing shipments and payments.
So, let's talk about presenting products that are available
for purchase online 24/7 in the eCommerce website - the value-added
activities including inventory tracking, product marketing and
sales order processing. Presumably, inventory is maintained
somewhere. For smaller businesses, inventory tracking may be
in a Microsoft Excel spreadsheet; For mid-market companies
inventory is found in a back-office system, ERP, financial or
inventory systems. Each individual item is represented in
these systems, with a quantity-in stock data attribute. There
are also other attribues, like Reserved Minimum Quantity and
Reorder Quantity.
The items (or Skus) in the back-office system are usually
grouped together at the product level for display on the
website. This allows an online shopper to search for a
product quickly, and then select the particular item based on size,
color, brand, etc. For example, you are shopping at the Mercier
Orchards online apple store for blackberry jam. You find the
jams product, and then you then select the flavor and the size of
the jar. For the online shopper there is the one jams product
presented in the Jams, Jellies, and Preserves category in the
product catalog. In the ERP system however, there is a jam
item for every combination of flavor and jar size. So it is
important to manage at the item level back-office systems, and
ideal to manage at the product level on the website.
Let's just say the manufacturing business has an ERP system like
Microsoft Dynamics, where items, inventory and sales orders are all
managed. When there are many products online and even more
items in the ERP system, it makes a lot of sense to integrate the
eCommerce website with the ERP system's sales order
processing and item detail modules. With integration,
each web order is automatically sent to the ERP system. When
the web orders are fulfilled, inventory is automtatically depleted,
and inventory counts are transmitted to the website at some
frequency (perhaps daily or hourly). We use eConnect for
Microsoft Dynamics, and similar products for other financial and
ERP systems.
So now the question is, what do you do when you run out of an
item in inventory? Without getting into backorders, here are
the options:
1. Show the product and allow the shopper to select the item.
2. Show the product, but don't allow the shopper to see any items
that are out of stock.
3. Show the product and item, but don't allow the shopper to select
the item.
I don't recommend option 1, unless you are 100% sure you can
fulfill the order meeting your guarantees to your shoppers. When to
capture the charge is a topic for another day. Let's just
assume you send an order confirmtation email to the shopper and
authorize a hold on the shopper's credit card for the total
purchase amount. When you realize you cannot fulfill the
order, you have to tell that shopper and void the
authorization. Chances are you lose that customer
forever.
The second option is the other extreme I don't recommend.
If a shopper doesn't see that Mercier Orchards carries his favorite
blackberry jam at all, chances are he is lost forever. The
only time this option may be satisfactory, is when you are closing
a product line and when it's gone, it's gone for good.
I think the best option is displaying the item, but not
allowing a shopper to add it to the eCommerce shopping cart.
Even better, the shopper sees a message indicating the item is
currently out of stock with a phone number/email address to get
more information. The eBusiness gets a call from the shopper,
and has the opportunity to cross-sell or get the customer's contact
information to alert them when the item is back in stock.
Integrating the eCommerce website to the back-office systems is
a key piece to optimizing the value chain for a manufacturing
eBusiness. Deciding how to display products and availablity
for online purchase 24/7 is also a key business issue. When
presenting products online, there is a lot of prepatory work
involved to group individual items (Skus) into product
groups. A product image, description and name has to be
created for the eCommerce website, and managed with the website
content management system.