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What is a perpetual inventory system?

By: Aaron Rubin, Founder & CEO of ShipHero

Physical inventory counts are an extreme time sink. Employees have to walk around and manually count inventory levels to double-check inventory records. Not only are these physical counts a time-consuming way to track inventory, but they can also be inaccurate due to human error.

Periodic inventory systems that use this manual inventory management system are slowly phasing out to be replaced by more up-to-date processes that are less prone to error. Modern inventory systems save time for employees, so they don't have to count items in storage bins when they have more vital work to do.

A system that has gained popularity as technology has advanced is called perpetual inventory accounting. Perpetual systems are technology-driven solutions that allow for your different software platforms to share information with each other. Companies that take advantage of this new, interconnected system can benefit from things like real-time data, point of sale (POS) integration, more accurate inventory balances, and significant amounts of saved time for employees.

Perpetual inventory systems work by tracking inventory directly through your point of sale software and inventory management software. By leveraging things such as barcode scanners and transaction data, the system automatically tracks stock and inventory items as they are acquired in the warehouse or sold. You can still hold inventory counts, but only to account for potential damages to inventory or theft, not to track your entire inventory system.

Advantages of a perpetual inventory system

There are a handful of excellent advantages to a perpetual system. Due to its automatic nature, as soon as the merchandise is sold or acquired, your COGS account (Cost of Goods Sold) is immediately updated. Through real-time database updates, accounts payable and accounts receivable can instantly and accurately report and analyze inventory and sale data. Perpetual systems also leave a paper trail for all received shipments and purchases, helping with audits and fraud prevention.

Manual counting of inventory numbers isn't used in perpetual systems to the same extent as other systems. Implementing a perpetual sale system that automatically sends inventory data to a central database saves your employees time and your company money. Automatic systems also cut out human error, saving you money on poorly managed and miscounted inventory.

Disadvantages of a perpetual inventory system

The barrier to entry for perpetual inventory systems is their initial cost. Purchasing all the needed items such as the perpetual inventory software, RFID or barcode scanners, and other additional hardware has a high average cost for companies.

Costs for training are also a consideration when considering the initial investment into a new perpetual system. While you can recoup initial costs in the form of wage savings and inventory management savings, the initial investment may still be too much to justify depending on your stock turnover and inventory.

What is the FIFO perpetual inventory method?

First-in, first-out (FIFO) processes act as if the first item you received will be the first item sold. In FIFO perpetual methods, the FIFO standards are assumed within the software, indicating that the most recent costs of purchased merchandise are the first to be charged against revenue. Perpetual FIFO is extremely common and often reflects the proper flow of goods through a company.

What is the LIFO perpetual inventory method?

Last-in, first-out (LIFO) processes assume that the last unit you receive will be the first unit that you sell. Opposite the FIFO method, the last cost of merchandise is what you charge against your company's revenue. Often this method is used for specific accounting purposes, such as tax breaks.

How does a perpetual inventory system differ from a periodic system?

Unlike the automatically driven perpetual systems, periodic systems rely on occasional physical inventory counts to keep track of stock and COGS. Periodic systems require significantly more manual involvement in inventory tracking and data updates. There are a few key advantages to consider for automatic perpetual systems:

Keep up with data in real-time

Perpetual systems use technology to update inventory data immediately as items are sold and transferred. Instant inventory updates mean that your teams can perform up-to-date analytics at any time while having faith that their inventory numbers are close to accurate. Real-time updates also empower your team to create more consistent, accurate reporting to keep an eye on product and sales performance.

Leave a paper trail

Due to tracking all inventory movements through digital software, you leave a reliable trail of data. Paper trails allow for easier audit compliance, fraud detection, and more accurate insights. Tracking can also help you get an overall view of your supply chain, helping you find areas where you can improve your practices.

Lower inventory management costs

Perpetual systems are a considerable investment upfront; however, they will lead to lower inventory management costs over time. Manual systems such as inventory counting are needed significantly less often or not at all. Real-time analytics means that you can prevent things like holding costs as well, saving you money.

Easily investigate stock level discrepancies

Since perpetual systems are constantly updating, you can more quickly see discrepancies in stock data. You can detect things like theft, damaged goods, and fraud through missing stock and inventory. Finding stock discrepancies faster can help give insight into issues that may become much larger if left unhandled, such as store security issues.

Leverage demand forecasting to grow your business

Keeping accurate and up-to-date stock information helps you forecast demand. Through reliable analytics and historically tracked inventory data, you can detect trends in your demand and make changes to your purchasing practices accordingly. Preventing running out of inventory during high-demand seasons like the holidays can help your company's profits significantly.

When to use a perpetual inventory system

Not all companies require a fully-fledged perpetual inventory system, especially if they have small amounts of stock with little variety. There are specific places in which perpetual inventory systems do shine, including businesses with high inventory turnover or quickly growing companies.

Your business is growing rapidly

When your business is growing very quickly, implementing a perpetual inventory system can help track your new and growing stock. By implementing a perpetual system as things start growing for your company, you can keep a paper trail to track and project continued growth. Deciding to add a perpetual system set up to your company sooner rather than later can also mean saving future training and rollover costs.

You have dozens of SKUs

Dozens and dozens of SKUs are hard to track, especially when you have to go through and correctly note them manually. More SKUs mean more potential for human error and longer hours to try and track inventory data. Perpetual systems don't struggle no matter how many SKUs you have, making them a great option if you have a large inventory variety. For example, grocery stores almost always use perpetual systems to track all of their various products.

Inventory turnover is high

Slow, manual counts don't often cut it for analytics and tracking when your company has exceptionally high inventory turnover. It is harder to track trends and demand when your inventory moves quickly, so a real-time system is crucial for accurate data collection.

When stock is turning over fast in your company, it also can lead to lost inventory. A perpetual system helps keep precise data tracking and prevents things like theft.

Formulas in perpetual inventory

There are a few crucial formulas used within perpetual inventory systems. Cost of goods sold (COGS) and gross profit formulas help make sense of your data and give your company data for future business decisions.

The Cost of Goods Sold (COGS)

You can calculate the cost of goods sold (COGS) first by adding your beginning purchases and inventory, which is the cost of goods available for sale. Next, you will find the ending inventory and subtract that from your initial numbers. These numbers are tracked easily and automatically in a perpetual inventory, which means you can pull a continually updated COGS report. Beginning Inventory + Purchases - Ending inventory = COGS

Gross profit

The gross profit is your actual profits after subtracting how much your operating expenses cost you during a period. To find this number, all you have to do is subtract your COGS from your total revenue.Revenue - COGS = Gross Profit

Conclusion

Perpetual inventory systems can be an investment to implement, but they have many strengths over periodic systems. While periodic inventory systems can be suitable for companies with lower turnover or less product variety, perpetual inventory systems can provide significant advantages to companies that make many sales or have a broader range of product lines.

Manual tracking used in period systems takes time and is prone to human error. Perpetual systems track your inventory data in real-time, allowing your team to make faster reports, more accurate analytics, and save time in manual counting by leveraging technology. While the initial investment may seem daunting, the long-term profits seen from saved money in areas like inventory management make perpetual systems an excellent move for many growing companies.

Schedule a meeting today with our experts to learn more about our WMS software built for ecommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO

‍ShipHero

‍About the author:  Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

By: Aaron Rubin, Founder & CEO of ShipHero

‍Ecommerce websites are constantly shifting to keep up with buyer expectations. With competition from gigantic online stores such as Amazon, keeping up with ecommerce giants can be tricky. Luckily, there are a few key ecommerce trends that online retailers can look to in order to keep up with the wants of online shoppers.

With the rise of the ecommerce industry, more customers than ever are making purchases online. While brick-and-mortar retailers aren’t dead yet, many of them are seeing their customers flock to online stores. With a rise in ecommerce sales comes ecommerce trends.

Here are the 15 trends to keep in mind to help grow your ecommerce business.

AI helps improve ad campaigns and messaging

Top ecommerce stores are implementing AI and automation to help boost their ad campaigns and messaging across marketing initiatives and social media platforms. Through machine learning and artificial intelligence technology, companies have been able to make hyper-personalized advertising allowing for tailored messaging to customers. Specialized messages can include content specifically targeted at the user's interests or product recommendations that fit their previous browsing history.

On top of being able to personalize messaging to specific users, AI can track the performance of these campaigns and let marketing leads know how each initiative is performing. By carefully examining you and your competitor's marketing success, automation can pick out trends from the complex and time-consuming data, something hard for a human to discover manually.

The customer experience must be personalized

While AI is helping us customize our marketing experience for customers, we have to tailor the process from start to finish. For example, when searching through an online marketplace, users are more likely to purchase items they are interested in if they find them through sidebar suggestions based on their browsing habits throughout your site. Personalized product recommendations can help prevent cart abandoners and can help you sell more inventory too!

2-day shipping becomes the norm

Retail giants like Amazon have used their significant logistics network to ensure that 2-day shipping has become the new normal. Longer shipping times, though sometimes tolerated, are not going to be seen as the usual farther into the future. Finding shipping and logistics solutions to keep up with this 2-day expectation is difficult, but it is, unfortunately, a strong trend that will separate some sellers from their competitors. For ecommerce merchants that want to leverage 2-day shipping, consider working with a 3PL.

But customers will be hungry for 1-day and same-day shipping

Big ecommerce sites have made it possible for 1-day and same-day shipping, especially during the boom in online shopping during COVID-19. Customers can easily have food, snacks, household goods, or other products delivered to their homes overnight or even on the same day.

While many smaller companies have trouble keeping up with this high bar, many people have found the convenience of it even better than visiting a brick-and-mortar store to grab an item.

Chatbots improve shopping experiences

Chatbots, often powered by automation, can help guide customers through their shopping experience. By answering frequently asked questions or directing the customer to their desired page, chatbots can help users through any confusion or concerns without taxing your customer support staff. The answers are instant, customizable depending on your preference, and work on multiple devices.

Headless commerce drives innovation

Headless commerce, where the frontend and backend of your website are separated, can help you drive innovation on your site. The flexibility of being able to customize, brand, and play with your customer-facing front end while not harming the utilities within your backend lets companies make more considerable changes without stress or danger.

Separating your front and backend also helps improve customer experience by enhancing the website functionality and speed.

Subscriptions keep customers coming back

Subscriptions create a commitment, whether with SaaS in b2b, or monthly product boxes in b2c. Subscription models keep customers interested in your products and brand.

Even when your subscriptions aren't your main product line, they can help buyers get connected and familiar with your messaging and quality, making them more likely to open their wallets when looking at your other product lines. Subscriptions are also a regular reminder that your business exists, keeping you at the forefront of a customer's mind.

Customers want sustainability

With millennials taking up much of the ecommerce buying power, it is crucial to tap into things that often sway them. A Nielsen report has shown that 73% of millennials would pay more for sustainable products. Some examples of industries that benefit from this trend include upcycled products, consignment, and local p2p transactions. Tapping into these markets will require new initiatives and green product lines to appeal to these wants.

Mobile shopping is here to stay

Mobile devices have become more and more prominently used when shopping online, so much so that Insider Intelligence stated that mobile commerce would reach $488.0 billion (44% of ecommerce) by 2024. One-click shopping and easily accessible social commerce ads on apps have driven mobile shopping. In order to tap into the mCommerce market, it will be essential to make sure your website has mobile-friendly shopping or a mobile app.

Gen Z becomes more of a focus

The oldest of the Gen Z era are now in their early 20s, meaning they are quickly becoming more common customers within the ecommerce world. For a generation that has always known the conveniences of ecommerce and online ordering, a smooth customer experience will be vital. Gen Z is more partial to social commerce, meaning Facebook, Pinterest, TikTok, and Instagram are key places to garner their interest.

User-generated content remains key

Influencers have grown in popularity within marketing, especially when selling products through social media sites. Having a trusted celebrity or influencer tout your product can immediately get thousands of eyes on your business and markets much more directly to a group of consumers than SEO or content marketing.

TikTok and Instagram shopping become major sales channels

Both TikTok and Instagram are rising as major sales channels, especially with Gen Z starting to become a larger and larger part of the ecommerce market. Pew Research Center saw that 48% of United States adults between 18-29 years old use TikTok, a number that falls dramatically to 20% in the 30-49 age range. When marketing to younger consumers, both TikTok and Instagram will be a vital piece of the puzzle.

With Instagram and TikTok investing significantly in commerce capabilities, ordering directly from these apps is going to become much easier.

Brick-and-mortar retailers aren't dead

Score saw that 55% of those who do online shopping prefer to buy from stores with a physical location rather than an online-only shop. Being able to do returns, try on clothes in the store, or see products in person is still valuable to consumers. You shouldn't overlook the advantages of a brick-and-mortar location, especially in specific sectors such as apparel.

Buy Now Pay Later gains more traction

Buy Now Pay Later has become a wildly popular payment method for consumers. Services like Affirm, Sezzle, and Klarna make it easy for customers to make purchases on installment payments. Shopify has implemented the option natively with Shop Pay.

Apple Pay is launching a similar service. Having these installment-like payment options helps those without credit cards finance payments and creates accessibility for many shoppers. Having flexibility in payment systems also means that customers can make big-ticket item purchases that they may not have entertained otherwise.

The checkout experience must be easy and simple

Many platforms such as Shopify have made the checkout experience extremely smooth. Ensuring an easy and painless checkout can prevent cart abandonment and improve the crucial last parts of the customer experience. Poor checkout experiences are also more common on mobile devices, so make sure this process is simple across all of your platforms!

How ShipHero grows ecommerce businesses

Are you worried about keeping up with these ecommerce trends? ShipHero can help. Our software connects with your warehouse, outsourced shipping processes, and 3PLs to help you deliver your ecommerce. We help you elevate your experience through:

Fast shipping speeds

ShipHero offers standard, expedited, and overnight shipping so that you can keep up with top ecommerce retailers like Amazon and Walmart. We facilitate fast shipping without the hassle and frustration. ShipHero has no hidden fees, and we help you find the cheapest overnight options to save money.

Multi-channel fulfillment

Our software can help you handle your order fulfillment through a nationwide network of warehouses. By creating distributing processes throughout these warehouses, delivery delays are minimized, and orders arrive at your customers quicker. Multi-channel fulfillment allows us to offer overnight and 2-day shipping without the worry.

Easy returns management

Returns happen. When managed correctly, they can help you grow your sales and create repeat customers. Through built-in self-service options for your customers and easy label printing through connected shipping accounts, returns become simple for customers.

Conclusion

Keeping up with ecommerce trends is crucial to staying on top of the competition. From AI and chatbots to a heavier social commerce presence, adapting to the new normals can help you stay relevant and bring in new audiences. To give yourself an edge, implement technology and software such as ShipHero to help facilitate faster shipping and smoother fulfillment processes.

Schedule a meeting today with our experts to learn more about our WMS software built for ecommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO

‍ShipHero

‍About the author:  Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

By: Aaron Rubin, Founder & CEO at ShipHeroWhile seeing into the future of your supply chain may be impossible, predicting what may happen can be estimated by looking at the past. When a company wants to know how their finances, supply chain, and marketing may perform in the future, they often examine how things went in previous years.Historical business data can help you successfully estimate things like seasonal trends and product success. One of the processes for looking at this data in the supply chain world is called demand forecasting.

What is demand forecasting?

Demand forecasting is the practice of looking at a company's historical data for things such as finances, marketing, and supply to understand likely future trends. Demand forecasting methods end up within one of three categories, either qualitative forecasting, time-series analysis, or casual models. Forecasting can include looking at different lengths of time, using statistical methods, or looking at external influences on your future business.

Importance of demand forecasting for ecommerce

Businesses use forecasting in many ways to help gain an advantage over the competition. From inventory and supply chain management to cash flow and spend, there are many areas where you can use demand forecasting within your planning.

Preparing your budget

When preparing your budget, demand forecasting helps you get a glimpse into your company's needs during an upcoming season or year. By knowing positive (and negative) trends, your business is better able to reduce risk and plan through data-backed decision-making. Whether it be inventory needs, staffing, or cash flow, you will be able to estimate your budget more accurately when forecasting.For example, in the ecommerce industry, the holiday shopping season is one of the busiest times of the year. Ecommerce merchants use past holiday shopping data to forecast how much inventory they’ll need for the holiday season.

Planning and scheduling production

One area that demand forecasting is extremely useful for is production management. Through analysis of your past seasonal demand, your company can better prepare for needed production before running out. Ramping up production only when needed means customers get items when they want them, and you don't have to put in guesswork and waste money by overproducing.

Storing inventory

Warehouse stock needs can be hard to predict, which is why demand forecasting for inventory can help identify your future needs. Looking at inventory needs of the past and rising or falling demand trends, you can better gauge how much stock you will need throughout the year. Like production, having enough to continue providing services and goods is necessary, while having too much inventory can cost you unnecessary storage fees.

Developing a pricing strategy

External and internal forecasting are two of the many ways to garner insight into the market and potential areas of business growth. Looking at the competition and trends in the historical market, you can better price your items advantageously in relation to rising and falling trends.

The types of demand forecasting

There are different types of demand forecasting methods, all using unique forecasting techniques and statistical methods to examine potential future demand. Understanding which demand forecasting you should use is vital to gauge possible trends and future customer demand accurately.

Passive demand forecasting

Passive forecasting is the most straightforward when looking for a basic, non-nuanced prediction. In this type of forecasting, you look at historical data from your sales in the past to estimate future sales. Unfortunately, this model doesn't take into account variables, such as retailers that will have seasonal fluctuations. Passive forecasting models often can only be accurately used for analytics with businesses that are highly steady in sales and have robust historical sales data.

Active demand forecasting

The active demand model is most commonly used for businesses that are either very new or have aggressive growth within their marketing campaigns. Because your company may not have the past sales data to have accurate demand forecasts, active forecasting often looks at other resources such as market research, economic data, and supply chain management data.

Short-term projections

In the short-term forecast method, insights such as seasonal demand, cyclical patterns, and other similar anomalies are included in the trend projection, making this a great way to examine your inventory management and supply chain. You can also use short-term forecasts to think about new products and their performance. The time span that the short-term method looks at is from three to 12 months.

Long-term projections

Compared to short-term projections, long-term forecasting looks quite a bit further out from one to four years into the future. Rather than thinking about recent data sets and sales trends, future projections look at long-term demand, potential business decisions, business growth planning, and marketing planning.

External macro forecasting

When examining your company’s goals, sometimes you will want to look at how outside forces may affect your forecast accuracy and sales channels. Whether you look at competitor and market trends or other outside factors, external macro forecasting can help you look at some complex factors that may affect your goals. Using external forecasting is excellent if you have concerns about your supply chain, are thinking about expansion, or are concerned about risk mitigation.

Internal business forecasting

If you are looking to create accurate forecasts on your internal operations, such as your sales, a specific product, or a manufacturing division, internal business forecasting is ideal. Internal forecasting is excellent if you need an expert opinion on how things such as your warehouse distribution, purchases, cash flow, or profit margins are trending.

How your ecommerce business benefits from demand forecasting

Examining your current trends and predicting future possibilities makes demand forecasting important for any company. Even just using the most straightforward methods can help a company of any size gain insight into how to follow their goals and which goals to set.

Reveal seasonal trends

Using methods such as short-term forecasting, you can closely examine seasonal trends around your products. By predicting and understanding your customer demand spikes, you can better know how to handle your supply chain and inventory needs. Knowing your seasonal trends can also reveal markets and niches you have yet to tap into during your slower months.

Rationalize your cash flow

Examining your past cash flow and comparing it to future predictions can help you better understand where your cash flow is going and how much you will have to invest in the future. Having a better understanding of your potential financial health in the future can help you make crucial decisions and goals.

Plan your supply chain

Looking at demand trends, especially seasonal spikes, can help you better plan your supply chain needs. Rather than running out of inventory during your peak seasons, you can invest in more from your suppliers before these higher-demand periods. Knowing when your lulls are in demand for certain products, you can better plan your marketing strategy and only stock as much inventory as is needed during these periods.

Understand how outside factors will influence your sales

External macro forecasting gives you an in-depth look at how outside factors can influence your product performance, sales, marketing, and supply chain. As you understand how different risks may harm your suppliers, products, or business, you can appropriately prepare for changes in external markets to better protect your company. Looking at outside influences can also help your company become more flexible and robust to react to these changes and take advantage of them quicker.

Prepare for the future

Predictions are a great way to gather data about potential future trends for your company. From threats that you need to prepare for to new markets you should break into, forecasts can help your company make big moves for the future. Whether changing your marketing strategies or reinforcing your supply chain, different forecasts will help you make decisions across your business to bring future success.

Make demand forecasting easy with ShipHero

ShipHero makes demand forecasting simple, helping you easily gain insight into fulfillment operations, products, shipments, and returns. Our data reporting helps you see everything going on in your warehouse operations to help you make educated and data-backed decisions.We facilitate day-to-day actionable reporting to help keep your team organized while streamlining the process, actionable shipping reporting, and individual team member stats. ShipHero tracks:

• How quickly products are selling
• Which items are slow-moving
• How many days of inventory you have until you are expected to run out (based on SKU velocity)
• Where your customers are and where you're shipping from (with the ability to compare current and ideal distribution)
• Profitability by order, how much you are spending on shipping, and the average order amount that customers are spending at your store
• Daily order status and performance
• How your current demand compares to previous time periods
• How your sales are affected by different seasons and months
• A breakdown of transit times and average cart value by shipping method (to see which shipping methods are most attractive to your customers)
• How much your customers are spending by shipping method (to help you test different pricing strategies)
• How much inventory you were holding at any ShipHero fulfillment centers at any point in the past
• Your best selling items and the percentage of your business they account for (and how they are performing compared to other periods)
• How many orders are held up, where they are located, and which items are driving a backlog (so you can prioritize the replenishment of stock that are affecting sales)

Conclusion

Demand forecasting and data analysis help your company make big decisions to give you an edge over the competition. From inventory analysis to marketing initiatives, your company will be able to reduce risks for new endeavors and make profitable decisions. Programs like ShipHero can help.Schedule a meeting today with our experts to learn more about our WMS software built for ecommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.Click HERE to Schedule a Meeting TodayAaron Rubin, Founder & CEOShipHeroAbout the author: Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.Follow Aaron on Twitter&LinkedIn.

By: Maggie M. Barnett, Esq., COO at ShipHeroInvolved procurement strategies are complex and too often ignored by top-level executives. Supplier relationship management (SRM), for example, is a powerful tool that businesses can use to help evaluate vendors and streamline processes to help create a more efficient and beneficial relationship.A study by PwC showed that of companies that implemented SRM strategies, 50% mentioned more efficient processes as a significant benefit of the strategy, and over 40% cited inventory reduction, better customer satisfaction, and more sustainable processes and products.One of the main concepts of SRM is to create better relationships with suppliers to enhance your workflow and working relationships. Rather than just working independently from your supplier entirely, you create a closer relationship that leads to improved reliability, trust, and efficiency. By developing these partnerships, you gain a competitive edge and create a more positive working environment for both parties.

What is supplier relationship management?

Supplier relationship management is the process of examining all suppliers’ performances and measurables to see how well they match your company's goals while also coordinating strategies with these vendors to improve workflows and collaboration. Through professionally developed partnerships with your suppliers, innovation will flourish, and cooperative, streamlined processes will save time and money for both companies.

The importance of a supplier relationship management

Fostering improved relationships with your vendors not only can give you a competitive advantage but can prove to have significant cost savings for your company. By examining your supply chain and the suppliers within it, you can create better SRM strategies that will protect and advance your business through a handful of advantages.

Evaluate if suppliers are meeting performance expectations

Supplier management helps you carefully examine if your vendors are meeting procurement expectations. Upon looking at supplier data and KPIs, you may find that they are not meeting all initial goals. Taking a close look at these insights can help you find the best-performing suppliers that you should foster more intimate relationships with and those that may not be a good fit.

Find improvement opportunities with existing suppliers

Strong relationships with your suppliers are essential for collaboration and mutual growth. Looking at the current supplier strategies in place and finding ways to innovate your process with your distributor can help both businesses flourish. By finding areas where your KPIs aren't quite hitting the mark, you can work together to improve and monitor those metrics.

Reduced costs

The resources required to set up new relationships and contracts with suppliers can be costly and complex. Through supply chain management, you can foster relationships with strategic suppliers to create long-term, mutually beneficial relationships that save both parties money.

Increased efficiency & quality control

Growing more high-quality partnerships with suppliers means that operations between companies become more streamlined and efficient. Through long-term relationships, your teams learn workflow tactics and new approaches to the procurement process that saves time while still ensuring quality production.

Stable pricing

As buyers work more closely with their suppliers and grow a positive relationship, disputes, and hostile negotiations become much less common. A happy working relationship is worth a lot to both companies, enough so that it can create stable pricing agreements as your company commits to continue bringing business to vendors without volatility.

Supplier consolidation

Through the process of SRM, you start examining supplier segmentation within your supply base to analyze better your interactions with individual vendors and those supplier capabilities. Within your supplier management process, you will see which suppliers you can consolidate down to and which may be less ideal import sources.

Prevent supply chain disruptions

Working closely with your manufacturers can help prevent issues if supply chain disruption events occur. With strong relationships and long-term protective strategies, you can ensure that you have a stocked inventory and your suppliers are prepared as best as possible for unexpected events.

Ways to improve supplier relationship management

Improving supplier relationships doesn’t have to be complicated. Here are some ways you can improve relationships with suppliers.

Value mapping

By examining value mapping such as vendor risk and revenue growth potential, you find truly what a supplier's contribution will be to your supply chain. You protect your company when you look at the actual value of a supplier beyond just the product price the company hides behind.

Top-down approach

To ensure SRM best practices across the company, getting buy-in from stakeholders and top-tier executives is essential. Like with customer relationship management (CRM), business leaders can easily undermine the entire process without a total company commitment.

Spend optimization

When looking at your SRM strategy, make sure you are critically examining cost savings and cost modeling. Through value mapping and supplier analysis, you can find ways to optimize your company's spending better, ultimately improving its bottom line.

Risk mitigation

Suppliers can be a considerable risk for a company if you don't do the proper research into their previous work and expertise. Ask for references, and examine their financial performance, especially in comparison to competitors and their pricing. A wholesaler with the lowest price may seem attractive, but paying a bit more for more reliable service is a big deal for the strength of your supply chain.

Positive ROI

Proving the ROI of SRM processes can get buy-in from the C-suite and stakeholders. Through case studies, value mapping, and risk assessment, demonstrate and continue to back the positive ROI that these processes can bring to your company.

Technology makes supplier relationship management simple

SRM software helps communications with vendors and helps streamline and add visibility to crucial processes like invoicing, payments, approvals, and collaboration. By empowering your team with technology and software, you can take a lot of the risk out of these processes and ensure that supplier processes run smoothly and on schedule as much as possible while being transparent and gathering vital data.

Make timely payments

Just like you want your goods or services on time, suppliers rely on being paid promptly. If something goes wrong and payment will be late, communicate directly and openly with the supplier as soon as you know of the issue.

Implement a supplier information management (SIM) system

Keeping all of your supplier data tracked accurately can be overwhelming, which is where a SIM system comes in handy. All of the information you may need about a supplier, such as contact details or transaction data, is stored and managed within your SIM system. Creating an accessible and visible way to collect this data makes SRM easier and more effective overall.

How to evaluate supplier performance

Not sure if your current suppliers are meeting their requirements? Here are some ways you can evaluate their performance.

Check if SLAs are met

Continuously evaluate missed deliverables and incomplete orders. Make sure that products or services received are of the quality expected on a continuous basis. Ensuring SLAs are met is crucial to supplier performance.

Create a supplier scorecard

Supplier scorecards can be favorable for both the vendor and your evaluation methods. By setting transparent goals for your suppliers, you both will know what you are working towards and the pain points of the process.

Use benchmarks

When deciding how you will benchmark your suppliers, consider what your goals are from your supplier scorecard or other value strategies. Having measurables to look at for suppliers won't always give a complete picture but can help point out prominent trends, strengths, and weaknesses in your supplier process.

Review & update supplier contracts as needed

You and your supplier's needs and capabilities will most likely change over time. Rather than be resistant to change, review and update your contracts with your suppliers as situations shift for either party. Instead of keeping unhealthy expectations, morph these agreements to best fit needs across the board.

Conclusion

Supplier relationship management is crucial for a company looking to improve its bottom line and develop its procurement process. Creating solid and long-term relationships with valuable, low-risk suppliers can create a stable and reliable supply chain that will continue to fuel your company for years to come. Developing these partnerships can not only protect your company from future supply chain disruption but from having to create new, costly contracts with potentially high-risk suppliers.If you’re new to ShipHero Fulfillment, please schedule a meeting today with our experts to learn more about how we can help you get your orders picked, packed, and delivered with our fulfillment service. No setup fees - simply pay as you go. ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.Click HERE to Schedule a Meeting TodayMaggie M. Barnett, Esq., COOShipHeroAbout the author: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial and administrative procedures, reporting structures and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management and a passion for business transformation. She is known for her expertise in delivering operational excellence and an ability to provide guidance and mitigating risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.Follow Maggie on Twitter&LinkedIn.

By: Maggie M. Barnett, Esq., COO at ShipHeroShortages and bottlenecks have battered global supply chains throughout 2020 and 2021. The COVID-19 outbreak and other unexpected events caused critical suppliers worldwide to suddenly have short supplies, leaving companies reaching for alternate sources of supply that often had dramatic price increases. It has become more evident than ever that companies, manufacturers, and retailers need to build resilience against the uncertainty of the supply chain and the events that can upend it.To better prepare for supply chain challenges, company leaders and supply chain managers need to develop a plan for how to avoid supply constraints. Flexibility also needs to be considered so that when emergencies do happen, the company can adapt to unexpected changes, whether short-term or long-term. One of the first steps to creating resilience against shortages and other supply chain issues is understanding what causes these disruptions.

What is supply chain disruption?

Supply chain disruption is when a crisis or unexpected change causes problems with the normal flow of goods between entities all along the supply chain. The coronavirus outbreak is an excellent example of a crisis that caused supply chain disruption, such as when personal protective equipment became inaccessible for many hospitals in North America. Other examples of changes that can cause supply chain disruption include dramatic changes in consumer demand, tariffs, or natural disasters such as earthquakes.

The state of supply chain disruption in 2021

2021 has been a large scale example of how supply chain disruption can upend entire industries. Among a handful of other complexities such as the Suez Canal blockage, COVID-19 caused immense constraints on raw material supplies, semiconductors, and other commodities. Understanding today's issues and their effects helps us to have better visibility of future supply chain disruptions.

COVID-19 effects

COVID-19 had dramatic effects on global companies. The beginning of the pandemic saw consumers panic-buying in bulk. Inventory levels couldn't keep up with the sudden increase in demand for essential products such as toilet paper, food, PPE, and water. Large-scale workforce safety measures inevitably increased lead times, and outbreaks of the virus slowed companies even further.

Suez Canal blockage

The Suez Canal sees around 13% of the volume of global trade, as it is a gateway for expedited transportation between the Atlantic Ocean and the Western Pacific and Indian Oceans. The nearest alternative route is navigating around the Cape of Good Hope in South Africa, eight or more days of extra travel. On March 23rd, a huge container ship called The Ever Given got lodged diagonally in the canal due to high-speed winds and was stuck there for six days.Over 350 ships were stuck finding alternate routes or waiting during the Suez Canal blockage, leading to a ripple effect throughout the supply chain. Inventory shortages, loss of perishable goods, and a domino effect of delays caused a supply management nightmare. The waves from this event continued to be felt months after the event as warehouses and shipping companies got set significantly behind.

Supply shortages

Auto dealerships are facing shortages as they try to replenish their inventory from the pandemic. Simultaneously, car sales are up 48% over their lowest point in the pandemic. Retailers' inventory to sales ratio is only 1.07, and inventories for retailers have shrunk 5% YoY. Due to tight capacity across the global supply chain and high demand, companies have had to extend lead times for inventory planning. Not helping the matter is the shortage of semiconductors that is affecting car production levels.

Longer lead times

Lead retailers such as Walmart have also had to lengthen lead times as the inventory to sales ratio dropped to 1.23 in March 2021, according to the Census Bureau, the lowest ever recorded.

An example of supply chain disruption: COVID-19

The pandemic impacted all supply chain members and their ties simultaneously in a way we have never seen before. Border closures, supply market lockdowns, labor shortages, and shipment interruptions caused problems across all supply tiers. At the beginning of the pandemic in March of 2020, 94% of Fortune 1000 companies already saw supply chain disruptions.Many factors caused a critical shortage of hospital PPE, including the fact that at the time, more than 70% of respiratory protection supplies used in the United States were made in China. Manufacturers pivoted to help production, but demand worldwide was extreme. The US government stepped in to help, though federal policy like tariffs also added further disruption. Simultaneously, the general public was panic-buying resources such as PPE, grocery items, sanitizing agents, and household items like toilet paper. The reliance on just-in-time ordering and instant warehousing meant that average consumers could not reliably purchase essential items.

How are supply chains disrupted?

There are dozens of reasons why a supply chain can be disrupted. Here are some of the most common reasons.

Pandemics

COVID-19 is a prime example of pandemic-related supply chain disruption. These large-scale events can cause a ripple effect in the global supply chain that is extremely hard to recover from due to the worldwide impact.

Natural disasters

Hurricanes, fires, and floods all can cause supply chain disruption. Hurricane Katrina is a great case study, where large-scale power outages and the inability to use transportation routes caused significant supply issues.

Transportation failures and delays

Around the same time as the Suez Canal incident, a COVID-19 outbreak shut down one of China's busiest ports, the Yantian Port. Incidents like the canal blockage and the temporary shutdown at Yantian can disrupt entire supply chains for months.

Product problems

Recalls of incorrectly made or unsafe products can sometimes be isolated incidents but also can cause much larger ripples. For example, if a large supplier recalls a part used by many manufacturers, it could cause a delay across many parts of the sector.

Cyberattacks

In May, a cyberattack caused the Colonial Pipeline to shut down its network. The pipeline sources close to half of the East Coast's fuel, about 2.5 million barrels per day of gas. Cyberattacks are growing more common, and many crucial parts of the supply chain are incredibly vulnerable to these threats.

Geopolitical issues

Tariffs and trade wars can cause significant issues for manufacturers and suppliers. We have seen this with the US trade with China throughout 2021 and continuing shortages because of these policies.

How to prepare for supply chain disruption

Create a supply chain emergency plan

If necessary materials are affected by supply chain disruption, you need to have an alternate action plan. Whether having backup suppliers, an emergency budget, or a stockpile of these essential items, you will already be more resilient by coming up with a strategy.

Build up inventory

Stockpiling essential items for your company can help you prepare for any situation. Order ahead a handful of months so that your business will have plenty of time to enact its supply chain emergency plan before running out.

Conduct a supply chain vulnerability audit

By looking at where your risk is within your supply chain, you can help your supply chain leaders know where they need to create more flexibility. By predicting potential pain points before they become problems, you can encourage trade agility and find alternatives.

Identify backup suppliers

If your leading suppliers suddenly lost the capability to get you your goods, what would you do? Identifying backup suppliers for all of your goods and services categories can help provide resilience against issues in the future.

Diversify the supply base

When picking suppliers, try to pick those in different locations that ship to you through various avenues. When you diversify your supply base, you ensure that while one supplier may be unable to get to you, the others should still be functional.

Partner with a logistics expert or 3PL

Collaborating with a supply chain logistics expert can help you find alternatives in case of an emergency. Professional logistics leaders also can help you find ways to make your supply chain more robust and resilient. 3PL can also help you grow your company's ability to have flexibility in times when some areas or resources may be unavailable.

Adopt risk evaluation tools

Technology is adapting to help try to prevent these widespread supply chain issues in the future. Implementing some of these AI-driven risk evaluation tools can provide ways to predict and combat cyber threats. Automation and AI often have a better ability to find potential shortages before most suppliers even know they exist.

What to do when supply chain disruption occurs

Communicate with customers

Clearly explain to your customer base what is happening within the industry and what steps you are taking to resolve the issue. By keeping an open line of honest communication, they will be more accepting and understanding of your predicament.

Evaluate all critical components of the supply chain

Decide which parts of the supply chain are the most vital to getting your product out. Once you have identified the most critical components of your supply chain, find alternative suppliers for those items as soon as possible.

Estimate available inventory

Calculate how much inventory you have left and how long it will last you. Evaluating where you are at with your stock will help you figure out the urgency with which you need a new supply line.

Assess buyer behaviors

If customer behavior is causing part of your disruption, start assessing buyer behavior. By seeing how your customer base is purchasing, you can better react to their needs and shift in needed areas.

Optimize production and distribution capacity for safety

In the case of an event like COVID-19 or a natural disaster, consider the safety of your suppliers and employees. Ensuring the safety of all involved people and parties should be paramount. Consider staggered shifts, remote work, and alternative schedules to guarantee a safe working environment as much as possible.

Identify logistics flexibilities

Not every item you are receiving during a supply chain disruption is as crucial as the others. Just as you identified things that are the most essential to your company's function, also provide slowdown and flexibilities with those that are not. Communicating this information to your suppliers can help you get what you need more readily and not clog them up with less important items.

Evaluate cash flow impact

Adjust your overhead so you can cover and financial impact or issues with your cash flow. Determine what areas will suffer the most, and find ways to cover these losses in a way that is as financially healthy as possible.

Conclusion

Supply chain disruption is inevitable to some degree. The best thing your company can do is encourage visibility and resilience to ensure that if something does happen, you can combat it in a way that is healthy financially and for your workforce. Preparation and plans in case of emergency go a long way in protecting your company from disruption and can buy you precious time to implement alternatives and backup plans.Examine your supply chain, and consider ways that it may be affected in the future, and how you can create robust practices that will help soften the blow of any issues.If you’re new to ShipHero Fulfillment, please schedule a meeting today with our experts to learn more about how we can help you get your orders picked, packed, and delivered with our fulfillment service. No setup fees - simply pay as you go. ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.Click HERE to Schedule a Meeting TodayMaggie M. Barnett, Esq., COOShipHeroAbout the author: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial and administrative procedures, reporting structures and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management and a passion for business transformation. She is known for her expertise in delivering operational excellence and an ability to provide guidance and mitigating risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.Follow Maggie on Twitter&LinkedIn.

By:  Aaron Rubin, Founder & CEO at ShipHero

Effective July 1, 2021, the EU & UK will begin enforcing the eCommerce VAT Package and One Stop Shop (OSS), which includes new rules regarding eCommerce and VAT. These rules will impact all businesses in the supply chain, including individual sellers and marketplaces. All distance sellers within and trading with the EU & UK must update their VAT requirements as this package replaces existing distance-selling rules and extends the Mini One Stop Shop (MOSS) into a wider-ranging One Stop Shop (OSS). Full details from the European Union may be found online.

There will be a lower pan-EU & UK threshold of €10,000 (€0 for businesses established outside the EU), which means businesses will need to account for VAT on additional supplies.

One Stop Shop (OSS):

‍Many businesses may be able to register in one Member State and report all EU & UK transactions through a single OSS return. Your payments will be collected and distributed from the tax authority in the Member State to other states where VAT is to be paid.

New OSS Schemes:

European Commission, New Future Proof VAT Rules

‍Important Facts:

1. Removing the distance selling thresholds for sales of goods and setting a unified threshold of 10.000 euros.
2. Expanding the Mini One Stop Shop (MOSS) by launching the new One Stop Shop (OSS).
3. Ending the low-value import VAT exemption and introducing the new IOSS.
4. Online marketplaces will be deemed the seller for collecting and reporting VAT.
5. New record-keeping requirements will be introduced for online marketplaces facilitating supplies of goods and services.
6. Special arrangements in order to simplify imported goods with a value of less than €150 in case the IOSS (import one-stop-shop) is not used.

ShipHero Software Updates:

Your ShipHero software includes a new VAT field to help automate the new processes. Please read the ShipHero knowledgebase article on how to set up eCommerce VAT in ShipHero today HERE.The following have been updated to support the new fields:

• Public API
• New Order CSV upload
• Automation Rules
• Order Detail page
• Generate Label Workbook

For carriers, the following are done:

• Shippo
• DHL ecomm v4
• FedEx
• Endicia
• Firstmile
• Globegistics
• Endicia

In progress are:

• DHL Express
• UPS
• Webshipper
• Asendia
• Canada Post
• Purolator
• NZ Post
• Australia Post

If you’re an existing ShipHero customer, you can contact your Customer Success Manager (CSM) today to find out how ShipHero can help you navigate the new EU & UK eCommerce VAT and OSS Package requirements.

If you’re new to ShipHero, please schedule a meeting today with our experts to learn more about our WMS software built for ecommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO

‍ShipHero

‍About the author:  Aaron Rubin the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

By: Aaron Rubin, Founder & CEO at ShipHeroShipHero Fulfillment is excited to announce that effective today, July 7, 2021, we have lowered our list rates for Standard Service by 5%, which now start at $5.29! Our 2 day service retains the same very low pricing; for example, 5lbs anywhere within the 48 lower states in 2 days is $13.97 - no residential surcharges, no fuel surcharges.ShipHero understands how important it is to be able to offer customers the lowest available shipping rates. This is the driving purpose behind our reduced standard shipping rates, we want to help our customers to reduce their overall shipping costs. Our team continues to focus on quality and service above all and we're expanding our footprint with an additional 400,000 sq ft of warehouse space in Las Vegas and the southeast.

Important Facts:

1. The price reduction is only for List Rates for Standard Service, not Expedited.
2. Visit our fulfillment pricing page online today for more information HERE.
3. Download our new pricing sheet with the lower prices HERE.

If you’re an existing ShipHero Fulfilment customer, you can contact your Customer Success Manager (CSM) today for any questions you may have.If you’re new to ShipHero Fulfillment, please schedule a meeting today with our experts to learn more about how we can help you get your orders picked, packed, and delivered with our fulfillment service. No setup fees - simply pay as you go. ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.Click HERE to Schedule a Meeting TodayAaron Rubin, Founder & CEOShipHeroAbout the author: Aaron Rubin the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.Follow Aaron on Twitter&LinkedIn.

By: Aaron Rubin, Founder & CEO at ShipHero

Mis-picks in your company’s order fulfillment process: frivolous mistakes or detrimental problems on your warehouse floor? Well, considering that distribution centers lose an average of almost $585,000 a year because of mis-picks, it may not just be a harmless error after all.

To help your organization spot and fix errors in your pick-pack process, we’ll list the most common errors that lead to mis-picks, and give you solutions to avoid mis-picks in your warehouse.

What is the Pick-Pack Process?

The pick-pack process is defined as the process of collecting, or picking, ordered items from the inventory, and then packing these items for shipment to customers.

Warehouses are a busy place, with employees meandering from bin to bin and picking items, all while heavy machines move products to the right place at the right time. Of course, mistakes are bound to happen in such a hectic work environment, with an estimated 35% of facilities experiencing constant mis-pick rates of about 1% or more.

But any extra, unnecessary movement by an employee, in the case of a mis-pick, can jeopardize the flow of your whole operation and cost your business in the long run. The cost of the mis-pick (on average) is about $30 per incident.

If you want to increase your order fulfillment rate, accurately and efficiently picking ordered items is vital. An error at this first step can have detrimental downstream effects, cause shipping delays, and increase your shipping costs. Here are some common mistakes.

Common Mistakes in the Pick-Pack Process

Among all the possible mistakes in the end-to-end order fulfillment process, picking mistakes happen to be the most common. As a result, distribution centers lose an average of almost $390,000 a year due to mis-picks.

The severity of these errors can vary for your organization; for example, while an incorrectly picked item could be more detrimental to your customer’s trust, a mistaken additional item shipped along with the correct item impacts your margins.

Mis-picks are usually a result of minor errors made by warehouse workers, whether it’s from poor lighting, fatigue, or miscommunication. Here are some of the most common mistakes to avoid.

Picking the Incorrect Item from the Correct Location
‍In this scenario, the picker heads to the correct bin and grabs the item inside, but it’s not the correct item. This occurs due to a problem with the inventory replenishment process. As a result, the picker will have to find the correct item from somewhere else.

Substituting Incorrect Items
‍If your business is experiencing stock-outs of certain items, pickers may be unsure what to do when they cannot locate the exact item. Similarly, a picker may accidentally pick the wrong item due to unclear instructions or products that look the same.

Adding Incorrect Items
‍In the case of bulk orders, your picker might accidentally throw in one product too many, or maybe one wrong item altogether. While the customer might be enthused, this has the potential to impact your margins and inventory levels over time.

How to Fix Picking Mistakes

The scenarios above typically occur when warehouses are using a paper-based, pick-pack process, where pickers follow orders written/printed on physical paper. Some organizations are vastly reducing their error-rate by moving to a mobile device-based system.

Here are some ways to reduce these mistakes and keep your company warehousing running efficiently and smoothly.

Measurement is the First Step

To accurately understand the situation and measure any progress, you should start collecting the necessary data.

Set up KPIs (i.e., key performance indicators) to measure picking accuracy. We recommend setting the following KPIs to get the full picture on your order fulfillment capabilities.

Order Fulfillment and Accuracy
‍No one likes to receive an order that isn’t theirs. This KPI lets you know how many packages you’ve shipped that have successfully arrived at the appropriate destination. If the order fulfillment values start to dip, then you’ll need to consider the influence it can have on customer opinions about your business.

Order accuracy data will also let you know whether your 3PL delivery line needs to be improved. If you’re sitting on an unusually low percentage of accurate orders, then there may be line errors at your warehouse that you need to address.‍

Inventory Levels
‍Whether you have invested in warehousing solutions or store your own inventory, you need to know where your inventory levels stand on a day-to-day basis.  Rely on inventory level KPIs to replenish your stock when necessary and to calculate your business’s average supply-to-demand ratio.

Order Volume

If you’re manufacturing products several months in advance, you need to know how much of your inventory goes out per month on average. Order volume KPIs calculate your sales by day, month, or quarter, depending on your needs. You can use year-out estimates to track the ebb and flow of your sales and to pre-produce inventory for each month.

Be sure to communicate your order fulfillment goals and progress, and reward your staff for any improvements made in certain fields.

Label Boxes Correctly

While this may sound like common sense, mislabeling boxes is a common mistake. Properly identifying and labeling items will help lower the risk of picking the wrong items.

With barcode scanning technology, your pickers can scan items into locations and optimally place the necessary signs, rack labels, and aisle markers to help pickers easily and quickly identify storage locations.

Use Collaborative Mobile Robots

Tired employees make more mistakes, so keeping them alert and rested is crucial to lowering picking mistakes. Collaborative mobile robots can help improve pick rates simply by reducing the need for your workers to walk unnecessarily.

Mobile robots can also help keep employees on task by effectively leading them to choose locations through optimized routes, as well as displaying ordered items and the quantities to pick.

Move From Paper-Based to Mobile-Based

Paper-based operations, while inexpensive and easy to set up, leave your company vulnerable to errors, product loss, and reduced order fulfillment rates.

That’s why more and more companies are transitioning to mobile-based processes. With small investments in mobile devices and the right warehouse management software, your organization unlocks the potential for warehouse staff to independently organize their pick/pack tasks, as well as scan products and bins at each step to minimize human error with built-in redundancies to double-check and triple-check their items.

Additionally, a software solution like ShipHero can directly integrate with e-commerce stores on Shopify, BigCommerce and more, so order information can be distributed right to the picking staff. Also, you can also monitor inventory levels in real-time and coordinate replenishment right when you run out.

Wrap It Up

Picking errors have the potential to drastically impact order fulfillment operations, leading to shipping delays, damaging your reputation, and hurting your bottom line. Developing a reliable and accurate pick, pack, and shipping process is vital to scaling your business, so consider investing in mobile-based picking processes, as well as the right software to drastically increase your order fulfillment rate.

That’s why more and more companies trust ShipHero WMS. Pick-packers can scan products at each step of the process with everyday mobile devices.

Schedule a meeting today with our experts to learn more about our WMS software built for ecommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.

Click HERE to Schedule a Meeting Today

Aaron Rubin, Founder & CEO

‍ShipHero

‍About the author: Aaron Rubin the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.

Follow Aaron on Twitter&LinkedIn.

ShipHero News

I am excited to announce that ShipHero has raised a funding of $50 million from investor, Riverwood Capital, which will propel our expansion. I am pleased to say that this enables us to serve you even faster, and better - empowering you to achieve growth with your ecommerce business.This is our first institutional capital and values ShipHero at $225 million. All the funds went into the company, no employees sold stock as part of this transaction and I will retain majority ownership and control of the company. Where we are today.ShipHero serves over $5 billion in annual ecommerce orders for thousands of merchants. Over 30,000 merchant employees use ShipHero to do their job every day. We take our responsibility to provide a high quality solution for ecommerce fulfillment seriously. We put our customers first and work to continuously improve ShipHero by offering new features and enhancements that elevate how people define a warehouse management system; quality and reliability are paramount.What does this investment announcement mean for you?I am thrilled about what this funding will enable for our customers. The resources give us the opportunity to make your work easier and faster while saving you money.

• ShipHero Software Product Development - We are investing heavily in features, functionality, integrations and quality.
  • Coming soon releases:
    • PostHero - Free tracking, reporting and analytics on shipping and delivery times for all your shipments with the major US carriers.
    • The ability to see a picture of every order as it ships.
    • EDI Support via SPS Commerce - Contact your Customer Service Manager (CMS) to join the beta.
    • Shipping Containers - Outbound sortation of packages by carrier. Watch the video HERE.
    • Live Shipping Board Metrics - Includes the ability to see and export historical data, available now in the Hero Board.
    • Advanced FedEx One Rate Support - Contact your Customer Service Manager (CMS) to join the beta.

• • Coming near term releases:
    • ShipHero App Store.
    • A native Netsuite integration, which will be our first ERP integration.
    • Xdelivery carrier integration.

• • Longer term releases:
    • Guided putaway.
    • Smart replenishment. We’ll prompt you to put fast movers in locations you designate as easy to pick from.
    • A full redesign of our mobile app to improve ease of use.
    • PO receiving on our mobile app.
    • Faster label generation.
    • Weighted average value of on hand inventory.

• ShipHero Fulfillment Expansion - We offer ecommerce fulfillment that is faster, cheaper and lower carbon out of our own warehouses in Allentown, PA, Dallas-Fort Worth, TX and North Las Vegas, NV, learn more HERE.
  • We are under contract to add an additional 400,000 sq ft of owned and operated capacity which includes the addition of a facility in Jacksonville, FL. We will continue to grow the size and number of facilities to support our customers.

Thank you to our employees and customers.The fundraising is a result of the work we’ve done as a company. Thank you to everyone at ShipHero for doing your best work. I appreciate you. Thank you to our customers. We only exist because of the faith you put in us and we only grow because of the good things you tell other business owners about us.With gratitude,Aaron RubinFounder & CEO, ShipHero

In the subtle words of The New York Times headline, “Chaos Strikes Global Shipping”. What does it mean by that exactly?

Swing by your local department store, grocery store or electronics store, and you're bound to notice empty shelves. Previously, people blamed COVID-19 panic buyers for emptying store shelves because they stripped stores clean of essentials like toilet paper and water bottles. However, the current empty shelf crisis comes from suppliers that can’t keep up with demand due to lower production, shipping delays and labor shortages.

As a result, consumers are seeing widespread shortages of goods, from shoes to cars and everything in between. In this post, we'll take a closer look at the empty shelf crisis, the industries that are impacted the most and what the future may hold for the shipping industry.

Why Are Walmart Shelves Empty?

There are many empty Walmart shelves in 2022 because of the Omicron variant, winter storms and supply chain problems. Here's a quick dive into each of those reasons:

The Omicron Variant

The Omicron variant of COVID-19 was discovered in November 2021 and caused a new American COVID wave in early 2022. Many Walmart stores temporarily closed for deep cleaning due to rising cases, which meant people had fewer stores to shop at – ultimately resulting in empty shelves across many locations.

Winter Storms

Mid-January 2022 saw a winter storm plague much of the Southern, Mid-Atlantic and Northeastern United States. Heavy snowfall and blocked roads caused food shortages in affected areas, resulting in low stocks almost everywhere.

Supply Chain Crisis

Unfortunately, some lingering supply chain issues in 2021 carried over to 2022. Many stores have resorted to importing extra grocery items on chartered cargo ships to ease these shortages.

What Caused the Empty Shelf Crisis?

The empty shelf crisis is largely caused by the COVID-19 pandemic destabilizing the entire shipping industry. There’s some irony to this shipping crisis because, while consumer demand and spending increased, suppliers couldn’t keep shelves stocked to capitalize on these opportunities.

Why Is There a Supply Chain Shortage?

While the pandemic majorly contributed to shipping delays, other immediate factors have also directly impacted the industry:

Container Shortages

Recent shortages of shipping containers have driven up the cost of goods delivered from China. CNBC reports that this caused shipping costs to rise by 300%, and logistics companies are struggling to keep up with shifting demands.

For example, the Apple iPhone was generally shipped by air, but the container shortage forced suppliers to ship these products via sea containers. Multiplied across industries, the shift to ocean freight congested sea routes, and the issues in the Suez Canal certainly exacerbated things.

Human Resource Shortages

During the pandemic, the number of dockworkers and truck drivers decreased, causing massive delays in shipping and delivery. As a result, the gig economy stepped in, providing temporary and part-time gig workers for warehouse and fulfillment center work.

Products and Material Shortages

One of the more talked-about shortages is the microchip shortage, which limited the manufacture of new cars and many electronic devices. Other product and material shortages due to the pandemic, such as a recent deficit of aluminum, have impacted the domestic transport of canned food and soft drinks.

Suez Canal Blockage

The Suez Canal blockage is a symptom of the industry's problems as a whole. According to Bloomberg, the lack of available workers caused many loading docks to become overwhelmed, resulting in massive shipping delays.

Industries Affected by Shipping Delays

These shipping delays are wreaking havoc within the retail industry, affecting the ability of domestic shippers and 3PLs to fulfill their eCommerce orders. Many American companies are paying up to ten times the usual price of shipping products across the ocean.

The following industries have seen the most impact:

Cars

While this doesn't impact your local shelves per se, the automotive industry is being hit hard by a lack of available materials – most specifically the microchips used to control the fuel injection system, cruise control and other electronic systems aboard today's automobiles. As a result, car dealers have struggled to maintain inventory, and consumers are seeing the price of used cars increase.

Electronics

The chip shortage also impacted electronics companies, including Sony, Apple and Microsoft. A recent fire at a Japanese plant has only exacerbated this chip shortage, meaning we may see a deficit in electronic merchandise for the foreseeable future.

Additionally, a lack of reliable containers has prevented popular electronics companies from reliably shipping products such as laptops, flat-screen TVs and even cell phones.

Since Americans couldn't go on vacation during the lockdown, they typically sank their money into fancy new entertainment systems. The industry did its best to keep up, but, ultimately, the laws of supply and demand collided at the port.

Shoes

Both Steve Madden and Crocs have expressed concern about the supply chain bottlenecks happening because of the global shipping crisis. Nike usually paid $2,000 to ship a 40-foot container of sneakers. Now, shipping this same container costs $15,000 to $20,000.

Canned Foods and Beverages

The pandemic has affected aluminum manufacturers, preventing them from producing familiar brands of canned fruit and soft drinks. With transportation and logistics problems also slowing domestic shipping down, many grocery stores may not stock popular canned goods for the foreseeable future.

Cleaning Supplies

Naturally, the pandemic had us all reaching for the hand sanitizer. While the shipping issue doesn't directly impact these products, it could still be a while before the cleaning industry recovers from the demands it experienced during the height of the pandemic.

Other Industries

Many online are panicking about the Great Ammo Shortage of 2021. Plus, America hasn't been uniformly affected by the current shipping crisis, so what’s absent from the shelf of your local supermarket may vary on a weekly basis.

Meanwhile, Amazon sellers are experiencing more profits than ever before, as more people turn to online shopping during times of store shortages. If you’re selling online, don’t forget to stock up on shipping supplies so you can fulfill your orders.

What to Expect for the Rest of 2022

Industry leaders are uncertain as to when the shipping crisis will be resolved. Some problems, like the microchip shortage, are simply a matter of production, but the availability of shipping containers and reliable shipping companies may take a bit longer to sort itself out. So, what can you expect while suppliers are scrambling to meet demand?

Higher Prices

Unfortunately, consumers can expect to pay more for the products they've come to rely on. Automobiles, electronics and particular brands of shoes may be harder to come by, and when you do, you may find yourself paying a higher sticker price.

For retailers, this highlights the need for a reputable logistics company. Because shortages can play havoc with your inventory, you need 3PL software to assist in warehousing and inventory services to stay on top of product levels, re-ordering schedules and more.

The right company can ensure that you keep your word to your valued customers, providing order fulfillment during a time of increased economic instability.

Preparation for the Holiday Rush

Many retailers are giving careful consideration to how to handle the 2021 holiday rush. The time to build inventory is now, so you can be fully prepared when the season comes. The retail ecosystem is bound to look different, but if companies are diligent, they can ride out this storm and come out stronger than ever.

Focus on Supply Chain Resilience

Supply chain resilience is your ability to continue normal business activities even when your order fulfillment and supply chain are disrupted unexpectedly. With a resilient supply chain, you can weather the storm of low stock and shipping delays without too many hitches.

Work with 3PL providers to improve your supply chain resilience. For instance, Amazon FBA users often work with ShipHero for FBM to keep products in stock and offer diverse order fulfillment options.

Check out our previous blog for best practices on building your resilient supply chain.

Wrapping It Up

Suppliers have had issues both producing and transporting goods over the past year and events like the Suez Canal blockage have only added to the "chaos." Consumers should expect shortages of automobiles, canned produce, cleaning supplies, shoes and more. In these uncertain times, having a robust and resilient logistics and fulfillment network is vital to keep your consumers' trust.

That's why ShipHero provides retail brands and 3PLs with powerful capabilities to handle their shipping needs and build a resilient supply chain.

Empty Shelf Crisis FAQs

What items will be in short supply in 2022?

Due to global events like the ongoing pandemic and reduced production capacity, essential items like groceries and feminine hygiene products are predicted to be in short supply during 2022. You can also expect shortages in aluminum and advanced microchips, which means high electronic prices, as we’ve seen with the recent PlayStation 5 price hikes in certain markets.

What is causing empty shelves?

Shipping delays and low industry productivity cause empty shelves. However, factors like inclement weather and the COVID pandemic can worsen these shortages.

-About ShipHero:

We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With over 5,000 brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.