In a previous post we outlined the 5 key levers to efficiency gains in ecommerce. Let’s take a more detailed look at some of the ways reporting and analysis can help you reduce costs in the first three of these areas.
Inventory & Stock Control
Getting your inventory right requires a fine balance of time and quantity. It’s also directly linked to how good you are at purchasing. You don’t want too much stock so that your money is tied up, sitting there for too long and doing nothing except increasing your costs. You need to be aware of the time it takes to move each item of inventory and the different lead times for ordering and reordering, down to a SKU level. Good reporting will allow you to balance your stock and your sales, sliced across a range of criteria, like marketplace or channel, region, SKU and supplier.
Similarly, dead stock is another drain on your profitability. Being able to see what stock has had no sales over the last 7, 30 or 60 days, for example, allows you to identify poorly selling items and see what the stock value is of those SKUs. Perhaps they are seasonal SKUs, explaining the period of inactivity, in which case you could explore selling to countries where they are in season. If they’re not seasonal, you could bundle them into promotions to move the dead stock and recover some of your costs. Either way, reporting and analysis allows you to use the information as you see fit.
A stock forecast report lets you see, down to the individual SKU level, how many days of stock you had left, the supplier lead time for reordering the stock, and the days until you had to re-order the stock, so you can improve your efficiencies, especially for those items with long lead times. A zero stock report showing you how long each item was out of stock for, combined with supplier lead times, helps figure out your total elapsed time without stock. Better still, a system like Volo allows you to set up automated email notification to let you know if a SKU’s stock level goes ‘amber’ or ‘red’, according to rules you put in place.
Warehousing & Operations
When it comes to the operational side of the business, you’re looking for maximum productivity with minimum errors. The better your productivity, the more efficient your operations, whereas every mistake in warehouse allocation, eats directly into your hard-earned margins from the original sale. Accurate reporting lets you judge the relative performance of your warehouse staff in processing supplier deliveries, helping you pinpoint the problem areas and staff, so that you can provide more training or better deploy your resources to reduce the error count
Do you know your credit/refund percentages, by revenue and volume? A critical area for reducing costs is looking at your credits and refunds, since they impact both your customer service and purchasing areas. Interrogating your order data and splitting out the credit and refund elements lets you spot which suppliers – physical suppliers versus drop-shippers for example – and which SKUs or categories are causing more credit and refund problems and eroding your margins. High refund figures could be the end result of poor product quality or incorrect item descriptions.
Or perhaps it’s a specific channel, region or country that’s hurting your profitability? Being able to slice and dice your credit and refund data in lots of ways gives you the detail you need to identify and eradicate the excess time and costs spent on the worst offenders.
Fulfilment & Dispatch
Similar to operations, with order processing, fulfillment and dispatch by couriers, you’re looking eradicate errors and an end-to-end process that’s as effective as possible. Mistakes in picking, packing and dispatching directly impact your profitability and harm your relationships with your customers. Being in possession of the right information helps you assess how good your staff members are at processing customer orders. With this information you know where and with whom you can make the appropriate improvements.
It’s a similar story and benefit in your courier dispatch areas. Great reporting and analysis allows you to see your courier spend, for example, and what you’re spending on different parcel types to different countries. When you can report easily on courier usage you’re able to evaluate other courier options based on current and forecast volumes.
Better reporting and analysis helps you get better at purchasing and better manage your exposure to or risks with certain suppliers. You can buy more accurately and use the power of reporting intelligence to negotiate better prices from your suppliers. The best sellers get the best prices from their suppliers and derive the highest gross margin, gross margin being your revenues less your cost of goods sold.
If you can see your stock value by supplier and your sales by supplier, this allows you to match supply and demand more efficiently. For example, you wouldn’t want to see a high stock value for a supplier and low sales for that supplier. A ‘scatter plot’ chart allows you see your supply base at a glance and spot the problem areas where you’re holding too much stock from suppliers whose products aren’t bringing you high sales. Then you can drill into the individual supplier to see the stock value and sales across specific products or products lines.
You can take the same approach when you look at your customer service centre and their service load. Being able to see the minority of products that is taking up a disproportionate amount of customer service effort helps you make informed decisions on what you need to fix. Similarly, if you can analyse and report on the type of customer questions that crop up the most often, thereby taking up most service time, you can work to introduce more automated information and more answers to frequently asked questions to reduce the service costs and the need for manual intervention.
Let the Reporting do the Work, not You
If you’re running your business and stuck in the day-to-day activities, maybe you don’t have enough time to constantly assess how you’re really doing. This is where technology can come to your rescue and do the heavy lifting for you, whirring away in the background and collecting and crunching data while you keep things moving. Once you have set up your key performance indicators and targets across the important areas of the business, you can sit back and let a system like Volo take care of the rest.
If you’d like to learn more about Reporting and Analysis for efficiency, click here