A great American economist, two time Chairman of the Federal Reserve, and once Chairman of Economic Recovery Advisory Board, Paul A. Volcker once said – “Less emphasis on inventories, I think, may tend to dampen business cycles, because business cycles are typically in the grasp of inventory cycles and heavy industry cycles.”

Paul’s statement beautifully highlights the role of effective inventory management in driving businesses’ success. Do it right and your business might do well, but do it wrong and your business will surely fail.

Inventory management is not an easy task, let alone managing inventory with sales happening over multiple channels (including physical stores, e-commerce store, online marketplaces, etc.). To add to that, businesses have to meet the growing demand for improved shopping experience (same day delivery, timely updates, flexibility to buy online and pickup in store, etc.) from customers.

Being able to exercise complete control over the inventory is every business’s dream, and there lies the solution to all the inventory management challenges.

What challenges? You ask.

Let us quickly review the top 6 inventory management challenges that businesses frequently encounter and how e-commerce and ERP integration can help you overcome these challenges.

Consider this,

Starks sold school supplies across the country from a chain of company-owned physical stores. They were well known for the quality of their goods and amazing service. A year ago, they adopted an e-commerce store to cater to customers who have been slowly moving online.

1) Lack of Inventory Visibility leading to Overselling of Products

Their e-commerce marketing efforts worked and the orders slowly started to trickle in. Starks invested more in their marketing efforts and offered amazing discounts, thanks to which their e-commerce order volume dramatically increased.

But Starks’ happiness was short-lived. They soon realized they did not have enough inventory to fulfill all orders. While the initial few orders were shipped on time and customers were extremely happy, others had to wait for inventory to arrive. The delayed shipping had a huge negative impact on the customer experience.

How E-commerce and ERP Integration can Help?
With e-commerce and ERP integration, Starks can automate order sync from e-commerce to ERP and inventory sync from ERP to e-commerce. This ensures accurate inventory count across systems, preventing overselling.

2) Lack of Inventory Visibility made Selling on Online Marketplaces a Challenge

The Starks were quick to catch up on trends and added eBay and Amazon marketplaces to their sales channels. These platforms drove a lot of orders, but fulfilling them came with challenges.

eBay and Amazon had stringent requirements such as minimal cancellations and timely fulfillment. Failure to meet these could lead to losses.

Despite strong demand, Starks delayed or canceled orders due to inventory issues. Customers lacked visibility into order status, making marketplaces unviable.

How E-commerce and ERP Integration can Help?
While it does not directly solve this, integration ensures accurate inventory, timely fulfillment, and better communication. When extended to marketplaces, it reduces cancellations and improves customer satisfaction.

3) Lack of Inventory Visibility led to Idle Stock despite Pending Orders

Some stores had excess stock while e-commerce orders were delayed due to shortages. Starks struggled to optimize inventory usage.

How E-commerce and ERP Integration can Help?
By centralizing data, ERP becomes the single source of truth. This enables strategies like Buy Online and Pickup in Store to better utilize inventory.

4) Lack of Inventory Visibility led to Delays in Stock Replenishment

Due to poor synchronization, ERP had incorrect inventory data, making it difficult to identify when stock levels fell below thresholds.

How E-commerce and ERP Integration can Help?
Automated order sync provides accurate inventory insights, enabling timely purchase orders and even automation of replenishment processes, improving operational efficiency.

5) Lack of Inventory Visibility led to Poor Decision Making

Selling across multiple channels was a strategic decision made by Starks. While this helped drive sales all year round, the focus was always to extract the most from their Back-to-School campaign. This one campaign, which lasted for a month, contributed nearly 20% of their annual sales.

However, what Starks were not prepared for was their strategy to sell specific products on specific channels and the increased order flow. To complicate things further, Starks introduced a new product, the inventory for which was stocked not based on past data but on gut feeling.

How E-commerce and ERP Integration can Help?
E-commerce and ERP integration bridges the gap between Starks and their ability to take data-backed decisions. With centralized customer, order, and inventory information, Starks can better forecast sales (by identifying trends) and stock inventory accordingly.

Starks can further leverage this data to draw actionable insights like top sellers, product sales by channel, etc. This information can then be used to build and drive effective marketing and promotional strategies for both existing and new products.

Further, these insights can also be used to validate strategic and investment decisions like dropshipping.

Conclusion

Wait! Didn’t the title say 6 challenges?
Yes, it did. And no, we have not forgotten it. The reason we have not mentioned the sixth challenge along with the others is because it is a derived challenge — all five challenges contribute to and aggravate it.

The sixth challenge is the negative impact on customer experience. Everything from overselling products to poor decision-making negatively affects the customer experience.

Customers are not concerned about how you manage inventory. They expect a consistent and memorable shopping experience — and e-commerce and ERP integration helps achieve that by:

• Showing accurate stock levels
• Keeping customers informed
• Centralizing key information for better decision-making

Do you identify yourself with the Starks? If yes, contact i95Dev. We can help you go multichannel and scale your business effectively and efficiently.