About the Startup
One of our client a blooming gardening-startup aims to solve plantation quandaries by providing tried-and-tested solutions. The client helps people discover, buy and look after right plants for their space.
Online Plant eStore concept
Their e-store concept is simple; you fill in an online form by selecting the size of the plant, pick few styles of plants and wait for the garden-savvy to drop in at your door-step to deliver your selected plant, you can either buy all your selected plants or pick and choose.
The interesting part is that you can select the timing slot within which you want the plants to get delivered, they deliver within a very short period of time usually in a day or two on your selected time slot. By this way, the client makes sure that the customers get the plant fresh and live with the required plantation guidance.
Challenge
Just-In-Time Inventory Management.
The client was aware that any amount of inventory spoilage will have a direct implication on their profit margin. The idea was to keep minimum amount of inventory at the store/warehouse and fulfill orders with a faster purchasing process.
His business operates across the UK and receives almost 1000 orders per day, he delivers these orders within 2-3 full business days from the date of shipment. To meet the delivery commitment, the client has to make sure that the Supply chain cycle time is minimized; i.e the time the plants get sourced from his suppliers to the time it takes to the delivery door-step.
So, how was the client fulfilling orders in such a short time while keeping low stock on hand?
The client enabled the option of backorder, which allows his customers to place orders for out-of-stock items. He manages to fulfill these orders through back-to-back purchasing.
Key issues with the existing backorder management system
The critical part was that the client needs to wait until the supplier has accumulated the “backorder products”. If the supplier does not send the required stock in the due course, the client loses on the sales order.
The only possible solution for this was to create a “Purchase order” in advance by predicting the demand so that the client can expect to get the products ( Inventory ) on time. The inventory which is been raised in POs is considered as In-purchase quantity.
The In-purchase quantity will have the inventory details & a “Due-date” ( time within which the supplier can supply the items ).
Solution Delivered
Orderhive set up the below provisions for the Startup to help them streamlined their supply chain process;
- A provision to record all sales orders items as “Backorderable”.
- A provision to create a purchase order for these back ordered items with supplier id reference.
- Considering the inventory items of these purchase order as “In-Purchase” quantity.
- Validating the due date of the “In-Purchase” quantity against the delivery date of the sales order.
- Once the items arrive, the client can search through their sales orders to match these to the correct purchase order.
- A provision to create shipments and track it throughout the fulfillment cycle.
Result
A fully functional customized backorder management system streamlined the client’ supply chain process and eliminate the chances of lost sales due to stockout.
