Marina Vassilopoulos writes on the behalf of Cloud9Fulfilment
As inflation rises in the UK, your order fulfilment strategy needs to be bolstered. If you want to survive and thrive during these tough times, then you need to be ready for the worst.
Cloud9 Fulfilment, an industry leader for e-commerce fulfilment solutions, has used its expertise to provide some top tips on how to ensure your brand survives the coming economic downturn.
Missed forecasts can be very damaging for companies: Here’s how to avoid them.
To be successful, a business must accurately predict its sales figures and forecast peaks of customer demand. If it fails to do so, the consequences for its operations, reputation, and even growth could be dire.
For example, if you’re running out of stock, it could be because you failed to accurately forecast demand for your product. But even though this sounds catastrophic, most companies fail to successfully forecast sales with enough accuracy.
Whatever the reason for your business’ failure to thrive, there are some solutions available to help you turn things around.
For example, depending on the severity of missing your forecasts, there could be soft costs (e.g., reassurances from investors) or hard costs (e.g. layoffs). If the severity of missing your projections is mild, then you might want to consider soft costs, whereas if the severity is severe, then you’d probably need to go through with hard costs.
Over-forecasting means that you’re going to need some soft costs and hard costs in order to achieve your target number. Soft costs would be things like reassurance for your executives, increased quotas, and reaffirming your CFO/CROs’ relationships. Hard costs might include pulling forward key hires, investing in extra resources, and sourcing emergency stock.
During a recession, you need to focus on maintaining customer demand by improving communication.
If you want to keep your business thriving during tough times, one of the best things you can do for yourself is to increase your marketing efforts. Marketing helps reinforce your company’s image of strength, leadership, and determination, which reassures consumers that they can trust your brand.
Even if your business is struggling, you need to project an image of stability. To do so, you should target current customers first. This method is cheaper than trying to attract new ones. For example, offer special discounts to past clients.
You should also promote consistency across your marketing efforts for an engaged audience. For example, you might discuss different ways to approach your brand, including blogs, newsletters, ads, emails, and press releases.
With an economy in decline, there are several things you can do to ensure your business survives. You might want to consider changing your pricing strategy, making sure that you’re attracting the right people to buy from you, and adjusting your KPIs so they match the current economic climate.
During a recession, you need to be efficient.
During tough economic times, companies need to be more efficient with their resources.
To enable brand growth, the first thing you need to do is examine your current resources, team and software solutions in practice. Do they allow you to take inventory easily and accurately, or are they outdated? If your software allows you to take inventory easily, then you can pinpoint any problems with accuracy and know where your problem areas lie.
After evaluating your resources, decide which ones are the most valuable for your business.
Evaluating your brand can help you understand how to make changes to improve it. For instance, if there are order fulfilment tools or licences rarely used, they could be cancelled to save money. Likewise, you might discover if there are employees who aren’t doing their job properly. Before making any cuts, you may wish to refresh their training to perform better, as layoffs can hinder your brand’s growth.
Finally, you should evaluate whether the market is ready for your product. Is there a new innovation that can make your product more efficient? Have competitors abandoned the software you depend on due to its outdated features? A step back to see how successful companies operate may give you insight into where you stand.
Ways to deal with increasing delivery costs
Many small businesses find out that shipping costs are one of their biggest expenses. As a result, they panic when external factors, such as shortage of products and disruptions in supply chains, cause prices to increase.
Unfortunately, shipping is an essential expense for any fulfilment company. As a result, here are some ways you can cut costs while maintaining high shipping standards:
- You should approach multiple carriers, as many offer price structures that are dependent on volume – meaning the more you ship, the lower your costs. Many carriers also provide e-commerce payment processing, which may help ease some of the stress for small business owners who don’t want to deal with credit card fees.
- Use custom shipping labels, lightweight packaging materials, and pack your products into corrugated boxes to cut down on shipping expenses.
- To avoid paying extra for empty space, use a smaller sized package than necessary. For example, if you’re sending a small item, opt for a polymailer rather than a box.
- If you’re planning to ship your products overseas, you might want to consider air freight instead of ocean shipping, as prices have risen to an all-time high. Therefore, it might be worth absorbing the extra costs for ensuring your products arrive on time.
- If you’re an international importer, you might want to consider moving your manufacturing operations out of China. It could be cheaper for you to set up shop somewhere else instead.
Tips for inventory and supply chain management
If you don’t manage your inventory well, your business could lose out on sales because of poor inventory management. Your company might also face losses if you run out of stock during a recession.
There are several ways in which one can improve their inventory and supply chain management structures, pursuing either empirical or forecast strategies. Empirical inventory management strategies take into account your sales history in order to evaluate future requirements; using past data to improve future results.
Forecasting takes into account both micro and macro factors. It is particularly useful for products that are subject to seasonal fluctuations or irregular sales, such as holiday products or back-to-school supply.
After choosing the type of strategy needed, you should assess current procedures and find ways to improve these. One of the most important areas to evaluate is your inventory management processes, making sure that you don’t overstock and at the same time ensure that there are no empty shelves.
After choosing an investment strategy and evaluating stocks, there are several ways for you to improve your inventory and distribution capabilities
- Use an A/B/C analysis for your stock
- Consider calendar replenishment methods
- To estimate when inventory levels need to be replenished, consider using a reorder point method or just-in- time (JIT).
- To ensure adequate restocking, order variable quantities of stock, and replenish low levels of inventory periodically to meet changes in customer demand.
- Determine if dropshipping could be beneficial for your business
- ‘First In, First Out’ (FIFO) is particularly useful for companies that sell perishable items. By selling their older inventory first, they ensure that their newest products don’t expire before they’re even available.
Using the tips and tricks throughout the article can help your business to survive a slump and prepare your brand for any future slumps. By being prepared for every period of economic downturn, your company can consequently thrive during times of economic growth, ensuring its continual growth and profitability.
Cloud9Fulfilment is a market-leading provider of e-commerce online fulfilment services.