What is a Distributed Inventory in E-commerce?
A distributed inventory in e-commerce is a system used to manage the inventory of products across multiple locations, such as warehouses, retail stores, or distributors. This system allows for greater visibility and control of inventory, enabling businesses to accurately track and manage the availability of products in each location.
Distributed inventory also allows for better planning of inventory levels, allowing businesses to keep just the right amount of stock in each location without overstocking or undersupplying. This helps businesses save inventory costs and optimize their supply chain operations.
Significance of Distributed Inventory in E-commerce
Distributed inventory is an invaluable tool for e-commerce businesses as it keeps the product moving through the supply chain without any hiccups.
- It allows an e-commerce company to have inventory closer to its customers, reducing shipping times, costs, and increasing customer satisfaction.
- Distributed inventory allows for better stock management, as it allows for closer monitoring of inventory levels, enabling businesses to better anticipate customer demand and reduce the risk of stockouts.
- Additionally, distributed inventory can help reduce the cost of warehousing and logistics, as goods can be sent directly from the supplier to the customer without needing a central warehouse.
Prerequisites to Calculate Distributed Inventory and How It Works
Prerequisites to calculate distributed inventory include –
- It is important to have a basic understanding of the supply chain process and where each part of the process falls within the overall system. This includes understanding the flow of goods and services, the various stakeholders involved, and the different types of inventory.
- A comprehensive inventory management system
- Data analysis tools to provide insights into databases and help identify opportunities and trends.
- An efficient distribution network
Use Case With Distributed Inventory
One of the widely used examples of distributed inventory is newspaper distribution. In the case of newspaper distribution centers, the newspapers are the inventory units that need to be distributed across multiple locations. Using distributed inventory, a retailer can fulfill the requirement of the customers all at once without any extra transit times as well as low costs.