What is Pipeline Stock?
Stock being transferred between locations but has yet to be purchased by a customer is referred to as pipeline stock. It is additionally known as a pipeline inventory. It is crucial to evaluate since it enables you to determine what percentage of your assets are within your control.
Significance of Pipeline Stock in E-commerce Logistics
E-commerce companies can maintain a healthy bottom line and get a clear view of their cash flow by managing their pipeline stock. They also use this inventory method to accommodate the high demand for particular orders. Here are some more advantages of this shipment to consider:
- Improved inventory forecasting and production management
- More excellent knowledge of shipping costs, routes, and systems
- Improved supply chain management
- Improved forecasts for figuring out the lead time for production orders
- Enhanced protection from inventory loss
- Gaining a thorough understanding of the pipeline stock can help improve inventory management
Pre-requisites of Pipeline Stock and How It Works
The pipeline stock begins to function the minute the online seller makes the payment to the supplier or manufacturer, regardless of whether the retailer owns the products. An e-commerce warehouse can be where pipeline inventory ends up. The following are the two prerequisites for calculating pipeline stock:
- Lead time: It is the amount of time it takes for inventory to be received from a supplier.
- Demand rate: It refers to the typical quantity of SKUs sold between restocking cycles.
Use Case With Pipeline Stock
Assume a shipment of laptops made in New York is on its way to Australia. If the online seller has already paid the manufacturer, it becomes part of their pipeline stock and continues in their inventory until it is sold to end-users.