Impact of store pickup and delivery on inventory
Introduction
Customer Order and Delivery Management Plugin is a software module that seamlessly integrates with Tagrain and allows retailers to further extend the capabilities of their TAGRAIN edition. It allows them to add omnichannel capabilities to the existing Tagrain application. With this Plugin activated, retailers can uniquely identify an order from a customer, capture customer specific instructions, offer customers to buy products online and facilitate in-store pickups.
When an order is placed in Tagrain, the customer has the option to select a preferred method of delivery. He can either choose to pick up the order placed from a nearby store or opt to get the order delivered at his doorstep. Depending upon the delivery selection made by the customer, the order is processed. Whatever the case maybe “Store Pickup” or “Home Delivery”, it has a direct impact on your inventory. Let us try to understand this with an example.
In this example, we will consider a product “10001”, the stock in hand for which, at the beginning of the month, is 100 units.
Order Booking
An order was placed by a customer requesting “Home Delivery” of 10 units. The retailer, though the product is still lying with him, keeps aside 10 units of the product and marks them as “Reserve Stock”. Now the actual units of the product left with the Retailer to sell is 100 units minus 10 units (Reserved) = 90 units.
Delivery/Pickup
Now 2 possible scenarios could arise here. The customer may have requested Home Delivery or may have opted for Store Pickup. In either case the “Stock on Hand” will be reduced by the units equivalent to the number of units delivered or picked up. In this example the customer was delivered 5 units of the product. As a result,
- The “Stock on Hand” was reduced by 5 units
- The “Reserved Quantity” was reduced by 5 units. (Units that were delivered to the customer).
Refund/Cancellation
Sometimes there might arise a situation wherein a product sold is returned or an order is cancelled. In either case, there will be an impact on “Stock on Hand” or “Reserved Quantity”. The customer who was delivered 5 units of the product, now chose to return 2 units. As a result, the “Stock on Hand” increased from 95 units to 97 units and the “Reserved Quantity” remained at 5 units. Another customer who opted in for “Store Pickup” picked up only 3 units. As a result, the Stock on Hand was reduced from 97 units to 94 units and the “Reserved Quantity” reduced from 5 units to 2 units. Then there was a customer who cancelled 2 units from his order. Since the cancellation of an order does not affect “Stock on Hand”, the “Stock On Hand” remained at 94 units. However, the “Reserved Quantity” was reduced from 2 units to 0 units.
Conclusion
This section explains the effect on stock levels at different stages of the order management and fulfilment process. The 4 broad categories are explained below:
When a Sales Order is Booked in Tagrain
When a sale order is placed in Tagrain, the “Quantity Ordered” will be kept aside and marked as “Reserved Quantity” and the “Quantity Available To Sell” will be reduced by the “Quantity Ordered”.
In our example we reserved 10 units in lieu of the order placed. This reduced the “Quantity Available To Sell” from 100 units to 90 units.
When a Sales Order is Delivered or Picked Up in Tagrain
Reserved quantity will be reduced by delivered / picked up quantity. In our example we reduced the reserved quantity by 5 units, delivered to a customer. However, there will be no change in the “Quantity Available To Sell”. In our example, the available quantity to sell remained unchanged at 90 units.
When a Sales Order is Refunded in Tagrain
When a sale order is refunded in Tagrain, the “Inventory on Hand” and the “Quantity Available to Sell” will both increase by the “Quantity Refunded”. In our example one of the customers returned 2 units, which increased the “Inventory On Hand” from 95 units to 97 units and the “Quantity Available To Sell” from 90 units to 92 units.
When a Sales Order is Cancelled in Tagrain
When a Sale Order is cancelled in Tagrain, the “Quantity Available To Sell” will increase and the “Reserved Quantity” will decrease by the “Quantity Cancelled”. In our example,a customer cancelled 2 units from his order. The reserved quantity was reduced from 2 units to 0 units and the “Quantity Available To Sell” increased from 92 units to 94 units.
Suggested Readings
Customer Orders & Delivery Management Plugin Features
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