SAP on AWS
EDI for SAP
3 Simple Strategies for Managing your Online Inventory with SAP
by Jodi Abrams
When you are making use of multiple e-commerce sites to sell your product, it’s important to accurately manage your stock levels so that each site/retailer shows available stock when you do have the inventory, but you don’t overcommit to something you can’t deliver on.
WHAT DOES THIS HAVE TO DO WITH EDI?
For many of these online retailers (Walmart.ca, BestBuy.ca, Costco.ca, etc), inventory is communicated to them via an EDI 846. This EDI document contains information on products and available inventory levels. Typically it’s sent daily, but can be requested as frequently as every hour to ensure that the websites are staying up to date with how much inventory you have available to ship.
There are different ways that you can manage this within SAP to try to maximize your available inventory, while minimizing your mistakes of listing inventory that you just don’t have.
THE STORAGE LOCATION SOLUTION
This solution requires some configuration in SAP to set up a storage location for each retailer. Once that is set up, there are different options for maintaining it. One option, is to have your planners manually manage the inventory – moving inventory to those storage locations as they forecast it will be needed. Another option is to configure standard replenishment of these locations from a main storage location. You then send your EDI 846 to the retailer and report on stock only in the storage location assigned to them. You are guaranteed not to overcommit. However, you could leave money on the table by having inventory in the wrong location at the wrong time – allowing one storage location to be depleted while another has an abundance of inventory.
THE % ALLOCATION SOLUTION
In this solution, you set up what % of your inventory you want to report out to each retailer. For example, you have 100 in stock, perhaps you want to report on 10%, so your inventory advice goes out saying you have 10 available for them to sell. This can allow you to overstate your inventory if what you are sharing with each retailer adds up to more than 100%, but this could be a strategy some want to take. Just be careful if you are reporting on levels in a storage location from which you fulfill your other customer orders, you may run out faster than you expect!
This solution could have you overcommitted so runs a risk there, but could minimize how frequently you run out at the online retailers while you still have inventory in your warehouse.
THE REPEATED INVENTORY ADVICE SOLUTION
If the retailer allows it, you could combine either of the above solutions with repeated inventory advices. Sending 846’s more frequently throughout the day. This can allow you to continually replenish stock as it’s selling and reallocate as needed based on orders and commitments coming in.
No matter which solution you choose, it’s a fine balance between being out of stock with the e-retailer, and showing stock that you don’t have, which can lead to steep fines. How many e-commerce sites, what sort of safety stock you maintain and what your other sales channels include, are all factors in making this decision.
Jodi is an expert in SAP and eCommerce integration, and is Vice President of Applications for CONTAX.