Sellers tell Stacy Walker they don't need an inventory management system because their 3PL already handles inventory. Her answer is that a 3PL handles the warehouse, the picking, packing, and shipping, and may send you a report on what went out. What it doesn't do is show availability across your selling channels, forecast when to restock, generate purchase orders against your lead times, or calculate your cost of goods sold.
Inventory & COGS
Why Ecommerce Sellers Need an Inventory Management System, Even with a 3PL
2 min
Transcript
0:00 The 3PL misconception
As an ecommerce seller, have you ever wondered the best way to manage your inventory while still using a 3PL? Hi, I'm Stacy with LedgerGurus, and today I'm going to explain to you why you need an inventory management system, even if you are using a 3PL for fulfillment.
When I speak with clients, I often hear people tell me that they don't need an inventory management system because they're using a 3PL. Well, today I want to clear up that misconception.
If you're using a 3PL, then you'll already know that it manages all your warehouse and fulfillment processes. When an order comes in, it's sent through to the 3PL, and somebody at the 3PL picks, packs and ships the order. You might even get a monthly or quarterly report from the 3PL telling you what's been fulfilled and possibly what's left on the shelf. The 3PL is also likely using some kind of a shipping tool.
0:45 What a 3PL doesn't cover
What you're missing with the 3PL is everything on the operational and accounting side of your inventory. Your 3PL doesn't manage your available inventory across multiple selling channels, any kind of forecasting, including when you need to send more inventory to the 3PL or to Amazon, purchasing inventory, and most importantly, your cost of goods sold.
1:10 What an inventory management system adds
A good inventory management system will keep track of where your inventory is at any moment. Is it in transit to the warehouse? Is it in transit to the customer? Is it sitting on a shelf? It also manages your purchasing process. Along with forecasting, a good IMS will look at historical sales and lead time requirements in order to generate purchase orders, so you never run out of inventory.
Most importantly, an IMS automates everything around cost of goods sold. Knowing your profitability is critical to the success of your ecommerce business.
If you are an ecommerce seller, then it's time to consider an inventory management system, even if you are using a 3PL for fulfillment. If you would like help choosing an inventory management system for your business, please contact us through the link below. If this video was helpful, like it, leave a question in the comments and subscribe to our channel for more helpful ecommerce accounting tips.