If there were no customers, there would be no business. And with no business, there is no income. So, it would be safe to summarise that customers should be the point of business, would it not? Since we have ascertained that customers are important and therefore their satisfaction should be paramount, how can inventory management both create and negate happy customers?
What comprises satisfaction with a service?
Let us first define what comprises a customer’s satisfaction. A customer wants to order the product when they choose to (with respect to time of day and ease of access), at the best possible price, with the lowest shipping cost and in the shortest space of time. The customer’s satisfaction is also based on enjoyable interactions with the company. Under broad terms these are accessibility, affordability, reliability, speedy shipping and service. Therefore, by endeavouring to meet these needs you will help to ensure a happy customer, which equates to loyalty and guaranteed custom in the future. Let us take a look at how inventory management can impact on these aspects of customer satisfaction.
Night or Day
Accessibility is a big part of a successful sales and marketing strategy and inventory management systems play a vital role in its successful implementation. Customers generally expect everything worth purchasing to be available from an online website, which or course is accessible globally. But to operate this service, there needs to be back-end support in the form of custom-designed inventory management software. This serves to ensure there is accurate reporting of product availability which then transmits that information to the website so that when product is no longer physically available in the warehouse, the website will prevent a customer from making a purchase.
It is important that a product is affordable or at least provides a perceived value for money. When inventory stock is erroneously manufactured, ordered or supplied, it incurs storage costs and also can be subject to obsolescence or expiration costs. These costs must either be absorbed by the company, which results in erosion of the bottom line, or alternatively, the cost must be built in to the item price where it is essentially passed on to the customer. If the customer is a savvy buyer and perceives the item to be worth less than its price, then the customer is likely to be dissatisfied and shop elsewhere.
You want it yesterday? No problem.
A big faux pas in the retail world is the inability to reliably supply a product whereby the customer needs are not met. Often, this scenario is a direct derivative of incorrect prediction and calculations of customer demand and subsequent product manufacture and/or yield. Now, whether it is inventory management of final product or of raw ingredients which precede manufacture and yield, failure to relatively accurately predict customer demand, which is also a function of inventory management, will result in inconsistency of supply. Another factor that affects this is shipping, which must be both affordable, extremely reliable and hasty. From experience, when a product arrives within one or two business days and exceeds expectations in terms of reliability, satisfaction and the likelihood of future purchases increases exponentially.
Sometimes things do not go well, regardless of the amount of planning. In cases like these, do not underestimate the power of exceptional customer service. That is, the honesty, friendliness and charm of company employees interacting with customers and their willingness to go to extreme lengths to help the customer. Often, a customer will overlook some of the other aspects and accept the inability to supply or expensiveness for an exceptional customer service experience that leaves them feeling worthy and valued. Of course, to be able to express stock status with honesty and reliability, good inventory management software is required. Likewise, if a customer is returning a faulty product, the ability to provide a replacement at short notice without impacting supply requires effective inventory stock management.
Inventory stock management underpins the whole company and its operations and should not be overlooked when implementing optimum operating procedures. It also can have significant direct and indirect effects on customer satisfaction which of course is paramount for the generation of business and income.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.