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Plan for Your Best Peak Season Yet with Available to Promise

01/23/2020

January is a perfect time for your businesses to reflect on the holiday season. Did you meet your revenue goals? Did the holiday madness overwhelm your business? How can you improve for your next peak season?

However, busy seasons are not limited to holidays for retailers and e-commerce businesses. Planning is critical to make sure that inventory stays at the right levels during any peak season. You can grow your business to new heights while maintaining your sanity with the right methods in place.

Available to Promise (ATP) is a critical concept in business, especially during a busy holiday or peak season. However, without the right systems and processes in place, you could be falling short. Here’s what you need to know about ATP to help plan for your best peak season yet.

What is ATP?

ATP allows companies to forecast the quantity that can be produced on or before a chosen date to fulfill the order customers place. Done well, it strikes a delicate balance: companies can provide to customers while maximizing inventory efficiency.

ATP is divided into two strategies:

Push strategy is real-time ATP that estimates based on production trends and demands forecasted on previous data. It takes into account what you have on hand, your supply (such as planned orders), and demand.

Pull strategy, on the other hand, is calculated after the order is placed. Many small businesses and start-ups that cannot afford forecasting tools have to rely on the pull method.

Peak season is when the pressure to meet customer demand is at its highest. The right ATP tools can help advise your inventory, as well as the rest of your business strategy to maximize profits.

Perpetual Inventory Management for Better Business

The critical feature for effective ATP is perpetual inventory management. Knowing how much inventory you have on hand is not enough. However, many companies fail to really know what is in stock. In fact, the average retailer has an inventory accuracy of just 63%.

You need to see the amount that you can actually sell. Inventory that still needs to be inspected, for example or products that failed quality inspection should not be included in your ATP because you cannot send that to your customers yet.

For effective inventory management, make sure that you know your stock. That way, you can deliver what you have and maintain a smooth inventory even in the peak madness of your busy season. It also allows you to identify trends in your inventory quickly. Is a formerly slow item starting to sell out at a faster-than-normal pace? You can react to have the product you need on hand for maximized sales.

The better in-depth view management has of stock, sales, and trends, the faster you can act to meet the needs of your customers.

Maintain Team Success

While ATP is a critical aspect of inventory management, it affects far more than only your warehouse. It allows all of the teams in your company to get on the same page for a more effective business.

ATP does more than maximize your inventory space. It also makes sure that your entire team knows how best to position your business. Marketers, for example, cannot be as effective without a thorough knowledge of ATP. They may be frustrated that the products they feature in direct marketing efforts (such as pay-per-click, email, or social media) are low- or out-of-stock. They pay to get the product in front of the right eyes, only to have the order refunded, and the customer leaves a negative review.

Knowing what is in stock can also help marketers create effective ads to help grow your business. They can emphasize alternative items to replace out-of-stock items. They can also take products off of your homepage or landing pages when they notice the inventory is low.

In addition to marketers, operations can benefit from better ATP processes. Pre-authorizations can be a headache if the payment does not go through. They can get tied up with pre-authorizations that expire before the order can be processed. When there is no tie-up in the order, you can ensure that all payments can go through without having to sort out any issues that could arise from expired pre-authorizations.

The hold up in pre-authorizations can cause problems for customer service in a couple ways. Sometimes businesses choose to hand these issues to customer service in order to free operations. However, the burden on them to sort out payment issues can slow down customer service. In addition, they also might see an increase in complaints for the slowed service and payments.

When everyone has access to critical information and maintaining smooth inventory, your whole business can benefit. No aspect of your company is in a vacuum: each department affects the others. By improving communication and improving each department, your entire business will benefit.

Better Customer Experience

There are few things more frustrating to customers than the inability to get what they need when they need it. This is especially true for peak seasons, such as the holidays. If they are under pressure to get a gift on time or they need a swimsuit before vacation, any delays in the process of getting it will likely make your customers unhappy with you.

Knowing your stock is essential for getting orders out on time. Many businesses fail to pay close attention to their inventory: 34% of companies shipped an order late because they accidentally sold a product that was not in stock.

Matching your inventory to your website is critical as well, especially with popular items. It can be frustrating for customers to go through the entire buying process only to find out later that their order can’t be fulfilled.

Negative reviews can be detrimental to your company. You don’t want to have to send out emails informing your customers that their order was delayed, or worse, that it has to be refunded. These will likely end in complaints on both social media and to your customer service department.

Mark-Down Management

Seasonal items can be tricky for companies. They want to keep enough to sell and keep customers happy, but not so much that they have to lose money on them to free up cash-flow and inventory space. The right mark-down management system will help ensure a maximum profit by identifying stock to mark-down gradually.

Maintaining your stock is critical for overhead costs: reducing stock-outs and overstocks can lower inventory costs by 10%.

When you know your stock, you can avoid unloading too much seasonal stock that doesn’t sell. You can start the mark-down process at the right time to sell as much of your product as possible.

Maximize Your Business with the Right ATP Tools

ATP is valuable for your business throughout the year. However, it is critical during peak seasons. Gain inventory control and visibility across all your retail and wholesale channels, systems, and fulfillment locations with an ERP system. With the right tools you can maximize profits, increase efficiency, improve your customer experience, and reduce overhead costs.

Make this year the best one yet. Contact us today to see how ERP can help you create a better Available to Promise process.