Inventory managementΒ systemsΒ to avoidΒ backorders
1. Dropshipping
To mitigateΒ backlogΒ delays, you may consider reducing shipping and processing time by cutting out several steps of theΒ inventory managementΒ process usingΒ dropshipping.
When you use theΒ dropshippingΒ technique, you receiveΒ sales ordersΒ from customers but keep no inventory in stock yourself. Instead, these orders are sent directly to the supplier, manufacturer, or anotherΒ retailerΒ for fulfilment, who ships the order directly to the customer.
UsingΒ dropshippingΒ cuts out several of the additionalΒ fulfilment processΒ steps above. The supplier does not have to waste time shipping you the product. You do not need to receive or process the product at your warehouse. And the items do not have to be shipped multiple times to arrive at the customerβs door.
2. Just-in-timeΒ (JIT)
AnotherΒ inventory managementΒ systemΒ that can reduceΒ backorderΒ frequency isΒ just-in-timeΒ (JIT). In a nutshell, the JIT philosophy eliminates waste to simplify and streamline the production process.Β
While JIT reducesΒ stock levels, this method can also identify and eliminate inefficiencies that can cause unexpectedΒ stockoutsΒ andΒ backlogs.
Excess inventory lets your company hide inefficiencies like waste, scrap, machine breakdowns, or poor design. JIT exposes these inefficiencies, thus helping you to produce more accuratelyΒ forecastΒ production schedules in the future.