Logiwa Streamlines Cosmetics Inventory Management

Inventory management is one of the challenges in the cosmetics online retail business. Constantly changing market conditions and competitive environment is forcing cosmetics industry into a more responsive warehouse management model. Consumers have a certain level of brand loyalty. However, it is very likely that they will go for another brand if they can’t get a good customer service level such as accurate and on-time delivery. Else, they can find the same brand at another vendor in the market. Competition is between the supply chains of the cosmetics brands as it happens in most of the consumer packaged goods industry. Logiwa easily responds to the needs and challenges in the cosmetics retail. You can enjoy the demand-driven order fulfillment strategies to access your consumers.

Logiwa provides the following improvements to the cosmetics retail;

  • Accurate and real-time inventory management
  • Commitment to accurate and on-time shipments.
  • Effective tracking of lot/batch number information
  • Inventory visibility and accuracy
  • Applying the most feasible order picking strategies in the warehouse
  • Faster packing, labeling, and pre-packing processes.
  • Tight shopping cart integration
  • Traceability along the supply chain.


Logiwa WMS Fits Perfectly in your E-Commerce Warehouse

Logiwa WMS is a cloud warehouse and inventory management software that focuses on the inventory management and order fulfillment needs of retail and e-commerce businesses overall. We have been helping hundreds of retailers around the world for more than a decade. We help retailers in apparel and fashion, furniture, consumer packaged goods, electronics and household items as well as Cosmetics. Please feel free to contact us at info@logiwa.com to learn about our expertise in all retail segments and to see how we are connected to dozens of different sales channels..


 Want to find out more about how an inventory management system can work for you? Schedule a free demo with Logiwa today!

 

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Boost Your Business with Logiwa WMS and SquareSpace Integration

We’re excited to announce that we are now fully integrated with Squarespace, SAAS-based content management system, which allows online business owners to create and maintain their websites, blogs, and online stores.

Our customers can manage their shipping and inventory efficiently with Logiwa WMSSquarespace integration.

Through integration with Squarespace, Logiwa WMS allows you to easily start selling on various sales channels, share inventory and synchronize orders across different sales channels, prevent overselling and missing sales opportunities.

What can our customers do with Squarespace and Logiwa WMS integration?

With seamless integration with Squarespace, our customers can;

  • Capture orders from their connected sales channels such as Amazon, eBay, Shopify, and Walmart
  • Process orders within Logiwa
  • Connect to major shipping carriers like USPS, FedEx, UPS, Canada Post, and DHL to deliver orders to the customer
  • Calculate shipping rates before printing carrier labels
  • Generate and print shipping labels
  • Get tracking number and shipping information automatically updated on the originated sales channel

Connect your business to Logiwa WMS

Logiwa WMS is the most connected inventory management system that connects all parties and offers seamless supply chain management. Logiwa WMS provides:

  • Shopping cart integrations ( Shopify, Magento, BigCommerce etc.)
  • Marketplace integrations (Amazon, eBay, Walmart, Jet.com, Houzz.com, Groupon, Sears etc.)
  • Shipment carrier integrations (FedEx, UPS, USPS, DHL etc.)
  • Accounting system integrations( QuickBooks, Xero etc.)
  • Open Restful APIs

About Squarespace

Squarespace is a service-based content management system, integrated website builder, blogging platform, hosting service, commerce platform, and domain name registrar. The system allows individuals and businesses to create and maintain websites, blogs, and online stores. (*) (from Wikipedia)

Squarespace allows their users to;

  • Select and create their original website from hundreds of customizable templates
  • Open and manage their online stores
  • Create their blogs to share their thoughts and experiences in a professional platform
  • Connect their domain to G Suite and create custom emails for their personal brands or businesses

 

Want to find out more about how an inventory management system can work for you? Schedule a free demo with Logiwa today!

 

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Logiwa is Integrated Seamlessly with Groupon

Logiwa is fully integrated with Groupon. When an order is processed on Groupon, Logiwa automatically updates the inventory and shipment data in the system. Thanks to our inventory management integration, sellers can easily know the status of their orders and even optimize their operation process. Groupon integration includes:

  • Pull orders from Groupon
  • Pull product data from Groupon
  • Push real-time inventory quantities
  • Push order & shipment status & tracking number back to Groupon
  • Create pick list and shipment labels

 

To learn more about our integrations or other benefits of Logiwa, sign up for a product tour below!

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5 reasons why you need Inventory Management Software for your online retail business

It is more important than ever as an online retailer to manage logistics to account for sudden influxes of orders. Managing your inventory can take a lot of calculation, endless spreadsheets, and missing or misplaced inventory.  An inventory management system can help you to run your online retail business in new and exciting ways. By investing in a quality inventory management solution, you can easily streamline your processes and improve control over your business. Here are the top 5 reasons why Inventory Management Software can completely change your online retail game:

 

5 reason why inventory management system

It Saves Money and Time

A WMS can help save both money and time by optimizing your warehouse. However, one of the biggest ways that a WMS can save you money is by completing all your administrative tasks, such as entering and updating, for you. Instead of having to input inventory into an excel spreadsheet and keep track of it all manually, your WMS can manage it all with just a quick scan. This can save you hours of tedious work, allowing you to spend your valuable time elsewhere!  Additionally, a cloud-based WMS system can be used by your remote workforce as well as employees who need to access the system from home or in the field, meaning you don’t need to buy special devices or waste time syncing and updating spreadsheets to manage your inventory.

It Automates Your Warehouse

Logging inventory manually is always risky, especially since the margin of error is way higher than a simple barcode scan. You could misplace or lose a piece of inventory or worse — log it twice. With all these inconsistencies, it can be difficult to know exactly how much inventory you have! An inventory management system makes sure that you know where your product is at all times. Additionally, it automates and optimizes your picking and scanning process, choosing the types of picking that are best suited to your needs. This increases efficiency and also helps save your pickers valuable walking time.  

It Minimizes Human Error

Logging inventory manually can be a chore, and can result in many human errors. When doing bookkeeping manually, you run the risk of misplacing inventory, or worse — inventory is lost, accidentally not logged or left un-updated. It can even cause errors when trying to calculate your safety stock levels or ATP, which could cause you to miss a sale and ultimately lose money. With a WMS, your bookkeeping is guaranteed to be accurate and is always easily accessible, which means you’re always able to keep up with it in real-time.

It Gathers Data For You

Analyzing data from your warehouse can help you understand a lot of trends in the industry and with your business as well. Data provides insights into your future threats and opportunities, and summarizes this into a report that can help you predict future trends. This makes statistics more significant and the results more important than ever. While data analysis is incredibly important, making sure the data is accurate and valid is crucial. You should make sure to have the proper systems and tools in place so you can collect data in a manageable and accurate way. A WMS, for example, can create data reports and analyses for you.

It Keeps Customers Updated

Your customers rely on tracking their purchases now more than ever, and creating a reliable tracking and return system can be difficult to handle on your own. It can be even more difficult to ensure that shipping information gets sent out on time to the right customer, or provide confirmation that their return is being processed. Additionally, your customers will be disappointed if the product they order is not available immediately. Inventory software helps to keep them informed by automatically updating stock status across all your sales channels.

 

Do you need an Inventory Management System?

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How Inventory Management Contributes to Online Sales

 

Nowadays, online retail is king. It’s more important than ever to manage your inventory for e-commerce businesses and make the sales process efficient and smooth. Manual inventory management may seem manageable now, but as your business scales, so does the amount of orders that need to be fulfilled, and it can get even more difficult to track your inventory. An inventory management system, or WMS, is a great way to solve these small human errors that can cost you major sales. By using an automated inventory management system, you can not only be more efficient, but convert single sales into repeat customers. Here are five ways to increase sales with the right inventory management:

 

It Minimizes Errors

Each small misstep due to human error can cost you a huge amount of money in lost sales. One example of this is in managing selling across multiple channels. Balancing inventory can be difficult for multi-channel e-commerce stores, because often the same pool of inventory is rapidly depleting at different rates. This can mean that you might sell out of the product and restock, but other channels might not get updated to reflect this, which results in a false “sold out” sign and lost sales. An inventory management system can ensure that you haven’t lost any potential customers by making sure you have enough stock supplies to minimize sales loss. Manual inventory management can be slower and take longer than automated systems. Inventory management softwares automatically generates your pick list, ensuring the right order is picked each time.Good inventory management tells you where your inventory is at all times, what you are running out of, and what you should reorder, ensuring that your company is never sold out when it shouldn’t be.  

 

It Improves Customer Service Levels

Your customers will be disappointed if the product they order is not available immediately, or shipped to them as soon as possible. Returns can be even trickier to handle, especially when competing against retail kings like Amazon. Inventory management software can help keep your customers informed about their orders and returns by automatically updating them every step of the way across all your sales channels.

Additionally, an inventory management system makes sure that the right items get shipped with the right order, minimizing unnecessary errors that could otherwise make you lose a potential customer or a high rate of returns. By shipping the right product every time, your customers know that they are getting what they asked and waited for, and that they can trust your store in the future. It also reduces the chances that your store gets a low rating on Amazon, which helps with future sales. Additionally, having tracking information helps prevent missing packages and makes sure that the customer knows where their product is at all times, giving them peace of mind and assurance that their money was well spent!

 

It Saves You Money

As your company begins to scale, it can be harder and harder to know what’s going on with your inventory within the warehouse. Inventory management software can help boost insight by giving you access to every process that is happening in your warehouse in real-time. The automatic updates and alerts for slow or surplus stock saves you money that you could have tied up in unnecessary inventory, freeing up resources for potential sales.  

Since the stock is a huge biggest asset for businesses, it is essential to be able to forecast and streamline inventory levels to improve sales. By having a system measure your inventory levels, you ensure that a popular product is never sold out again, and that your store can be relied on to provide the goods your customers love.

 

Make Your Operations More Efficient and Productive

Inventory management is great for thinking ahead for your company, too. An Inventory Management System helps you measure what your best and worst performing products are, and what might sell better in the future. This helps make your future operations more efficient and productive because you can now market the trends your software recognized, resulting in more sales.

Inventory management also ensures that your warehouse can ship its products seamlessly and easily, ensuring your customer gets your products at the correct time. By completely automating your processes in the warehouse, you can optimize picking routes and save time in the packing process, which helps not only your employees fulfill an order faster, but make sure it’s less tedious to do so. You can not only ship faster with an inventory management system, but also focus your efforts on what the data shows is going to help boost your business most.

 

They Do The Data Crunching For You

As a retailer, it can be a nightmare to calculate KPI’s and inventory benchmarks, especially as the buying and selling seasons fluctuate.  An inventory management system calculates benchmark numbers such as ATP, Reorder Points, and Safety Stock by crunching the data for you. The system can even adjust to minor fluctuations and patterns over time that a human might miss!

Safety stock,  or buffer stock, is a set amount of extra stock that mitigates risk during lead time. Your safety stock level is usually below the reorder point level, but just enough to account for fluctuations in demand. A good safety stock level makes sure that your stock will never dip below 0. This means that, should sales suddenly increase, you still have some inventory in the bank while you’re waiting for a purchase order restock.  

Unlike safety stock, which is used as a buffer if demand fluctuates or unforeseen delays arise, ATP  is what you have available in the near future.  ATP is the projected amount of inventory you have left available to sell, not including allocated inventory. It is like promise that you will always have a specific amount of inventory available to sell. WMS systems help calculate Available to Promise inventory, or ATP. ATP tells you the amount of inventory you have available to sell, making sure you don’t risk selling inventory you don’t have. Knowing these numbers ensure that you will never miss a sale just because of bad bookkeeping!

 

Do you need an Inventory Management System?

Meet one of our industry experts to see our product’s free live demo.

 

5 Reasons Why You Need to be Using SKU Barcodes, Now!

Using SKU barcodes to help manage your e-commerce business might seem like an unnecessary step. After all, keeping track of your inventory hasn’t been too difficult so far, and there haven’t been any problems yet, right?

SKU barcodes are more important than you might think.

Barcodes use item numbers or stock keeping units (SKUs) for your Amazon store. Barcodes help you reach your full sales potential, regardless of the size of your inventory, by keeping track of and managing your inventory in your warehouse. Many professional companies use SKU barcodes to manage their goods and sell them across multiple marketplaces, but why is it so beneficial? Here are five reasons why you should use barcodes with your business:

 

 

1. It’s Easy

Barcodes helps in many different ways, such as categorizing products easily, measuring inventory levels, purchasing accurate items, and helping make communication between you, the vendors and your customers smooth and efficient. Barcodes are easy to implement and keep track of; instead of having to input unique individual numbers for each product,  you can easily scan in or out a piece of inventory and have it register automatically in your inventory management system. The data on that item can then be recalled at any time with a simple scan, and be accessible from all devices.

2. It’s Accurate

Barcode implementation helps ensure that an item is never double counted, lost, or mislabeled. By attaching a barcode to each product in your inventory, you can also easily keep track of how much of a particular type of product you have. This can be beneficial when measuring inventory levels and deciding on numbers like safety stock. Additionally, if you want to sell your product across multiple sales channels such as Amazon, eBay, Walmart, or Shopify, these channels require an SKU or UPC to list your product. If you already have SKUs assigned to your products, it will be easier for you to match different listings of the same product amongst all your online channels. If you use an inventory management software, it will act as a sort of hub for all your sales channels by connecting to other sales channels and feeding them the correct inventory quantity for the right product.

3. It’s Cost-Effective

Implementing barcodes in your warehouse is very cost-effective! Each barcode label only costs a few cents, and all will be compatible with an inventory management system, ensuring that they work every time. Additionally, barcode implementation cuts down on work and training time, which will improve overhead costs and save you money by increasing productivity. Finally, implementing SKU barcodes ensures that you do not tie up money in accidentally ordering excess inventory, which can save you money in the long run.

4. It’s Accessible

Barcode technology is simple and accessible to implement and can be used in a variety of ways. Additionally, the technology is everywhere and internationally recognized, which helps when selling overseas. Every experienced merchant knows that the best way to search and find a product is the SKU code or the UPC code. Barcodes also help other retailers search for your product and find your store. WMS systems like Logiwa help manage barcode data and provide access to it in real-time.

5. It’s Secure

Barcodes not only streamline the sales process but also leave less room for errors. Without a barcode, it is impossible to tell whether a returned item truly came from your store. For example, if you sell dish soap and someone returns it to your store, you have no way of telling whether the dish soap being returned is truly from your store, or if it is from somewhere else. Barcodes make sure your inventory is secure and free from fraud situations like this. It also keeps track of all your inventory and allows your system to pool data from a quick scan, which can help when having to report exact numbers for taxes or other purposes. Barcodes provide the security of knowing that your inventory is accurate and error-free, and that you have data for it always.

 

Do you need an Inventory Management System?

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Is Your Warehouse Ready for Automation?

We’ve been writing a lot about warehouse automation lately on our blog, and it’s easy to see why. Automation is modernizing faster than ever before, with robots that can open doors and automatic sorters becoming common place in larger warehouses. Companies like Amazon use small robots to help speed up the picking process, and soon enough, humanoid robots may even become a thing.

Ready for Warehouse Automation?

But how do you know if your warehouse ready for automation, or if the investment is worth the money? Here are a few key metrics to look at:

 

Warehouse Automation 1

 

Data is incredibly important when deciding whether or not your warehouse is ready for automation, and whether you’ll make more bang for your buck. The best way to fetch data on your warehouse is by pulling it from a warehouse management system (WMS) you’ve been using.  For example, let’s assume we’ve fetched data from Warehouse X using Logiwa. By looking at X’s data, we can use the following metrics to measure viability:

Median number of shipments or shipment orders = 388/hour.

Average # shipments: 416/hr

Median # products shipped: 1328/hr

Average # products shipped: 1376/hr

These metrics are very important to analyze your data because it indicates the amount of work an automated system would have to do to complete the same amount of orders and remain a profitable asset to Company X. If these numbers are too low and the rate of orders doesn’t increase, the automation used will go through these orders too quickly, which could result in a disrupted order flow. Worse, the investment in this automation might not pay off within a year and could end up taking longer to return true value. However, if these metrics are high, this means that installing automation such as an automatic sorter will return its value quickly because it will be constantly utilized and bring efficiency to the warehouse.

 

Warehouse Automation 2

 

Another key metric we looked at is the pattern of shipments over time. As you can see, the # of shipments over time for Company X was erratic but should have been more constant like the graph on the right. If your number of shipments over time fluctuates dramatically from week to week, automation will not be able to return much value because it will be underutilized during the slow days. In order to properly implement automation, you should constantly have a smooth pattern for shipments over time.

Finally, a last key metric to look at is your company’s service level. In this case, that means a company’s commitment to shipping and delivery speed. The service terms, such as same-day delivery or next day delivery, will drastically affect your decision. In an erratic demand environment, if the service level is just 24 hours, it would be very difficult to implement an automated sorter.This is because, during the low volume days, you can not use your sorter efficiently. However, if the service terms are longer such as 4 days, then you can take advantage of your delivery terms to smoothen the shipments. A high volume days shipment can then be scheduled over the next four days rather than in one single day. This way, you can have a smooth shipment pattern, which you can utilize your automation investment.

Overall, some key questions to ask yourself when considering investing in warehouse automation are:

  1. Will it be in constant use?
  2. Will it return value quickly?
  3. Does your company handle enough orders to justify automation?

 

Do you need an Inventory Management System?

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What KPI’s Should I Use To Measure My Picking Process?

I recently visited a client last week who had a dilemma with his online retail business; something they were willing to pay hundreds and thousands of dollars to fix. They needed help with their picking efficiency. 

My customer came to me and asked me whether their picking process was efficient or not. They asked for a benchmark to compare themselves with, but the simple truth is that it’s very difficult to find one. After taking a look at their historical data, we analyzed their data and fetched their report from their system.

I came up with two KPI’s that I think are great benchmarks for measuring picking efficiency:

The first KPI should be as high as possible, and the second should be as low as possible for an e-commerce warehouse. Why?

First, let’s take a look at what types of picking they were using in their warehouse, and what types of orders they were fulfilling.

They were using cluster or batch picking in their warehouse, picking around 15 orders per trip. Our system was directing them to specific locations, wherein they would simply pick what was there. The client hadn’t considered other methods of picking, or what types of orders were being fulfilled.  

Let’s take a more in-depth look the types of picking methods they were using for picking efficiency:

Cluster Picking

Cluster picking is the process of picking multiple orders in the same picking trip into distinct totes or bins. Generally, multi-tote or multi-bin car/carts are used to execute a cluster pick batch. In a cluster picking batch, each order is assigned to a distinct tote or bin. This is useful for orders with multiple different items, because it minimizes the amount of walking required for each picker, thus increasing picking efficiency.

Batch Picking

Batch picking is the process of picking multiple orders in the same picking trip into same car/cart. Generally, a batch picking trip is followed by a sorting or consolidation process which you sort or consolidate batch picked products into distinct totes. The only exception to this process is single item orders. Single items orders are directly transferred to packing stations to be packed.  Batch picking is handy for picking multiple single orders at once.


Warehouse-batch-picking-trip-01

 

So How Do You Measure Picking Efficiency?

To create the two KPI’s, I analyzed data produced from jobs. For each job, I checked the start and finish time, the number of ORDERS and SKUS the picker picked, the total quantity picked, and  the number of locations visited.

From these numbers, I found that their average quantity picked/location  was around 2, but it should have been 4. I also determined that their locations visited/ job or trip was around 17, and it should be around  8 or 10 for their warehouse.

We also determined that 35% of their orders are single item orders, meaning they had 1 product in each order. They were picking these orders with a cluster picking approach, which results in a lower number of items picked per trip.  

From a productivity point of view, visiting less locations per trip means your trip will be shorter, increasing picking efficiency. Additionally, picking more products per location means you have aligned orders correctly so that most orders that have the same SKUs are in the same batch/trip. This number should always be high.

Solutions

My first overall solution for picking efficiency was to split or separate their single item order base to a different job. That way, we could create one big batch trip for all single items, and the customer would not need to sort or split those items, since there is only one SKU per order. This will help increase the first KPI because 80% of their orders are single item orders using the same 10 SKU’s. Because of this, one job dedicated to single item orders will take care of 80% all the orders at once.

My second solution was to analyze the data further, and see if any orders are much larger than others. I determined that 5% of their orders have more than 15 products in each order, which would be more efficiently handled with order based picking. I then suggested that they use order-based picking for the 5% of these orders, since this will increase the picking efficiency and productivity in their warehouse. It is difficult to pick larger orders in to small totes in a cluster pick trip.

Visiting less warehouse locations or bins per picking trip means that your picking process will be shorter, and therefore more efficient. Picking more items per warehouse location or bin means that you have aligned and batched your orders correctly, ensuring that most orders that have similar products are in the same batch.  Additionally, changing the way you pick your orders can save the number of locations/bins visited per trip, thus saving time and promoting efficiency. The customer loved using these two KPIs as a benchmark to measure their picking process — and now you know how to create your own, too!

 

 

Do you need an Inventory Management System?

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How an RMA System Helps with Warehouse Management

When it comes to eCommerce and inventory management, anything that saves time and effort is valuable. Even shaving off a few seconds can make an enormous difference in the long run, especially when dealing with a large inventory.

Of course, this isn’t as easy as it might sound, what with all the individual steps involved in the fulfillment process and the high standards customers have for shipping. Mistakes in picking and packing, delays in getting packages out for delivery, or damaging items in the process all create a poor customer experience. Even missing delivery deadlines can cause huge problems with the customer’s order. To avoid these issues, your business needs to maintain quality standards that mean you can’t rush.

Warehouse management software like Logiwa will streamline this process and help you save loads of time in a multitude of ways. As a business owner, you know the value this degree of efficiency provides. So what else can you do to move faster? Where else can you save time during warehouse management without cutting corners?

Returns and Reverse Logistics

Product returns are inevitable in eCommerce. No matter how great your product photos and descriptions are on your website, you’ll still face customers who want to return something. Reasons for returns vary from the sensible to the, well… unusual, but they’re always going to happen.

When you receive a return, you need to go through the process of reverse logistics — taking items back into your warehouse to determine if any value can still be derived from them. You need to evaluate each returned product, whether it can be resold, and what needs to be done with it. Missing barcodes and other issues complicate matters. Logiwa’s customer returns features can help this go a lot smoother once the returned products reach your warehouse.

But what about having more control over the items that get returned to you in the first place?

The Benefits of a Return Merchandise Authorization System

A Return Merchandise Authorization (RMA) is a form issued to a customer that authorizes them to return their purchase to you. An RMA might include a shipping label if the business pays for return shipping.

With a system to issue RMAs, your business can exert some control over the items your warehouse will receive. As long as you have it spelled out in your policy, you have the right to refuse customer returns under the circumstances you define. This can cut down on the number of completely unsalable products that are returned to you for your warehouse to deal with, but it also provides the benefit of foreknowledge about the condition of the returns you do accept.

RMAs enable you to collect information from the customer ahead of time, including photos of the product. You can require proof from the customer whether the item is resalable, still has its original packaging, has an intact barcode, and more — all of which influence what you do with it in the warehouse. Of course, you’ll still need to deal with it once it gets to you, but if you’re prepared with knowledge early on, you have options.

Using RMAs to Simplify Receiving

When you look at the photos a customer provides during the RMA process, you may be able to tell right away what you’ll be doing when you receive it. Is it completely unopened? Can it go straight back to its place in your warehouse after scanning it back into the system? Or are you going to need to handle it a different way?

Knowing these facts can enable you to create a more streamlined system where part of the work is already done before the returns arrive, and less work means more time saved. For example, a business could use RMAs to:

  • Refuse certain returns outright, preventing them from reaching the warehouse at all
  • Issue different shipping labels so products that can go right back into stock can be more easily separated from products needing to be repaired or destroyed, enabling you to split the workload more effectively (for example, include a specific manager or team’s name on labels issued for items you know need extra inspection)
  • Determine problems in their fulfillment process that may be causing damage to items (certain products always ending up damaged in the same way could indicate a warehouse-related issue)
  • Give you more time to determine whether you have the inventory to replace a defective product

Of course, the situation will vary depending on the business, and you may come up with a different means of using RMAs to make inventory management easier. But it’s good to know that the tool is there, and can do more for you than might meet the eye at first — rather than just giving you power over whether a customer can make a return, you can also choose where, when and how.

It’s fair to say that an RMA system is an absolute necessity for eCommerce.

Implementing an RMA System for Your Online Store

A good RMA system provides the customer with a simple means of sending you the pertinent information about the product they want to return, such as by uploading photos. You should be able to automate some of the process, so look for the ability to display a list of customizable return reasons for the customer to select from. It’s also helpful if you can set a time limit on RMAs, preventing them from being initiated outside the product’s return window.

Preferably, you’ll be able to find RMA software that integrates perfectly into your online store’s software. However, that’s not always the case. The easiest solution is to run your online store on a feature-rich eCommerce platform that includes an RMA system out of the box — along with as many other features and integrations as you can get your hands on. You’ll end up saving time and money in the long run, and who doesn’t want that?

Do you need an Inventory Management System?

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The State of Our Automated World: Part 2

This article is part 2 of a 2 part series on warehouse automation in the logistics industry and how robotics can change the future of warehouse management. If you would like to learn more about the current state of robotics and whether it’s feasible for small to medium sized businesses, please check out our first article in this series, or another on this subject here.

It is extremely important for us to understand how many jobs done by people can be automated to determine if these jobs will be taken over by robots or software in the future. In 2013, 702 different business lines were analyzed by Carl Benedikt Frey and Michael A. Osborne of Oxford University in their paper “The Future of Employment: How Susceptible are Jobs to Computerization“. According to this study, 47% of jobs that people are currently performing seem to be at high risk of being taken over by warehouse automation.

In the Supply Chain and Logistics sector especially in warehouses, engineers constantly work on accelerating existing services, lowering costs and increasing accuracy. As a result, automated processes are evaluated by comparing the same work with human labor. When we examine these decision processes, the life cycle of automation looks a little something like this:

 

  1. The work is split apart to analyze the time it takes to complete each individual step.
  2. Each piece is redesigned and from scratch with new designs to figure out scenarios where more work can be completed with less resources.
  3. For each new step, a warehouse automation solution produced in the industry is compared with the current workforce and investment analysis to see whether it can be substituted. If the firm’s fixed workforce cost can be used to return the automation investment, it is decided that the investment is feasible.

For example, assume there are 100 employees working one shift for 8 work hours in the warehouse, and the average number of orders prepared daily when used order printouts is 20,000 and the cost of workforce is fixed.

With humans doing it with the above parameters, they can complete around 28,000 orders per day in such a warehouse.

Now, consider how much faster it would be to replace this process with robots in this warehouse. Although the initial investment cost will be much higher due to things like the price of the hardware, software and network connections, they will only need 1/4 of the existing staff. Therefore, the daily average number of orders that can be taken out will be around 75,000, saving the company both money and time in regards to payroll and orders fulfilled.


The crucial thing to pay attention to when making a business investment decision in warehouse automation is whether the profits of automating your warehouse will outweigh the financial burden of installing and implementing this automation.

Some common costs with warehouse automation to consider:

  • Within the first two months, you must budget for three to four times the current expenditure.
  • The monthly investment at the ninth month will be the same as the current order.
  • From the ninth month the Investment costs should begin to bring in returns.
  • From the 4th year the investment will start to provide a net operating profit to the company.
  • The increase in business volume that the company shows will enable all these calculations to take place much earlier.

Apart from these, other criteria such as currency value of the country of operation, market balance of the sector, and growth plans of the company will have a direct impact on this warehouse management investment decision.

As we have already mentioned, another condition of robotization of the warehouse is the ability of the robot to do the work currently done by people. One of the problems in replacing people with robots in the supply chain, especially in warehouse, is working with delicate or oddly-shaped inventory and packages. Finding robots that can not only handle these types of inventory, but also cheap ones, can make it impossible to switch to automation systems.


The hope is that in the future, we will have the ability to do a simple software upgrade rather than buy entire mechanization systems. This would produce cheaper production lines, easier warehouse automation techniques, and a more cost-effective future. Companies that realize these opportunities and make the right investments will have very valuable future advantages.

We cannot deny that these developments are beginning to occur today. Yesterday it was a Tesla in space; perhaps tomorrow, a fully sentient automated packing system. Only time will tell what factors today will truly account for a future in warehouse automation.

 

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