Commerce Layer is proud to be an official sponsor the JAMstack Conf in London — 09-10 July, 2019 🎉 Don't miss out!

GLOSSARY

Inventory model

A series of rules, related to the management of a stock, usually helpful in organizing the goods that are ready or will be ready for sale


Generally speaking, an inventory model helps a certain business in determining the optimum level of inventories to maintain in a production process. It usually manages:

  • the frequency of ordering,
  • deciding on the number of goods to store,
  • tracking the flow of the available stock items, to provide non-stop service to customers without any delay in delivery.

The inventory model you create while setting up your Commerce Layer’s Organization is one of the key elements of a Market. Within that specific market, it establishes a hierarchy between the Stock Locations used for each order.

A Commerce Layer’s inventory model is defined by two simple pieces of data:

  • a name, the internal identifier for this resource within your organization
  • a list of stock locations (ordered by priority). Besides these two main elements, there is the option to select two checkboxes: on hold and destroy.

Checking the on hold flag tells the system to block the shipment of a specific order and put it in a dedicated queue. The reason to stop the shipment usually depends on waiting for some items to be available.

The destroy checkbox lets you select stock locations you want to remove from your organization.

Commerce Layer can handle up to 5 stock locations. If a requested stock item isn’t available in the first stock, the system will check the following one. And so on, until it gets to the one with the lowest priority.

Now let’s suppose an order includes multiple items. Some of which available in the main stock location, some other available in the lower-priority ones. The hierarchy setup influences how the system handles the shipments. In this case, Commerce Layer creates as many shipments as the number of stock locations involved.

Examples

There are some cases where you should set up different (or more than one) stock locations. Let’s dive now into some examples to better understand:

  • how you should order by priority your stock locations
  • how the above mentioned on hold flag could help you optimize your shipment process in some of them.

Dedicated and shared ecommerce stocks

You want to organize the goods in the warehouse of your physical stores to fulfill the requests coming from your ecommerce business. You have three main options.

  • In an omnichannel approach, you can decide to match the whole warehouse with a single stock location. It will then be shared between all your selling channels. So, regardless of whether the items picked up have been ordered online or sold offline. In this simple case, your inventory model features one stock location.

  • In terms of the inventory model, the situation will be the same even if you decide to split the items in your warehouse into two groups. The first one dedicated to your ecommerce business (the only stock location you will need to configure). The other left aside for the offline selling.

  • In a more structured set-up, you associate the two group of items mentioned above to two stock locations. The first one still dedicated to the online selling. The other one now shared between ecommerce and offline channels. The latter can be seen as a fallback stock when the requested items aren’t available from the online stock. Your inventory model will feature: the main stock location (the one associated with the “ecommerce” stock) a low-priority one (the one associated with the “shared/fallback” stock).

Backorders

A backorder is a customer order containing items unavailable in your main stock location but available - for instance - in 90 days from another one (the one handling the backorders).

When you decide to handle backorders, you’re taking a step towards a more structured hierarchization of your stock locations. You need an inventory model featuring at least two of them:

  • the main one
  • a low-priority one (the one associated with the “backorders” stock).

Multiple shipping locations

If you plan to ship your goods from different places across your catchment area, you can organize your shipments based on customer proximity criteria. This particular case isn’t handled within an inventory model, but with the creation of more markets and Shipping Zones.

In a similar way, inventory models are helpful to replicate the logistics organizational structure of your company. Speaking about that, a classic case is the one involving a supermarket chain. Each store has a warehouse that can be configured as a stock location. Hence, the related organization has as many stock locations as the number of stores of the chain. This example is quite appropriate to highlight how the same stock location can be associated with the inventory models of different Markets at different priority levels. A store located in North America could be associated both with:

  • the main stock location within the inventory model of a US market
  • with a lower-priority one within the inventory model of a European market.

Vice versa for a store located in Europe.

On hold queue

As mentioned above, when defining an inventory model, you can decide if you want to mark a specific stock location as on hold or not. This will optimize the progress of your shipment process, according to the availability of your SKUs. Let’s go and explore a couple of cases in which you should check this specific flag.

  • Backorders
    On the basis of what we said above, it’s easy to understand why marking the stock location dedicated to backorders as on hold is highly recommended. By definition, that specific stock location is the one which gathers all the orders containing items not available at the moment. That’s why it has to be put on hold until the products become available for shipment.

  • Preorders A preorder is an order placed for an item that has not yet been released or even produced. In this case, that specific item isn’t ready for shipment until it is commercially available. Therefore, it should be associated with a stock location marked as on hold.

  • Kits and bundles
    There might be the case where a specific order is the “combination” of many products. They can’t be delivered to the customer until they are all available for shipment. Think about a sports kit or a gift pack made of different items for example. Until that moment, this kind of shipment should be in the on hold queue.