CommerceHub Supports Supplier-Direct Fulfillment to Manage the High Cost of Carrying Inventory
With the economy slowing and the cost of capital to hold inventory rising, multi-channel retailers are looking to Supplier-Direct Fulfillment to reduce inventory carrying costs and operational expenses
Albany, NY. (PRWEB) November 20, 2008 -- As governments consider emergency measures to address the current financial crisis and an economy sliding into recession, retailers need to manage the high cost of carrying inventory, and find ways to control its impact on operating costs. CommerceHub, the Supply-on-Demand platform for supply chain integration and fulfillment solutions, has developed an industry report on implementing or expanding a Supplier-Direct Fulfillment strategy to control the high cost of inventory and logistics, "Managing the High Cost of Inventory in Today's Challenging Economy."
With funding markets locked up and lending rates high, many retailers are in a crunch to finance inventory capital. Many multi-channel retailers are using a Supplier-Direct Fulfillment (SDF) strategy to reduce inventory and associated expenses. In SDF orders are sent directly to suppliers, manufacturers and distributors, who fulfill and ship merchandise directly to customers. The Retailer never holds the inventory on their balance sheet and typically only purchases it after receiving payment from the customer.
"The cost of inventory is often the largest asset on a retailer's balance sheet," said Steve Hamlin, CEO CommerceHub, "Carefully managed inventory is a key metric to profitability in the best of times, in the current down economy, the impact is critical."
SDF offers retailers the opportunity to maintain and increase product SKUs while reducing the levels of inventory held. Many are using SDF to control expenses, expand operational capacity and drive incremental growth across all channels. The CommerceHub industry report details multi-channel opportunities:
| | - eCommerce, where customers place orders online and expects the product to be shipped to them. In a process transparent to the customer, orders placed online are fulfilled by drop-shippers who deliver the merchandise with packing slips and packaging bearing the Retailers name and logo.
- Direct sales for large products that customers expect to be delivered anyway, such as furniture, appliances and big-screen TV's. Retailers can carry floor models only, eliminate inventory carrying costs and reduce staffing requirements by having supplier-direct fulfillment for these large product SKU's.
- Retail distribution, SDF allows stores to bypass distribution centers, ordering directly exactly what they need in a just-in-time supply model, reducing cycle time, staff and warehouse space for very high-turn in store inventory that literally flows through the channel, like jewelry, CD's and DVD's.
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"The eCommerce channel has proven the effectiveness of creating virtual warehouses by using Supplier-Direct Fulfillment instead of buying, storing, and shipping product to customers," Hamlin noted. "a Supplier-Direct Fulfillment strategy is an effective way for any multi-channel merchant to reduce operating costs."
Whether managed internally, or outsourced to a third party, the benefits of Supplier-Direct Fulfillment are enticing: ability to offer products without additional inventory cost risk, zero warehouse and carrying costs, and direct impact on net income and the balance sheet.
The CommerceHub Supply-On-Demand platform rapidly integrates new trading partners or connections to the more than 4,200 drop-shippers, manufacturers and carriers currently in network. It provides comprehensive tools to manage order processing, drop-ship fulfillment, supply chain visibility, branding, trading partner performance, inventory synchronization, returns processing, carrier tracking, and reverse logistics.
About CommerceHub
CommerceHub is the industry's leading provider of fulfillment and integration solutions for retailers and wholesale distribution companies. With nearly a decade of experience working with Top 25 retailers, distribution supply chains and a wide array of major brand name suppliers, CommerceHub manages more than $4.5 billion in goods annually on behalf of such industry leaders as Sears, Kmart, Costco, QVC, Staples, Best Buy, Meijer, drugstore.com, Ty's Toy Box, Toys "R" Us, Walgreens, Dell, Toshiba, Sanyo, Minolta, Gateway and Little Tikes.
For information on the CommerceHub Supply-on-Demand platform, Universal Connection Hub and Drop Ship Master visit Commercehub.com.
Contact: Donna Cooper
CommerceHub
518-810-0700
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