About the Startup
One of our client a blooming gardening-startup aims to solve plantation quandaries by providing tried-and-tested solutions. The client helps people discover, buy and look after right plants for their space.
How the idea of starting a gardening venture seeded the client’s mind?
In an attempt to green up his own east-facing empty balcony space the client bought plants from an online store, however, with limited access to urban gardening knowledge, most of his plant failed to live longer.
That’s when the idea of gathering proper gardening knowledge speared up his mind. The client soon started procuring plants which fit the space criteria of modern planters and also avails them extensive methods of cultivation that offers rich foliage for a long period.
How the plant eStore works?
Their e-store concept is simple; you fill in an online form by selecting the size of the plant, pick few styles of plant and design and wait for the garden-savvy to drop in at your door-step to deliver your selected plant, you can either buy all your selected plants or pick and choose.
The interesting part is that you can select the timing slot within which you want the plants to get delivered, they deliver within a very short period of time usually in a day or two on your selected time slot. By this way, the client makes sure that the customers get the plant fresh and live with the required plantation guidance.
The need of an efficient supply chain design for highly-perishable items.
The client was aware that any amount of inventory spoilage will have a direct implication on their profit margin. His business operates across the UK and receives almost 1000 orders per day, he delivers these orders within 2-3 full business days from the date of shipment. To meet the delivery commitment, the client has to make sure that the Supply chain cycle time is minimized; i.e the time the plants get sourced from his suppliers to the time it takes to the delivery door-step.
It was more a kind of on-demand delivery model that the client was striving to achieve. Everything from procurement to delivery has to be performed within a short period of time. Keeping a high level of inventory in the warehouse to manage the sales order could prove out costly for them as the items they deal with are perishable in nature.
Also, any amount of inventory spoilage will have a direct implication on the profit margin. The idea was to keep a minimum amount of inventory at the store/warehouse and fulfill orders with a faster purchasing process.”
So, how was the client fulfilling orders while keeping low stock on hand?
By allowing the option of backorder
What is backorder?
Backorder allows customers to place an order for out-of-stock products. In short, you can manage to receive orders for products which are currently not in your hand.
With this option being enabled on the store, the customers can order items which are out-of-stock. This means that the client was not taking orders on the basis of the current stock value instead he was relying on his “Purchase order system” which can help him have the stock of the “backordered items” in time.
When Orderhive came into the picture
The client found Orderhive when they were looking for a “Just-In-Time inventory management solution”. The inventory is either available in the client’s warehouse or the required purchase order is raised to meet the customer demand.
The critical part was that the client needs to wait until the supplier has accumulated the “backorder products”. If the supplier does not send the required stock in the due course, the client loses on the sales order.
“The possible solution for this was to create a “Purchase order” in advance by predicting the demand so that we can expect to get the products ( Inventory ) on time. The inventory which is been raised in POs is considered as In-purchase quantity”.
What is In-purchase quantity?
Unit of measure and quantity in Purchase orders.
The In-purchase quantity will have the inventory details & a “Due-date” ( time within which the supplier can supply the items ).
Orderhive set up the below provisions for the Startup to help them streamlined their supply chain process;
A provision to record all sales orders items as “Backorderable”.
A provision to create a purchase order for these back ordered items with supplier id reference.
Considering the inventory items of these purchase order as “In-Purchase” quantity.
Validating the due date of the “In-Purchase” quantity against the delivery date of the sales order.
Once the items arrive, the client can search through their sales orders to match these to the correct purchase order.
A provision to create shipments and track it throughout the fulfillment cycle.
- Just-In time inventory management solution.
- Automatic routing of a purchase order to approved suppliers with mapping of pre-negotiated due date.
- Improving the overall business performance by automating the entire procurement cycle.