Chris Reddick (Clarity Venture's President and CEO) continues his discussion with Ron Halversen (Vice-President of Sales and Marketing) to discuss advanced inventory logistics as it applies to buying groups.  

Part 2 of a 3-part series. (Click to return to Part 1)

RON: So let's go ahead and talk about the value of that advanced inventory data, because we've given a couple examples here now. And so we really want to talk and understand how to manage that data across the different fulfillment partners, right?  It could be centralized, it could be distributed. And then how do we display that data? Is it centralized? Is it distributed? 

CHRIS: Absolutely. This this is pretty interesting stuff. So, you know, we like to joke around about how I went to school for aerospace engineering. And, you know, we'll say to clients, "your project isn't rocket science, but if it was, we could handle it." I think a lot of folks, especially within buying groups and dealing with multiple vendors, they would agree that it can be very complicated, in particular, getting the different data to come in with very different data sources. 

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CHRIS: Some of the vendors are going to be doing things manually. Some of them will use bulk upload techniques, some will leverage EDI or other API models. And ultimately, we need to be able to aggregate the data across all the different vendors that are part of this network. And this is an opportunity to set a standard with your vendors who are going to be part of this network, part of this buying group that they can sell into. In order to be part of this group, you have to actually provide your data at this level of integrity, in this level of detail, and this much accuracy, kind of like a tolerance of B2B inventory management accuracy.

And, you know, these are opportunities that you can take on. But, you know, one of the other things that is really important is just to keep in mind that in order to offer the most value to the members within the buying group, they have to actually be able to work with the different vendors that they really need to work with. 

So if some of them just don't have the ability to invest in the APIs, we need to be able to meet them where they're at. So the eCommerce platform that we implement and, we encourage you to kind of look for this as a baseline, it has the ability to allow the vendors to do things really intelligently in their portal so they can manually go do things, they can clone records, they can update, and they can make changes pretty easily on a manual basis. 

Now, typically, this isn't going to be the rule that someone's going to want to do this, but as an exception, it's nice to be able to go and do something manually when needed. Now, in addition to that, we can also set basic logic so that, you know, we were talking about this earlier on offline, that a lot of buying groups, you know, they may work with different vendors that, relatively speaking, have unlimited inventory. 

And for the purposes of the buying group, you know, we can set something simple like that. So again, we can do things that match the vendor where they're at. But then you also have the situation where a particular vendor may have multiple warehouses, multiple locations, and this can get really challenging to be able to do manually. So we have the ability to bulk upload and this is as the name implies, we can use kind of a template that the vendor can use. 

They can download their products and then update the accounts in the B2B inventory management software, then bulk upload that data. Although this is manual, it's a little bit more efficient than doing it one by one. They can also, of course, what we typically recommend, leverage the APIs, EDI, you know, literally the list goes on. We can take advantage of CXML, other formats that make sense. 

And so depending on the scenario, we've worked with a lot of buying groups who actually require or recommend certain ERP configuration for their vendors. And this is a pretty aggressive step. But depending on the size and clout of the buying group, they can enforce this with the different vendors as a means to standardize the data. I typically wouldn't recommend going that extreme, but we can at least enforce data formats that we we require in order to be part of the buying group. 

And then finally, you get into the different locations and the different forms of listing all of this data so we can look at, "do they have multiple locations." For people that are not familiar with Amazon, Amazon has essentially providing this concept for a lot of users. In a lot of ways, Amazon provides a form of buying group for their end-users. Not exactly the same, but they will accumulate inventory within a distribution center on behalf of the sellers. 

This is something that quite a few buying groups will do. Now, this can be really expensive and it may not make sense for your buying group, but the point is that we have the mechanisms in place to be able to handle this type of logic, whether it's the seller who has multiple locations all over the country or all over the world, and being able to independently track all of the inventory at all of the different locations and the time it will take to fulfill those items from those different locations. We can manage that on an individual seller level within this buying group platform, And that is really, really powerful to be able to accurately represent this inventory data.

It's kind of what you're doing. Ron, with the inventory data, is you're really having to not just show the inventory data, but also some other key meta information. Where is it located? How much reliability do we have on this data? Because, you know, maybe they're selling it in other kinds of inputs that they have within their business to sell these products. How accurate is the data? How often is it updated, this kind of a thing. 

RON: Yeah, that makes perfect sense. Yeah, a couple of points. You know, Riley, my son, just bought something and he needed it relatively quickly and he went and looked and it said the lead time was two to five days. And so he bought it. And as they promised, it was shipped within two to five days. But they didn't tell him it was shipped from China. And it's been sitting in customs now for three weeks and now it's three and a half weeks later. He still doesn't have the item. So, same kind of thing, and that's just one particular item.

Another thing you mentioned just real briefly, whether the items is in stock or not, one of the things we have in our eCommerce platform that we use for this a lot, we use for digital downloads and we literally have a toggle where you can go into a product, and, if it's a digital download where it's never going to run out of stock, you can flip it to not counted and then we can display by default, we display in stock. So any time they go for a digital download product, it just says "in stock" and they're like, great, it's not out of stock. They buy it. They don't know how many there are because it's a digital download. There is no limit.

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RON: But things like that can also be used for this example. Let's say a vendor has hundreds of thousands of these widgets in stock, and they're literally never going to run out. They could just go in and go, "I don't want to have to deal with inventory, that's tough to manage the inventory of that many units. I mean, I manage it by palletfull. When it gets down to ten pallets, I order another fifty pallets?" So they're never going to be out of stock. So they might just want to flip it and go "in stock." Don't even bother counting them. And that could be very easy.

On the other hand, one of the reasons that might be a bad thing is what if you want to create a sense of urgency and you're trying to show that there are low stock numbers so that people might buy it. If you just show that it's in stock and they don't know that it's a limited number and they might run out, then there's no urgency there.

So you have to be careful of what your strategy is and what is a buying group strategy that works for your business? What are the purchasing habits of the buying group? Do they buy in bulk, do they buy at a hundred at a time? You probably want to show stop count because they really want to make sure that there's at least a hundred in stock. And if so, if I'm buying a hundred, what's the lead time? Where's it coming from? How much is it going to cost to ship? Is it going to be here? Do I see on the screen one that just says "in stock" versus the one from Chris's store that says 213 in stock? I'm probably going to buy the one for 213 because at least I know with Chris's store they're being purchased and Chris is tracking and giving me an accurate count where the other one just says it's in stock and they may have 1000 and may be much more reliable. But just even the fact that there's a more up to date accurate number might give me the confidence I need to buy. 

So there are definitely some strategies around that. And really what that is is managing the queue. Sometimes you call it queue management, but it's really how does the B2B eCommerce platform track and ensure that you've got the right reporting, the right display, the right numbers in stock. So Chris, go ahead and and shred this a little bit. Let's talk a little bit about managing the stock. 

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CHRIS: Absolutely. This is probably the fundamental issue with inventory whenever you look at a buying group. Because like you said, with Riley and the case where the information presented implied a three-to-five or two-to-five day lead time for him to receive the item, if at any point the trust is broken within the buying group, you're talking about large purchases that are critical for most businesses. 

If they do not receive them on time, they are going to end the relationship or quietly go away and reduce their volume of purchases. That's just how it works. They don't have time to get into the details, into the weeds. Now you'll have some that will be vocal about it, but in most cases, they're going to just quietly disappear. 

And this is kind of the method of feedback in reality. And so the integrity of the data has to be extremely high. And so that's what we would point out to you overall as the manager of the buying group. And really what we're looking to do with this software implementation, whenever we work with buying groups, we want to look at, how can we use buffers to make sure that depending on the different vendors, we're intelligently setting buffers that are going to manage the expectations of the buyers. 

Now, we don't want to get into a situation where you don't sell anything ever. That is another extreme of the spectrum that doesn't really help the buyers either. But ultimately the integrity of the eCommerce platform has to be the utmost importance to us delivering the software and setting everything up, and to your team, the buying group, and our group purchasing organization. 

Using buffers can really help with this. So an example of this would be that, you know, Vendor A sells thousands of items, but they're constantly running out they're constantly running into lead time issues. And we're using notifications, we're using feedback and expectation management within the eCommerce platform. But it's still causing a major issue with customers. So they might be selling a lot, but they're causing a lot of problems. So in this particular case, we could just simply increase the buffer for their inventory and we could do this respectively so that if they had ten items they're seeing or in inventory, we only show it as four. If they're saying that they have a hundred items, we only show it as forty. 

Now, this may end up being something that we tune as we progress, and this is a really interesting opportunity to take advantage leveraging machine learning or AI to intelligently make these adjustments based on settings and configuration that we can precisely match to each particular kind of scenario and have a starting place. Then allow the AI or the machine learning mechanism to basically figure out what's happening with this particular vendor and set an intelligent cue or buffer and kind of like watch them or babysit them. 

Again, this helps preserve the integrity of the buying group platform. Heck, I would even say just knowing that this is something that's part of the buying group platform, is that there is a watchdog and that there is either an AI based or human-based, but AI-assisted determination of what's the best buffer per vendor. That is so huge because now I'm going to know, "Okay, this vendor has a very reliable track record. They take it very seriously." Or, "Oh my gosh, this vendor is very risky."

These are things that within the buying group eCommerce platform, we can actually show this to the buyer. We can say, hey, this is a really good deal, but this particular vendor has a really bad track record. Unfortunately, here's their track record. So just go at it knowing that we can also do things that help buffer with the lead times. So not just the inventory count, but the lead time in a very similar manner.

Continue to Part 3 to learn more about advanced inventory logistics.