Understanding, Calculating and Tracking Pipeline Inventory for Improved E-commerce Fulfillment


pipeline inventory

Being “in the pipeline” refers to something that’s on its way, and when speaking in terms of inventory management, it’s intended as replenishment of stock, overhauled products or new product launches and/or product lines. For a holistic view of the amount of total inventory, the monitoring of pipeline inventory is necessary. This blog aims to create a better understanding of pipeline inventory and its importance in eCommerce fulfillment and explain how businesses can benefit from tracking pipeline inventory by collaborating with a third party logistics (3PL) provider.


What Is Transit Stock or Pipeline Inventory?


Pipeline inventory or transit stock refers to the finished or purchased goods that are in transit after being packed and shipped by manufacturers or suppliers. This stock is a paid-for asset and it is on its way to being stored at a fulfillment warehouse location or a fulfillment center.

What is the Formula for Calculating Pipeline Inventory?


Understanding and being able to calculate the value of pipeline inventory, at all times, is essential for optimized supply chain operations and accurate and timely order fulfillment. For calculating its value, you need to know the average lead time of production (meaning the time it takes to receive the inventory from the manufacturer or supplier) and make use of demand forecasting methods to know the demand rate. Demand rate is the average SKUs sold per each stock replenishment cycle. Here is the formula we use to calculate it:


Lead Time x Demand Rate = Pipeline Inventory


Why is the Understanding and Monitoring of Pipeline Inventory Essential?


Using the holistic approach of digital inventory management, businesses can better meet the customer demand, avoid stockouts and unnecessarily high inventory carrying costs. It is essential to study past trends in sales performance while placing orders and keep a track on the amount of transit stock before placing further procurement orders. Studying trends can be particularly helpful for preparing your eCommerce store for holiday peak shopping season. Moreover, keeping a track on the average transit period for each lot of pipeline inventory also leads to better warehousing and distribution operations by adjusting your schedule to mitigate potential delivery delays.


How can 3PLs like ShipBots Optimize Pipeline Inventory Management?


Partnering up with 3PL logistics providers such as ShipBots who are experts in providing eCommerce solutions will optimize your supply chain operations by improving inventory organization. Third party logistics partners who specialize in eCommerce fulfillment make use of previous performance records and real-time inventory tracking to aid you in making informed business decisions. While the importance of carrying sufficient inventory to meet customer demand and prevent stockouts is undeniable, carrying excessive inventory is bad for business. Making use of innovative eCommerce warehousing and distribution solutions such as digital warehousing for 3PL fulfillment and strategic distribution of inventory, third-party logistics companies optimize pipeline inventory management.


Strategic Inventory Distribution


ShipBots guides businesses in strategic allocation and distribution of inventory across 3PL fulfillment centers. This splitting of inventory is carried out after thorough study of the location of majority of customers and considering all other important aspects such as shipping costs and time. ShipBots aids businesses in selecting the right warehouse location from our network of fulfillment centers. Such careful and strategically planned allocation of inventory is a complex task without the use of analytical tools owned by 3PLs for eCommerce.


Utilization of Innovative Trends in Inventory Management


With the use of innovative tools, ShipBots have made the use of spreadsheets and manual tracking obsolete for their partners. Using demand forecasting methods, analytics tools and digital inventory tracking, 3PLs ensure better customer experience and improved profits.


Real-time Inventory Tracking


With ShipBots’ digital inventory tracking, businesses can keep a track of all their inventory, as it enters or leaves their fulfillment warehouses, be it merchandise inventory, inventory in transit (pipeline inventory) or physical inventory. All of this is available across one single dashboard, as the warehouse management system and the inventory tracking are integrated, so you get to see both the past trends and real-time performance updates across omnichannel platforms with ease.


Such optimized inventory management with easy access to updates and real-time tracking allows entrepreneurs to focus their resources on business growth and enhanced revenue generation. Such insights ensure you constantly stay updated with real-time inventory levels across all your fulfillment centers. Not only that, but you can also keep tabs on shipping costs for all shipping methods, where most of your customers are based, and the average cost of order fulfillment.


Optimized eCommerce Warehousing and Shipping


ShipBots is on the top of the league when it comes to eCommerce warehousing and shipping. Our inventory solutions allow you to relax and plan your next business move, while we take care of all your eCommerce warehousing and logistics needs. Our wide range of operations covers choosing the best eCommerce warehouse fulfillment location to packing and shipping to facilitating implementing the correct shipping strategy for your business and ensuring timely merch fulfillment. Get in touch with us today to learn how we can streamline your entire eCommerce fulfillment workflow.