Bizelo IPS FAQ: What is the diference between “on hand” and “available” inventory?
While Bizelo eRetail IPS might have a simple user interface, it is actually a very powerful inventory management system. Bizelo eRetail IPS doesn’t keep track of just one notion of inventory stock quantity, but actually keeps track of two: on hand inventory quantity, and available inventory quantity. The reason why we keep track of these two notions will hopefully be clear to you below and help you realize just how much power you get in the Bizelo IPS system.
Scenario: Selling and Shipping Products to Customers
Let’s say you have 50 black T-shirts you have in stock, and you want to sell them to customers. These 50 black t-shirts are posted to your online e-commerce storefront and are made available for purchase. You now have a quantity of 50 available black t-shirts in your store.
Now, let’s imagine someone actually buys one of those black t-shirts. First, you want to make sure that you accurately reflect how many T-shirts are available to the next customer who wants to buy them on the site. Since one was already purchased, there are only 49 black t-shirts left. This means that your available quantity for this SKU is now 49.
But wait a second — if you were to look at your warehouse at the moment, you will still see 50 black t-shirts on the shelf. This is because there are 50 black t-shirts still on hand. At this point, you have a quantity of 50 black t-shirts on hand, while you only have 49 black t-shirts available for purchase. The reason for this is obvious — one of those 50 on-hand t-shirts is designated to be picked, packed, and shipped to your customer. Basically, we have 50 black t-shirts on hand, but one of those is meant to be fulfilled as part of the order that brought the 50 available t-shirts you used to have down to 49. Make sense?
When you sell an item on a store, you decrease its Quantity Available by the amount purchased by the customer. When you Pick an item from your storage location(s), you decrease the Quantity On Hand by the amount you fulfill to meet your customer orders. In this way, you are “reconciling” your available quantity with your on hand quantity.
The quanitity you have in your storage loactions is your “On Hand Inventory”.
The quantity available to your customers in your stores is your “Available Inventory”.
In summary, “On Hand Inventory” is the amount of an item you have in one or more storage location(s), and “Available Inventory” is the amoutn of item you have available for sale at one or more store(s). As customers place orders, your “Available Inventory” will be decreased for each item ordered. When those orders are picked, your “On Hand Inventory” will be decreased.
Getting More Advanced: When Available and On Hand Quanities aren’t in sync
In many cases, you would only offer product for sale that you actually have. In this way, your available quantity and on hand quantities always get in sync when you pick and fulfill orders that have been purchased at your stores. However, this is not always the case. You might have a scenario where you offer more of a product available than you actually have on-hand. Why would you do this? Perhaps you are offering products that are on back-order from your suppliers. Or perhaps you are a drop-shipper and maintain very little inventory on hand.
The Bizelo eRetail IPS system will warn you when you make more product available than you have on hand, and it will not allow you to pick from your orders if you don’t actually have that product on hand. It won’t prevent the orders from being placed on your stores, however.
On the flip side, you might have more product on hand than you make available. Why might you do this? Perhaps you are saving some product in reserve for free distribution, or for distribution to retail outlets. Or perhaps you only want to sell some of your product, but still keep track of all your inventory. Bizelo eRetail IPS lets you do this. You don’t need to only have one notion of quantity. In fact, having these two different notions is particularly powerful.
Updating your Available and On Hand Quantities
You can update your “On Hand Inventory” for an item per storage location and your “Available Inventory” per store. When you receive new product from your suppliers, you may change your “On Hand Inventory” manually to reflect an accurate new count per location. Once you have quantity on hand, you can then decide how much of that will be made available to each of your stores. Likewise, you can adjust how much product you want to make available to stores, optionally adding more quantity than you have on hand… as long as you realize that you won’t be able to fulfill orders that you don’t have on hand inventory for.