Shopify Inventory Management for Makers & Manufacturers
More and more crafters, makers and small manufacturers around the world are setting up their own web shops. Why? Because selling online has become so easy and has many benefits: direct access to your customers, immediate feedback on your products and customer service, plus you do not have to give away a margin to traders and re-sellers. Most makers, crafters, and small manufacturers choose Shopify as their go-to e-commerce platform with more than 600,000 shops and counting. It's simple to set up and easy to run.
Why does inventory management matter?
Once sales orders start flowing in through Shopify, an effective inventory and production management app will make sure that all orders from customers are fulfilled on time. This is where an MRP (material requirements planning) system like Katana MRP comes into play. Katana automatically receives all orders from Shopify and allows you to plan and manage your production and material supply process. This way you never miss a deadline and you'll always have the right amount of materials available in stock. In this guide we will explore ways how a Shopify store and an MRP app like Katana work together to save time and money for all small manufacturers, crafters, and makers selling on Shopify.
Here come the two most important steps to start handling your production and inventory managament properly:
1. Know what needs to be produced in order to fulfill a sales order and what materials are required to complete production
When an order comes via your Shopify store, an integrated MRP app like Katana will automatically pull the order and give you the answers to the following critical questions:
How many units of ordered products are immediately available in the stock for delivery?
How many units of ordered products are missing that need to be produced to fulfill the order?
What materials are required to produce the missing quantities?
Are these materials available in the stock or should your order some additional materials from suppliers?
When would the missing materials arrive and production can resume?
Answers to the first two questions listed above are typically available on sales order level. As soon as you open the Shopify-imported sales order in an MRP system you will see product availability information based on your actual stock levels.
This means that you can see how many units of ordered products are available in stock and how many units you need to be additionally produced to fulfill the order. Katana MRP takes it up a notch and also shows you how many units of products available in the stock and how many units expected from production have already been booked / reserved by sales orders that have arrived earlier (are higher ranked) and are still unfulfilled.
In Katana MRP, you can also change the priorities of sales order via drag-and-drop in case you need to prioritize a recent order to be fulfilled earlier than other open orders. It also re-books available units of ordered products automatically based on sales order ranking - this makes it easy to manage express orders that need to be delivered to customers as soon as possible.
In order to provide answers to the last three questions, you need to define production recipes (bill-of-materials) for each product you make. Think of it as a link between the final product and the materials you use for producing it. Typically, an MRP system allows you to define a production recipe for each product variation (colors, sizes etc.). Once an MRP app has the production recipe info available and you have created a manufacturing order for the missing units, the MRP app will be able to tell you exactly what materials you lack to complete the production and when would such materials become available. For all the missing materials you can create a purchase order with a click of a button and it will be sent to your suppliers.
Also, when you complete your manufacturing orders, the MRP system will automatically reduce the stock levels of materials consumed during production and increase the stock level of products produced. Typically, inventory management apps meant for traders and wholesalers, lack the functionality of production recipes and thus you end up adjusting your stock levels manually. In Katana MRP you can also create production recipes that include sub-assemblies - products inside products inside products, inside... you get the idea :). And you will have visibility of materials required throughout the multi-level product recipes. Additionally, MRP apps have built-in reorder point and safety stock functionality. By setting desired levels you can have the MRP keep your stock levels optimized so you have exactly the right level of products and materials available in stock. Optimal stock = better cashflow.
Think of MRP as an inventory management app tailored for manufacturers and makers. But MRP is not only about inventory management - it also helps you plan your manufacturing and ensure floor-level efficiency.
2. Know what is being produced next and plan ahead
A manufacturing plan is rarely carved in stone. In a typical small workshop changes happen on hourly basis. And all that may affect your daily/weekly production plan. A sales order might get cancelled, a floor level employee might call in sick, a supply order of materials required for production may be delayed and so on. That's why it is important to work with a flexible tool that makes it easy for you to change priorities in sales and production on the fly. A good planning functionality means you can:
Change the priorities of sales orders with a drag-and-drop and immediately see the availability of products in stock and products expected from production based on changed priorities
Change the priorities of manufacturing orders with a drag-and-drop and immediately see the availability of materials in stock and materials expected from suppliers based on changed priorities
Clearly see the link between a sales order, related manufacturing orders and related purchase orders of materials
Get an immediate overview of status of each sales, manufacturing and purchase order currently being processed
In Katana MRP you will be able to adjust the priorities in your sales and manufacturing with drag-and-drop functionality and RAG (red-amber-green) dashboards simply highlight the status of each order. You can easily track what sales orders can be immediately fulfilled where products are available in stock and what sales orders are waiting for production prior to fulfillment. You can also immediately see the availability of materials for each production order and track production statuses. This way you always know what is the status of your sales and manufacturing in glimpse.
Once you have finished manufacturing the missing units, sales orders from Shopify are ready for fulfillment. An integrated MRP system will sync the shipping status between MRP and Shopify. This means that as soon as you ship an order from MRP the stock levels of products on the order get adjusted automatically and the shipping status is also synced to Shopify. This will ensure that your orders in Shopify and in your MRP will always have the same shipping status and everybody knows what orders are open and what have been fulfilled.
This guide highlighted some of the key benefits of using Shopify combined with a MRP app. To get a first hand experience SIGN UP and get an immediate 30-day free trial access to Katana MRP. Once you have signed up, there will be a very short on-boarding flow that helps you connect your Shopify store and you can immediately get access to all the benefits a combined Shopify + MRP solution has to offer. Happy manufacturing!