When talking about success in eCommerce, we split eCommerce success into two branches:you must have both Product success and Operations success. You must have an online ready product, as well as a marketing strategy across many different channels. We discussed the marketing and branding foundations that we felt were requirements for having a 6 and 7 figure business in our previous episodes. Now we are going to move onto building Operational Success.

The biggest operational challenge with scaling is ensuring your processes are able to handle the growth. With increased volumes, your procurement, inventory of raw materials, demand planning, production scheduling, finished good inventory, and cash management processes need to become more robust. 

Our first year, we sold just under 2,000 candles, this year we are projecting selling nearly 50,000 products. Making 25 times more product than our first year, requires a very different approach. 

Today we have a full blown MRP (material requirements planning) system that manages every aspect, from procurement, to production, and inventory management.

Why do all of this work? One of the most difficult tasks for companies is cash management. When you have payroll, rent, insurance, utilities, car payments, etc, all these fixed costs take your cash. You cannot have cash tied up in raw materials that are not needed, nor in slow moving finished goods. Having a good, and well set up, MRP system along with good historical sales data can really help you plan inventory needs.

 

You do not want to run too lean that you risk out of stock scenarios, this is especially evident the last two years, but you do not want to tie up too much cash in unnecessary inventory.

Resources:

MRPeasy: https://app.mrpeasy.com/ctrl/partner/link/170

Instagram: https://www.instagram.com/candlecouplepodcast/

We are now available on Apple Podcasts and Spotify

Timestamps:

1:22 Are your processes able to handle growth?

2:02 Our Benchmarks: where we started vs. now

4:33 Buying ingredients at the grocery store?

5:16 Everything is a time cost

5:39 Eric's Corporate background in Procurement

8:25 Developing Supplier Relationships for consistent products

10:20 Technology to streamline Procurement: MRPeasy

12:27 Excel spreadsheets for Procurement?

13:05 You have to invest in software to grow

13:32 How we use MRPeasy

15:57 MRPeasy saved us over the holidays

16:69 It takes a lot of time to maintain

18:34 How do you forecast growth?

19:27 We refuse to more than 2x sales year to year

20:00 Understanding Working Capital & Cash Flow

21:51 Out of Stock Scenarios

22:40 Slow moving inventory is a killer

23:25 Know your data

24:20 Having options is the best thing in Procurement

Disclaimer: Everything shared in our videos is from our own personal experience, and is intended for educational and informational purposes only. Always seek legal guidance from a business attorney and certified public accountant. Everyone is responsible for their own business structure and business practices, and we will not be held accountable.

Since we love the companies we talk about so much, we may have an affiliate relationship with them. If you make a purchase through the above links, we may earn a small affiliate commission. There is no additional cost to you.