In the ever-evolving world of e-commerce, inventory management plays a critical role in ensuring a seamless customer experience. For Magento 2 developers, and merchants, the introduction of Multi-Source Inventory (MSI) has revolutionized the way inventory is handled. I had the opportunity to work with MSI recently and I found it pretty interesting so I decided to write about it and share my understanding with anyone who may be interested in learning more about it. In this blog post, we will explore the fundamentals of Magento 2 MSI, its purpose, and its significant benefits for businesses. Also, I’ll give you an example to illustrate how it works currently.

Understanding Magento 2 MSI

Magento 2 MSI is a feature-rich inventory management system introduced in Magento 2.3 and above. It empowers merchants to manage inventory across multiple sources, such as warehouses, physical stores, drop-shippers, and more. This functionality enables businesses to efficiently track and fulfill orders from different locations, thereby enhancing operational efficiency and improving customer satisfaction.

Key Features and Benefits

1. Source Management: MSI allows merchants to create and manage multiple inventory sources within a single Magento Instance. Each source represents a distinct location, or channel, from which products are stocked and shipped. For example, a merchant may have separate sources for their warehouse, brick-and-mortar store, and a third-party supplier.
2. Stock Management: With MSI, merchants can effectively manage stock levels for each inventory source independently. This granular control ensures accurate inventory tracking and prevents overselling or stockouts. Real-time updates across sources provide a holistic view of stock availability.
3. Order Fulfillment: MSI introduces a dynamic algorithm that automatically selects the most suitable inventory source for fulfilling an order based on factors like proximity to the customer, stock availability, and priority settings. This intelligent order routing optimizes the shipping process, reduces delivery time, and minimizes shipping costs.
4. Inventory Reservations: When a customer adds items to their cart, Magento 2 MSI reserves the stock from the relevant inventory sources, ensuring that it’s available during the checkout process. This prevents inventory conflicts and guarantees accurate stock allocation. This stock reservation mechanism is a brand-new feature in Magento.
5. Track Inventory History: MSI enables comprehensive tracking of inventory changes, including stock adjustments, transfers, reservations, and cancellations. This valuable information allows merchants to analyze historical data and make data-driven decisions to optimize their inventory management strategies.
6. Integration With Third-Party Systems: Magento 2 MSI seamlessly integrates with external systems like Enterprise Resource Planning (ERP) software, Warehouse Management Systems (WMS), and Point of Sales (PoS) systems. This facilitates streamlined data synchronization, improves inventory accuracy, and eliminates manual data entry.

Magento 2 MSI has emerged as a game-changer for businesses operating in the e-commerce space. By providing a robust and flexible inventory management solution, MSI enables merchants to efficiently manage stock across multiple sources, automate order fulfillment, and enhance the overall customer experience. Leveraging the power of Magento 2 MSI, businesses can streamline their operations, reduce costs, and achieve a competitive edge in the market.

A Basic Understanding of How It Works

The following diagram illustrates the relationship between source stocks, aggregate stocks, and sales channels:

In this diagram, a bicycle merchant has inventory for a mountain bike in two warehouses and a drop shipper. He has two stocks with configured website sales channels and sources. When a customer shops through the UK website, Magento aggregates bike inventory from the UK warehouse and the drop shipper sources, for a salable quantity of 95. The bike can be shipped from either the warehouse of the drop shipper, but not from the NY warehouse.

This example was taken from the official documentation about the Magento 2 Multi-Source Inventory.

Conclusion

As a senior Magento 2 developer, understanding and harnessing the capabilities of MSI will enable you to build scalable and efficient e-commerce solutions for your clients, resulting in increased customer satisfaction and business growth. Embrace MSI and unlock the true potential of Magento 2 for your inventory management needs.

I’m planning to write more technical articles in a series focused on how Magento 2 MSI works under the hood so, new content will come soon around this matter.