What is MSI?
Why MSI is a must-have for any Magento business?
To expand their offer and increase sales, e-commerce retailers go omnichannel selling their product virtually everywhere, from e-stores and CSEs to brick-and-mortar shops. Inventory management in omnichannel commerce grows extremely complex, as you have multiple points of sales and just as numerous warehouses from where you deliver the goods. Magento MSI helps streamline sales channels and connect points of sales with warehouses to reduce the time needed to arrange shipments.
Effective warehouse inventory management is crucial for maintaining optimal stock levels and ensuring smooth operations
Magento Multi Source Inventory: Key concepts
Magento MSI is the first-ever Core Bundled Extension. This means that unlike Magento 2 extensions bound to different Magento versions, MSI does not have such dependencies, so it can be enhanced and upgraded virtually any time a store owner likes. Magento MSI uses a set of concepts. Some of them are well-known, and some are new. We consider them below.
In Magento Multi Source Inventory, sources are physical places where stocks (see further) are located. A warehouse, a grocery store nearby, and even the basement of your home (provided that you store goods for sale there) can be a source. Mind that in Magento Sources can’t be deleted to prevent order data loss. You can only disable sources and change the related info, including location and contacts. Code of the source can’t be changed.
Stocks enable store owners to unite several sources and then link them to sales channels and salable quantities. Technically, stocks are virtual entities that represent numerous sources.
MSI Salable Quantity
It’s another valuable concept that enables store owners to visualize different numbers of goods to be sold per source. There are 2 new columns in the grid - Quantity per Source and Salable Quantity. Quantity per source represents the physical stock at a location. You shouldn’t change this figure before you actually have a shipment to deliver. Meanwhile, the Salable Quantity is the sum of available resources, grouped in stocks. When a new order is placed, the Magento MSI module deducts the quantity from the salable number.
Magento MSI Source Selection Algorithm
Magento MSI project is still up and running, and the situation with source selection algorithms proves it. Let’s look into the matter.
MSI started off with one and only source selection algorithm - priority-based one. The algorithm resolved the key shortcoming of the previous Magento versions - deducing items at the stage of order placement. Now the algorithm does not start until the customer pays. However, for proper work algorithm requires configuring source priorities on the grid manually. This is how it works:
- When the customer pays for the order, the algorithm combs through the pre-configured sources starting from the top of the list.
- Then it checks the order and the available quantity of items and recommends a quantity to ship and source per product.
- It goes down the list until the order shipment is filled.
- The algorithm skips disabled sources.
Introduced in March 2019, this algorithm is undoubtedly more intelligent. It can compare the destination and source location and selects the closest source. Besides, a distance can be “measured” as physical distance in km, miles, etc. and in the time needed to reach the delivery point. In the latter case, the algorithm relies on database location data or Google directions.
Thanks to the new Magento MSI Source Selection Algorithm, the checkout performance will be improved significantly. It’s mostly because the source selection happens when making shipments, and the customer only needs to add the actual source later.
It’s another step-up available with Magento MSI. Now you can fulfill the needs of most demanding customers shipping orders in parts. The functionality requires manual configuration, but it is quite flexible. You just need to select the source that offers the best delivery terms (usually it’s about the speed) for a product in question. The rest of the order will be shipped following the algorithms. As you can see, algorithms are the magic powers that boost MSI and leverage omnichannel e-commerce, so they do deserve another look, don’t you think? As Magento extension providers, we continuously thought about improving MSI algorithms to leverage complex shipping scenarios and make shipping customizable. The result of our work is Advanced MSI for Magento 2, a module that embraces the native Magento algorithms and twists them to offer a brand new one. Let’s have a closer look.
Advanced MSI fully supports native MSI algorithms and also offers a completely new one that combines them to offer the source selection based on the delivery price. There are 4 algorithms available:
- Source priority algorithm – basically, its the native Magento SSA selecting an optimal store according to its priority in the stock assignment settings.
- ‘Product Stock Availability by Amasty’ selecting an optimal store by the availability of goods. The algorithm chooses the source that has all order items in stock. This helps avoid breaking the order into several shipments from different sources, which makes shipment faster and less pricey.
- ‘Product Stock Distance by Amasty’ - a native-like algorithm that helps you save up on transportation costs.
- Combined Source Selection Algorithm – that’s what it all about. It’s a custom algorithm that uses 3 criteria above one by one until the 'perfect match' is found. For now, this option isn’t found in native Magento.
1 manual job
Unlike native MSI that offers to perform most of the tasks manually, Advanced MSI requires only 1 manual job. Just like in native MSI, it's priority setting. In other respects, Advanced MSI is a fully automated solution. Once you choose an algorithm, it’ll be auto-applied as a default algorithm on the shipment creation page. Moreover, with Advanced MSI you can reduce the process of shipment creation to just one click. Guided by the default algorithm, it will select the warehouse and the necessary number of items for the order. You’ll only need to click Proceed to shipment button, and all the info related to the order will be automatically imported to the Order summary.
Combined Source Selection with Advanced MSI
Apart from offering a custom selection algorithm, advanced MSI gives you full control over the choice grounds. You can prioritize the three algorithms using a simple drag-and-drop. To set priorities you should rely on your business specifics. Obviously, choice grounds for car parts retailer and for a store selling clothes will be different. Let’s consider an example to see how the algorithm works step by step:
Step #1 Priority setting
Setting priorities to the three available algorithms with regard to your business specifics. Say, you set the availability in one source as the Priority 1 algorithm, the Nearest store factor comes 2nd, and Source priority (native Magento algorithm) is the last one to be applied.
These settings will be applied by default to any order when Combined Source Selection is chosen as a default method.
Step #2 Combined algorithm in action: criterion 1
The combined algorithm applies the 3 criteria to the available sources according to the priorities you set. First, it checks the good availability in one source. If only 1 suitable source is discovered, then the algorithm selects it and stops. If 2+ sources are found, they will be checked against the 2nd criterion (Nearest source). Again, the selected sources will be then checked against the 3rd criterion (native Magento algorithm). The sources that don’t meet the criteria are moved to the bottom of the list after each selection operation. In case none of the sources has the needed quantity of items, the algorithm checks the whole list against the 2nd and then the 3rd criteria. After each selection, the list of sources will be rearranged starting from the most suitable ones. The Combined algorithm will activate partial shipment from each source starting from the top of the list until all the items are collected and the order is completed.
Step #3 Combined algorithm: criterion 2
The combined algorithm checks the sources against the 2nd criterion - Nearest source. Here you can set Distance to warehouse roundoff to apply the criterion efficiently. If the distance between the closest and other sources is less than this value, the sources are considered equidistant. In case only one source is detected, the algorithm will rearrange the list of sources by distance and activate shipping from the nearest one. If several sources can be considered equidistant, the list of sources will be rearranged and checked against the 3rd criterion.
Step #4 Combined algorithm: criterion 3
The combined algorithm applies the 3rd criterion (native Magento algorithm), i.e. arranges the selected sources according to the priorities you've set in the extension settings.
Step #5 Shipment
Click Proceed to Shipment. You will see the order summary auto-completed by the algorithm. You just have to click Submit Shipment.
Magento MSI vs. Advanced MSI by Amasty
Number of algorithms
Native Magento MSI has 2 algorithms – priority-based one and distance-based one. The algorithms don’t run until the order is paid.
We offer 4 alternatives: 1 native Magento algorithm, 2 specific custom algorithms and the combined algorithm. The algorithms activate on the order creation stage. This makes it possible to use third-party carriers (UPS, DHL, etc.) that can calculate shipping cost relying on the customer’s address.
Working with native MSI involves many manual tasks. So you will need to assign priorities to sources, choose which algorithm to apply, adjust the number of goods to be shipped from the sources selected by the algorithm.
Basically, you only need to assign priorities to sources, just like in the native MSI. From then on, source selection is fully automated. Hence, it’s possible to submit shipment in one click.
Native Magento and Advanced MSI: Sum-up
MSI project has already proved to be successful. So is it time to relax? No way. As we see, Magento experts steadily work on improving native MSI features and algorithms, which are growing in number and the level of intelligence. But it all requires time, and customers don’t like to wait. So Magento wisely welcomes extension vendors to contribute with improving MSI functionality in Sale Channels and Shipping algorithms. And we’re in. So what do we have in mind for our Advanced MSI? We plan to make omnichannel retail more manageable reducing time and manual jobs for routine tasks. For now, our plans include:
- Enabling customers to choose the stock to deliver from at the checkout
- Streamlining procurement management. Retailers will create supplier profiles and orders right in the MSI. When the order is paid, the goods are distributed to stocks.
- Enhancing stock management. We plan to allow transporting goods from stock to stock provided that all transfers are well documented and the docs are stored in MSI. Transferring goods secretly (without due documents) will be banned.
How to disable multi-source inventory in Magento 2?
To disable multi-source inventory in Magento 2, you need to navigate to the backend of your store and access the "Stores" section. From there, click on "Configuration" and select the "Inventory" tab. Next, you can uncheck the "Use Multi-Source Inventory" option and click "Save Config" to disable it. Keep in mind that disabling multi-source inventory will limit your inventory management capabilities, so it's recommended to use it only if necessary.
That’s it for now. Do you have some Magento 2 MSI improvements in mind? Please comment to let us know. Stay tuned.