Stockpiling is a common response to the challenges of inventory management, it helps to guard against sudden changes in consumer demand. But, more is not always more. Inventory that exceeds what is required in the short term can be expensive, create inefficiency and limit perspective on inventory changes.
In a recent survey (Total retail) 63% of retailers report having more than one month of inventory on hand, a figure that grew within groups that identified inventory volatility as a challenge. Forecasting can be blamed, many retailers use basic modelling methods to predict and plan for inventory needs.
Effective demand planning technology provides a more engaged forecasting process supported by advanced modelling techniques. Retailers can generate a unified demand and supply plan through the following action steps:
- Factor in fulfillment variability
- Cover demand based on historic customer data
- Control inventory levels through technology tools
- Build precise forecasts based on customer behavior and location performance
- Revise sales channel allocation based on performance
All of these combined actions help to create a more effective vision of inventory, by effectively factoring in past history, expected behavior and management challenges. The merging of these attributes allows for the development of a cogent inventory control implementation. While inventory management can be controlled manually it is tedious and often inefficient, that is why many retailers are moving towards and automated system that functions to meet retailer and end customer requirements.
Inventory management systems can be a strong first step to mastering consumer demand, leveraging a system that controls inventory through buffer levels and additional control mechanisms including location allocation. Having minimum inventory levels helps to mitigate the risk of a customer leaving the store empty handed.
SKU management is perhaps even more critical in managing inventory levels, with a targeted management approach, retailers can easily control the stock level of every item. SKU management allows retailers to manage the process of analyzing the carrying cost for each SKU to determine which products are the best serving. If certain SKU’s are not performing, stock levels can be shifted to “Dark Stores” or warehouse locations to enable ship to store, or direct to home shipping on those items.
Administrative errors are also a significant concern for retailers, mistakes with stock takes can be a major cause of lost inventory and dead stock in stores. More than 20% of the loss in the average business is caused by administrative and paperwork errors. Taking inventory by hand is therefore not the most efficient way to capture accuracy around inventory levels. With the development of RFID technology and inventory prediction, retailers can easily resolve the challenges of stock takes and minimize loss prevention.
But a unified inventory management system is limited without direct access at the point of sale, while having basic awareness around inventory levels is important, being able to leverage this information at the point of sale is a tremendous advantage. Accessing item level inventory at each location, from any location maximizes the retail associate’s ability to sell. Capturing payment directly from the customer and then easily fulfilling the order. Whether through store pickup or ship to home.
With Teamwork Commerce all of these challenges can be resolved through a connected, unified commerce platform that drives efficiency in backend operations and a seamless experience on the front end. Learn more: www.teamworkcommerce.com/universalcustomer