The world of retail faces one of its most prominent challenges in the wake of emerging technological advancements and disruptions in the supply chain – the need to balance inventory against costs and ensure high levels of customer satisfaction. This is a subject that has always been topmost on every retailer’s mind. Add to this the invasion of an Omnichannel marketplace with consumers seeking cross-channel order fulfilment and delivery, and the inventory optimisation equation gets more complex and volatile.
Today’s Omnichannel consumers are aware of their privileges and are hardly impacted by loss of stock in a brand’s physical or online store, knowing fully well that they can place an order at one store (physical or online) and either pick up the merchandise from another store or have it delivered to their location.
Retailers need to constantly be on their toes to satisfy the needs of their customers or they run the risk of losing loyalists to a competing brand.
Judicious Inventory Management
Judicious inventory management plays a very crucial role in helping retailers optimise inventory and provide seamless shopping experiences. Effective inventory management in an Omnichannel era ensures that the supply chain scale stays balanced by preventing both over stocking and under stocking of inventory.
Retailers have realised the importance of aligning inventory in response to market demand and aggressively improving their customer service levels, while maintaining optimal cost structures and keeping a close eye on business profitability.
Supply chain automation is fast emerging as a transformational strategy to help retailers achieve their brand objectives and maintain a continuous supply chain.
Factors Influencing Retail Inventory Planning
While we cannot discount the importance of retail inventory management, every structured inventory plan has to be conceived keeping in mind some key factors that are likely to impact the overall supply chain process.
Optimising retail inventory can be a complex task given the fact that inventory management process itself can be quite overwhelming. In the wake of high competition and changing customer preferences, retailers are challenged by constant variations in the range of products not to mention planning and managing thousands of SKUs and ensuring the availability of the right products at the right time at the right place and at the right price. The thumb rule of efficient inventory management is to balance the demand and supply scale.
Key Drivers of Effective Retail Inventory Management
Retailers are now moving towards next-gen inventory management solutions based on predictive analytics of consumer demand. These solutions focus on an integrated approach towards retail inventory management and cover the various facets of merchandise procurement and storage, allotment and replenishment, and logical distribution. Balancing retail inventory can be achieved though science of digital decision-making to rake in big profit from the investment.
- Process-centric approach: Retailers should take a structured process-oriented approach that can factor in changing market demands and meet the needs of the business.
- Better visibility into the supply chain: End-to-end supply chain visibility brings transparency and enables speedy and accurate decision making. End-to-end visibility of inventory, stockout, overstock, sales loss, and sales and purchase efficiency, throughout the enterprise in real-time, will reduce supply chain uncertainty as more action is taken.
- Dynamic demand management strategies: Consumer preference and demand are very dynamic in nature. Efficient tools to predict demand daily at a granular level will enable faster decision-making and faster reaction to counter the dynamic demand problem.
Optimising retail inventory is a complex but necessary process. By carefully analysing the ‘Digital Insights’ and acting on it daily, retailers can address inherent supply-chain challenges and take critical functional and operational digital decisions.
Real-time, fast computational retail technology solutions could very well be the answer to solving the complicated supply chain conundrum and help retailers achieve their foremost business objectives, namely increase availability to heightened sales, reduce inventory and reduce purchase.
