Supply chain trends 2023 #3: Customization and digitalization
At the advent of a new year, it is a good idea to not only…
Retail inventory management is the process of having the right amount of stock, in the right place, at the right time to service stores. Inventory management is a vital practice for any retail operation. It helps satisfy the customer’s needs while reducing costs, increasing profits, optimizing fulfillment, and avoiding shrinkage and waste. Stock, may not be limited to merchandise to sell directly to consumers but also potentially raw materials and components.
Inventory management tools help retailers improve this activity by enhancing efficiency and recognizing the correct drivers for effective sales. These systems work to balance inventory to maximize customer service in-store. This article explores the need for intelligent inventory management to ensure robust Retail and Supply Chain planning.
Intelligent planning is a fresh approach guided by technology to allow businesses to discover crucial insights and drive greater business outcomes. It works to integrate critical business functions for smarter planning and better decisions. In Retail, intelligent planning identifies the spending patterns of consumers and turns them into profitable merchandise, assortment, and replenishment plans while aligning product strategy to customers’ needs. It also delivers end-to-end visibility across Supply Chain resources and assets to help organizations balance demand and adapt to new requirements after every operational decision.
Intelligent retail planning includes functionality for inventory management, sales reporting, and analytics. Resources are more readily available to:
These planning solutions also help retailers cultivate better sales success by linking to sales performance tools. Every function works in synchronicity to drive significant benefits across the organization.
When retailers know how much they have and need, they can precisely determine inventory levels, helping reduce storage while maintaining customer service and constraining the resultant costs of surplus merchandise. An inventory-focused approach:
It underwrites retailers’ need to meet customer demand and avoid operating out of stock or holding surplus provisions. The “right” (balanced) inventory secures every potential sale while preventing over-stock and minimizing operating costs.
Other savings involve logistics, shipping, depreciation, and the opportunity cost of not having an alternative product that might sell better. Retailers enhance profitability with reduced inventory costs and sufficient supply for every order.
Intentionally planning around inventory helps retailers minimize the expense when products expire or become obsolete. This applies to perishables with a limited shelf life, such as milk and meat, and to non-perishable items that become obsolete because of consumer preferences, seasonality, and innovation changes. Examples include:
Minimizing inventory shortages is essential for not failing customers or missing spot sales opportunities. Retailers utilize planning intelligence via Inventory Management tools, driving data-led decisions to establish the perfect level of inventory to have on hand. With this real-time data on sales and stock, retailers can react quickly to changes in circumstance and reorder, transfer supplies from another location, or even drop ship the product directly to the customer as required.
When customers choose a product, they want it to be in stock and delivered faster with fewer mistakes. These fulfillment conditions enhance customer loyalty. Customers’ experience begins when they enter a high street store or online platform. Retailers want to leave the best impression to boost customer loyalty and enhance brand perception. Building good customer relationships results in better customer service and customer confidence.
Several elements contribute to a great in-store and online experience:
What the customer gets in the first experience of the store makes a long-lasting impact.
Building rapport with customers and displaying excellent knowledge of products and services is a great way to encourage additional sales. The in-store and online support staff must know everything about the available products to increase the likelihood of a purchase.
Staff confidence in understanding how to manage inventory adequately and the supply flow can be the difference between customers feeling like they are receiving a personal service. In turn, it will increase customer satisfaction and encourage return visits. Showing customers the merchandise and explaining its features and benefits will demonstrate the seller’s product knowledge, which is essential when securing a sale.
Tracking store inventory can be challenging, so most retailers use several methods to check inventory levels. They integrate an inventory management approach via a POS (Point of Sale) system, so stock reflects every sale or return.
The accuracy of inventory matters to the retail demand plan. Stores must conduct physical inventory inspections periodically, and differences will need immediate amendment against inventory records. Training staff on procedures such as exchanges and returns and stressing the importance of putting them into the system helps retailers oversee accuracy across inventory levels.
Low-margin, high-volume stores uphold rapid turnover to make a profit. For instance, retailers selling luxury products that take a long time to manufacture can drive low-turnover rates. Likewise, a store with a lower turnover rate might be over-ordering or have too many slow-selling products – so they inevitably spend more on inventory costs.
Intelligent inventory management processes help manage retail goods from initial orders to the final sale. The purpose is to ensure a retailer has the ideal amount of product available when customers want it while keeping costs minimum.
Many retailers sell through several locations, including a brick-and-mortar store or physical location, online via an eCommerce website or marketplace, or third-party suppliers. The challenge with this stems from providing a unified, integrated experience for customers across all the different online and offline channels. Retailers must keep a reliable inventory balance to drive this omnichannel approach.
Introducing intelligent inventory planning and visibility enables retailers to manage inventory more effectively and get items to consumers more rapidly. A robust inventory planning process also diminishes tension in systems as sales increase. Order fulfillment and shipping & receiving run more smoothly while minimizing mistakes, customer objections, and strain on retail teams.
An intelligent plan allows reviewing data and placing new orders to keep with seasonal trends and minimize the risk of stock outages. It reviews items that might sell out in specific locations and includes them in repurchase proposals.
Discount sales can only run for limited periods to mitigate trends, obsolescence, or seasonal factors. If a retailer is offering discounts, they need to be systematic about price cuts and reallocate to alternative discount channels when appropriate – which can trigger extra cash and make space for more relevant products. Retailers must plan for sufficient stock to fulfill demand and what to do if demand patterns vary.
Planning with the right technology can transform retail inventory management. It is crucial for achieving maximum efficiency. Retailers must see the products in a single view across all channels using innovative, intelligent order management methods. Likewise, customers must receive an exceptional shopping experience. The question is, does your inventory strategy sit at the center of your Customer Service proposition?