Out-of-stock items is a large challenge that retailers face in serving customers. According to a report released this year this is as an issue for 48 per cent of retailers surveyed. It’s clear that inventory management plays a key role in tackling this, and ultimately maintaining customer satisfaction, in what is a challenging time for retail with factors like the cost of living crisis affecting sales.
Having real-time inventory insights can help firms make the right decisions that will enable them to keep customers happy in a competitive landscape, and one where expectations are increasingly high.
Some of the latest inventory management features and functions within Enterprise Resource Planning (ERP) solutions are helping retailers overcome common pain points and facilitating smooth omni-channel operations – a Holy Grail all retailers and wholesale distributors are working towards.
Striking a balance in times of fluctuating demand
Every retailer or wholesale distributor knows the rules of effective inventory management couldn’t be simpler: have enough stock, in the right places, to meet demand, without overstocking and tying up working capital and warehouse space. But achieving this absolute sweet spot with fluctuating demand, in what can be in an increasingly volatile landscape with economic factors affecting consumer spending, isn’t so simple.
This is where technology can help manage inventory replenishment to the right levels at the right times. Automating calculation of key settings like preferred stocking levels, lead times and re-order points – which can be viewed and managed across the organisation and multiple locations – takes time-consuming manual processes out of the mix. This can negate inaccuracies and prevent over or under-stocking based on judgement, guesswork or incorrect data, as the inventory view is in real-time across the entire organisation.
A key element in inventory management is inventory counting – a vital but challenging task. Using an automated solution to execute cycle counting is the most efficient and accurate method, and with ERP solutions such as NetSuite, features like Smart Count take care of this. It also keeps track of transactions made while the count is being conducted, so inventory availability is always in real-time. The user can then choose the appropriate action based on the real-time quantity changes. Parameters and rules can be set: counting can be done on pre-defined criteria, further automating processes while retaining control over outcomes. This is a real advantage in inventory management and helps negate customer dissatisfaction over unavailable items, or the system showing items are available that actually aren’t.
Another area to focus on in good inventory management practice is ensuring stock is logged accurately when received – as inaccurate records won’t provide a true picture of stock levels. Many wholesale distributors are now turning to mobile scanning to mitigate risk of inaccuracy and create efficiencies. Mobile scanning within a Warehouse Management System enables the correct details to be logged on receipt of goods-in – from lot and serial numbers through to where they are located in the warehouse, which also helps when it comes to picking the item later on. Mobile scanning is a growing tactic, as the technology becomes more affordable and therefore accessible.
Gaining visibility of the supply chain is vital for stock availability planning
Having a real-time view of inventory across the organisation – from warehouses and stores to 3PLs and drop-ship locations – is clearly vital. But just as important is good supplier management, and having visibility over these processes too, as they can be equally impactful on inventory management.
Many of the technology solutions available provide the capability to set up supplier portals, to manage the whole process of ordering and invoicing, offering visibility over these processes and the ability to manage communication, and therefore relationships. Delivery date management for inbound orders means any wholesale distributor can fully prepare for incoming supply, and know that stock will be available, how much of it and exactly when it will be received, so that orders can be fulfilled and customers kept happy.
This kind of oversight increases vendor effectiveness and reduces inventory carrying costs through the use of intelligent data – data that can ensure better utilisation of inventory across the supply chain and locations. When global supply chains are ever-shifting, having real-time information means these changes will have less impact on the business, as they can be swiftly acted upon or planned for – forewarned is forearmed. It is this flexibility and agility that is absolutely necessary in the current climate.
Using technology to harness data that can aid demand forecasting
Technology solutions can combine Artificial Intelligence (AI) with data such as historical sales and seasonal fluctuations to help with better demand forecasting, which in turn helps inventory management. These forecasting tools can integrate with other business data such as accounting and sales, to make demand predictions and then automatically schedule orders based on this data – which can be shifting in real-time.
This also highlights the importance of having an integrated solution, so that rather than this business data all sitting in disparate systems and silos, and not necessary updating or synching across systems, it is all available on one unified solution for a true 360 degree view of the business. This will aid better business processes across the board, and provide the insight for informed decision-making.
Effective inventory management is undoubtedly the key to success for retailers and wholesale distributors, as they face a variety of challenges from economic factors and supply chain disruption, through to customer expectations and growing competition. But the right technology can help businesses navigate these challenges successfully. Investing in such technology is no longer an option, but crucial in the quest to thrive and grow.
