Overcoming the challenges to achieve a unified view of inventory
If there’s any time for ecommerce businesses to develop a unified view of their inventory, it’s now. The pandemic’s impact on supply chains around the globe has inspired a renewed commitment for brands looking to fortify inventory management practices, especially in our increasingly omnichannel environment.
According to a recent report from RSR titled Retail ecommerce in context: the next iteration, half of retailers surveyed agree that a unified view of inventory is still the top opportunity to improve the digital experience. In theory it should be simple enough: The right product, in the right place at the right time - to satisfy your customer's needs.
But barriers to this goal continue to frustrate shoppers and retailers alike. Consider how brick-and-mortar storefronts and digital stores need to be working with an omnichannel inventory management strategy, along with the right software to bring that strategy to life. If not, customers, and employees alike will encounter gaps such as a lack of inventory visibility.
Inventory channel surfing
Here’s where inventory management gets tricky, explains Deanna Traa, Chief Marketing Officer at Bold Commerce. “If the physical store I manage has two shirts in Color: Black and Size: Medium, that information has to be pushed real time to the website for shoppers browsing online to see inventory available for pick up in their local store.” When those two channels “talk” in that way, customers receive reliable visibility of inventory at hand, no matter where they shop. And if a shopper buys that shirt in store, that inventory status has to be updated right away so the availability displayed on the website is accurate.
In the past, retailers would circumvent the responsibility of providing accurate info with a generous buffer stock rule or a “please call the store to confirm availability” message, but consumers are raising the bar on their expectations for convenience and accuracy.
Traa stresses the importance of further integrating real-time tracking of orders and inventory with the rise of social shopping. Emerging commerce channels are finding favor with younger generations who come to the table with expectation of accurate inventory availability and seamless checkout flows. Buying shoes off TikTok is no longer a far-fetched idea.
Real-time visibility can smooth the edges of frenetic ecommerce sessions, where products aren’t simply bought and sold, but rather placed in an online cart, removed from the cart, pre-ordered, back-ordered, reserved, etc. Ecommece opens the door to potentially hundreds of micro inventory lifecycle events happening dynamically. Batch interval processing and data transfer is no longer effective.
The market sentiment is leaning strongly towards cross-channel awareness. A study published in RIS News found that 72% of retailers agree omnichannel inventory management is a major factor in meeting their company’s financial goals.
As beneficial as it is to survey inventory and order management coming from customers, full inventory visibility also includes monitoring suppliers.
If the pandemic taught enterprise brands anything about supply chain management it was achieving more visibility to the status of inventory at the supplier location. As a Deloitte report notes, being aware of supplier production schedules and supplier shipment status will help ecommerce leaders predict supplier shortages and respond accordingly.
Upgrading key technologies is imperative here, adds the Deloitte report. “For the majority of companies that don’t have full electronic connectivity to key direct suppliers and control towers over the inbound flow of products and materials, companies should move quickly to get access to data and build management dashboards to support visibility and decision making.”
Flexible delivery can deliver
The recent RSR report also shared a telling line where retailers are looking to add more shine to inventory practices: delivery options. “Retailers want to be able to identify not only what inventory is available to sell, but when and how it can be delivered and how much those options will cost the consumer,” the report writes.
The pandemic also buoyed the trend of BOPIS (buy online pick up in store), as Rich Kreitz, Lead Checkout Product Manager at Bold Commerce, points out. “That isn’t going away anytime soon, and having that unified view of inventory is only more important now that we’re seeing a range of delivery options for consumers.”
Mismanagement or gaps in this area can not only damage relationships with customers but also pose challenges to partnerships with delivery services and suppliers. When all parties are on the same page, it can lead to a more seamless shopping operation.
Crystal-balling with clarity
If retailers want to level up their inventory visibility, demand forecasting has to be a tool they leverage often, recommends Traa.
“Retailers can use both historical and current shopping patterns along with predictive modelling for demand forecasting to anticipate where to put inventory, and how to manage this system properly,” Traa adds.
Put simply, demand forecasting is the process of calculating the inventory needed to fulfill future customer orders based on how many products you predict your business will sell over a specific period of time.
The upside to sales and profitability is warranted: Enough inventory on hand means retailers avoid stockouts or back orders. Also, determining data-driven predictions on how much inventory retailers need helps them optimize their investment, reduce markdowns and maximize profitability.
These days modern retailers have evolved to replace manual data collection with demand forecasting and allocation software. Further, they have refined their modelling to account for differences in inventory turnover and sell through by channel and location.
Dr. Chaman Jain, Editor of the Journal of Business Forecasting, is quoted as saying: “I found an average company can save $3.52 million for every one-percent improvement in the under-forecasting error, and $1.43 million improving the over-forecasting error.”
As customers continue to move the dial on where and how they buy, it’s critical that retailers are acutely aware and factoring in where those customers are shopping and how to place the inventory in the best location to maximize sales and convenience, while making it visible to shoppers and retailers in real time. Ask any pilot: increased visibility makes for a smooth flight.
Download "Retail ecommerce in context: the next iteration," sponsored by Bold Commerce.