Over the past decade or so, shopping has evolved from being a “chore” to a “customer experience” that makes frequent turns along the path to completing a purchase. Case in point: 67% of customers begin shopping on one device, but complete their purchase via another device or channel. With the digital transformation of the retail industry, customer demands are also becoming increasingly sophisticated, making omni-channel a must-have strategy.
To become efficient omni-channel operators, retailers must develop competencies in order management and fulfillment, omnichannel sales planning, data analytics, shared supply chain management, and most importantly, real-time inventory management, among many others.
As seamless retailers playing the omnichannel game, businesses need to form a big picture of their inventory levels. It helps in proactive planning and coordination of inventory movement from one location to another for complete order fulfillment. A holistic view of inventory levels on a real-time basis brings a trove of business benefits, some of which are detailed as below:
Real-time information about inventory levels help retailers to plan, forecast and make accurate orders. It helps leverage the benefit of Economic Order Quantity ordering and similar best practices in the procurement process.
Additionally, real-time stock levels combined with data analytics help find out top sellers, fast movers and slow-moving stock. This information enables retailers to make effective changes to their warehouse management system logistics and even the planogram of the distribution centers for quick stock retrieval and delivery. The ultimate benefit of this well-orchestrated process is complete order fulfillment, improved customer satisfaction and a positive brand image.
Real-time inventory management systems help keep a tab on dead stock inventory. Dead stock inventory refers to stock that can no longer be sold. The ‘death of inventory’ could be caused due to technological obsolescence, change in customer preferences, change in statutory mandates, seasonal changes, or any other factor. Another prime reason is poor inventory management that leads to wrong purchase decisions.
Siloed information about inventory levels and departmentalized procurement process could lead to dead stock pile up. A central repository of inventory levels at all geographical locations, distribution centers and revenue centers that can be accessed on a real-time basis will help retailers take smart decisions. It will help eliminate the peril of dead stock pile up and its negative influence on the bottom line.
Toyota pioneered the Just-In-Time manufacturing philosophy since the 1960s. JIT, aka the Toyota Production System (TPS), is aimed to drastically reduce the production cycle time from the beginning to the suppliers, and then to customers.
JIT has been adopted by several global brands like HP, Motorola, to perfect their supply chains. JIT relies heavily on real-time inventory level information. The entire assembly line of the car manufacturer works like a supermarket where spare parts inventory is available in the right numbers at all times.
A customer experience study conducted by ComScore found that “62% of customers want to buy items online and make returns in-store, while 44% want to buy online and pick up their purchases in a store.”
In the omnichannel era, customers expect high levels of flexibility in delivery, including the flexibility to choose the date and timing of delivery, flexibility to reroute the delivery destination and so on.
These sky-high expectations put extreme pressure on retailers as they are unable to bear the shipping costs incurred to deliver packages to far-flung customer locations. Retailers like Amazon have turned this critical retail challenge into a competitive advantage by setting up distribution centers in the vicinity of customers. The inventory levels of these distribution centers are updated on a real-time basis, enabling the retailer to choose from which distribution center the package should be dispatched for quick and cost-effective deliveries.
Needless to say, without real-time inventory data, retailers will be incapable to support flexible delivery models like BOPIS (Buy Online Pickup from In-Store), Try In Store, Ship to Home (TOSSH) and the likes.
E-commerce has empowered customers to make hyper-personalized choices. The personalization comes not only in the form of deliveries, but also in customizing the goods to the taste of the individual customer. For instance, a customer might want to customize a branded sneaker with a personalized design, order it online and pick it up from an offline store.
These kinds of volatile demands cannot be predicted with accuracy and also complicate omnichannel retailing. Luckily, real-time inventory management can give retailers the intel needed to tweak their storefronts so that out-of-stock goods are not displayed as available.
Upselling and cross-selling strategies make customers buy more of separate products bundled together as combos. They generate steady streams of revenue but also increase the complexity in omnichannel retailing.
Real-time inventory can pitch in here to enable retailers pair slow-moving goods with fast moving goods that customers are purchasing in high volumes. This achieves the dual purchase of extinguishing slow-moving stocks as well as attaining high order fulfillment levels.
An omnichannel strategy empowers retailers to deliver an interactive and personalized shopping experience. But, there are challenges lying ahead. A study by Accenture has found that 40% of customers expect retailers to improve their omnichannel shopping experience.
The biggest challenge in implementing an omnichannel strategy comes in the form of managing inventory levels. Retailers need access to real-time inventory levels to address volatile customer demands as well as to stay profitable when profit margins are steadily diminishing.
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