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Inventory Visibility remains an illusion for many Retailers

For retailers of all sizes, inventory is the lifeblood of the company and can be regarded as the “largest investment” made year on year. Despite levers such as Pricing and Mix, retailers’ revenue growth often comes down to inventory units available for sale. Inventory also has a critical impact on the bottom line, as its productivity is a key driver of a retailers’ margin.

The advent of Omnichannel and the significant growth of e-commerce only reinforced the importance of having a clear view of the inventory in order to optimize planning, sourcing, and fulfillment decisions. Consumer satisfaction with a retailer closely relates to promises retailers make on having (availability) and delivering (timing) the product and their ability to keep them.

It shouldn’t come as a surprise, then, that Inventory Visibility has become a core capability for most retailers. Central to Inventory Visibility is a real-time view of inventory location, condition, and value across the supply chain. This includes not only Stores and Distribution Centers but also inventory in movement and inventory at third-party nodes/locations throughout the supply chain (Manufacturing Partners, Consolidators, Transportation Partners, etc.). Only by having this holistic view of inventory can retailers make informed decisions on how to move, discount, or source specific inventory units.

Given the foundational nature of Inventory Visibility, the expectation would be that retailers have developed systematic and modern ways to keep close track of their inventory units, their location, condition, and value. The reality, however, is very different and despite significant progress with RFID technology, keeping an accurate track of the inventory remains a challenge for many retailers. This problem has become even more apparent through the recent supply chain disruptions retailers across the globe have been experiencing.

Understanding the reasons behind these challenges could easily take us in a myriad of directions. Still, in our experience, the main factors reside in a multitude of systems that control inventory, batch integrations across those systems, and an ever-growing number of processes relying on a clear view of inventory. Solving any of these issues can be a multi-year effort and require foundational shifts in a company’s data structures and core systems.

We believe a pragmatic way to make quick and lasting progress on the Inventory Visibility challenges is to focus on the inventory nodes or locations closer to the consumer. Inventory locations such as Omnichannel enabled Stores and Digital Distribution Centers tend to share the same SLAs and, in some cases, the same systems, leading to an easier road to a single logical pool of inventory that can serve multiple consumer channels. Depending on the size and disparity of the Inventory nodes, achieving a single logical pool of inventory with the same degree of visibility and accuracy will go well beyond the systems integration.

These efforts can be even more impactful if retailers focus on processes and controls that ensure any discrepancies in the inventory view are quickly addressed and resolved. Having those controls standardized across the fleet of stores and DCs, and an empowered workforce that can quickly understand the root cause, find the short term solution and identify patterns requiring systemic adjustments are key to ensure a consistently accurate view of Inventory. Furthermore, RFID technology is now mature and inexpensive enough to justify enabling stores and Distribution Centers with the ability to maintain an accurate and real-time view of inventory. Although perfect inventory visibility may never be achieved due to the permeable nature of retail and warehousing (shrinkage, mislabels, human error, etc.), the above steps will ensure that retailers can more reliably control the consumer’s experience and keep the promises on availability and fulfillment of the product.

When it comes to Inventory Visibility, having a clear starting point and demonstrating progress creates the right virtuous cycle that will lead to higher consumer satisfaction and a better process. TechTorch has codified the processes, data flows, metrics, and technology to help you get started in the Inventory Visibility journey and set up the capabilities in record time!

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