Inaccurate inventory and purchasing continues to plague retailers, costing the average retailer 4% of potential revenue.
It’s almost impossible to be 100% accurate to forecast inventory given the number of external variables. However, even a small reduction in the error rate has a massive impact on profitability. Too often, multi-store retailers are basing decisions on gut instinct or falling for traps such as:
- Buying items because a supplier offers a discounted price when buying more.
- Allowing suppliers to influence inventory, letting them re/order for you when in store.
- Purchasing the same quantity of items no matter what size.
- Delegating buying decisions to Store Managers without arming them with the right knowledge and tools.
Informed Retailers optimise inventory by using precise, real-time inventory data from their entire network, historical sales and margin performance. Using intelligent algorithms to interrogate this data, they can make more informed inventory and purchasing decisions. Data accuracy is maximised by:
- Applying categorisation hierarchies for product data.
- Utilising RFID technology to track the quantity and location of inventory through the supply chain.
- Performing regular stock reviews using digital tools to avoid human error, and enforcing a review and approval process.
- Ensuring systems allow a centralised view of inventory across stores and outlets.
- Ensuring systems accurately account stock on order, in transit or on layby/layaway.
- Creating a culture of accountability and understanding of shrinkage impacts.
Informed Retailers also closely collaborate with suppliers to ensure required stock levels can be met, by having a shared view of optimum stock levels across stores. This enables retailers to control out of stock issues and manage inventory through forecasting by analysing the data shared across the business. They can also plan and optimise their storage layout and generate logical picking routes throughout the storage facility.
Score your business in each of the critical areas of practice to identify strengths, weaknesses and potential blind spots.