Overcoming Today's Biggest Retail Inventory Management Challenges
By Rakesh Kumar, Pimcore Global Services (A Happiest Minds Company)
It's safe to say that inventory is at the heart of the ever-evolving retail industry. For businesses worldwide, managing inventory to ensure a pleasant and seamless customer experience has become one of the primary focuses in today's highly competitive retail landscape. The inventory software market is growing rapidly and is expected to exceed $3 billion by 2024, with cloud-based software claiming over 30% of that market share. Data analytics, IoT, and Cloud Computing are now some of the most highly sought-after technologies in the supply chain sphere.
Good inventory management practices can be a game changer when it comes to achieving exceeding customer expectations and maintaining healthy profitability. While comprehensive inventory control and accurate sales forecasts are reliable strategies, that's just the tip of the iceberg as far as inventory management is concerned. The challenges are as diverse as the global and local markets in which retail businesses operate.
Limited Visibility And Lack Of Real-Time Tracking
Knowing the location and status of an item is one of the key aspects of inventory management. This information needs to be up to date to be effective, and limited inventory visibility can prove costly. There are expenses involved in rushed shipments, additional storage for extra items, and losses incurred due to perishable goods. The pitfalls are too many if you don't have real-time data to make the right decisions and streamline your operations and logistics.
Reliable real-time information is vital for tracking an item's status throughout its inventory life cycle. This is where software systems can make a huge difference compared to physical methods that have a high probability of error in information gathering and updating. Data management software solutions can centralize the information, providing retailers with real-time location data and stock availability while ensuring complete accuracy.
The Inefficiency Of Manual Processes
Many business aspects have adopted automation and other intelligent software platforms and tools in this digital age. However, even today, many retailers rely on manual processes for managing inventory information. While this approach can work on small scales, its feasibility diminishes as businesses grow. For example, imagine a team of people trying to manage and update inventory spreadsheets for a retail business with 50 outlets across three countries, along with an e-commerce portal. Not only are errors inevitable but accomplishing it all in real-time is practically impossible.
Retailers need to make informed decisions on purchasing and stocking the right items and utilizing an MDM (Master Data Management) platform to manage inventories can make that happen. These software platforms are designed to significantly reduce the possibility of discrepancies while increasing productivity and streamlining operations. By enabling in-depth analysis and tracking for insights on industry trends, MDM platforms are transforming retail inventory management in the 21st century.
Overstocking And Inventory Loss
Meeting market demand is one of the basic requirements of retail businesses, which sounds simple in theory. The reality, however, is often more complicated. Keeping up with changing trends and paradigm shifts in customer behavior can be a real challenge in retail's fast-paced world. These variables can result in businesses keeping too much stock on hand. This leads to inventory issues such as additional storage costs and the possibility of inventory loss due to numerous factors, including spoilage, damage, and even theft.
It's no secret that accurate predictions lead to optimal inventory management. Over the past few years, demand forecasting has emerged as the best way to overcome inventory and supply chain problems related to overstocking and loss. It’s all based on analyzing past demand for a product within the context of present market conditions to predict future demand. However, as powerful as demand forecasting can be, it needs vast and accurate data to be effective. That's why MDM is a great way to augment demand forecasting by simplifying the management and interpretation of relevant data. With the help of MDM, businesses can access the data generated from accounting and sales activities to stay a few steps ahead of critical factors such as shifting preferences and seasonal market trends.
Empowering The Workforce With The Right Information
Employees need the information to be effective at performing their jobs. However, depending on the nature of their jobs, the information they require varies quite a lot. The challenge lies in providing the right information to the right person. For example, buyers need to know which products are doing well in the market to be able to work out the best deals with suppliers, while finance needs to keep an eye on purchased stock to ensure that it's not sitting in warehouses or on store shelves for too long. And this information needs to be made available to workers regardless of their location.
Data management solutions integrated with a robust workforce analytics framework make it easier to balance anticipated market demand and sales volumes with leaner, more efficient supply chain operations. Additionally, with the help of cloud deployment and a centralized information repository, these modern software solutions are unlocking new possibilities by enabling anytime/anywhere access. The result is optimized decision making at every level and seamless collaboration among remote workers and dispersed warehouse locations.
Training Employees To Leverage Software Solutions
For most employees, the introduction of new software is a big change that some might find too daunting at first. Imagine a workforce that is accustomed to legacy inventory management practices. While they probably will have a good understanding of inventory management basics, the new tools, processes, and data interpretation aspects of a software-based solution might look unfamiliar to them. Also, the tech savviness of individuals differs greatly. If employees are left to learn a new system on their own, it is quite likely that all of them won’t be on the same page. This can lead to inconsistencies in a new software solution’s promised benefits.
Businesses that rely heavily on inventory must train their employees in master data management tools. A comprehensive program will cover all the basics, and if necessary, specific personnel may be selected for specialized training courses offered by organizations such as the Association for Supply Chain Management. With technological innovations driving growth in retail all over the world, having trained specialists on board can be a key competitive advantage.
In Conclusion
It all comes down to finding the right MDM platform that fits your needs. By ensuring timely access to accurate and consistent data, a successful MDM implementation cuts down costs, pumps up order-fulfillment rates, and enhances customer experience, thus decreasing the time and effort in managing inventory. Investing in a robust MDM solution can help retail businesses easily overcome even the biggest inventory management challenges.
About The Author
Rakesh Kumar is Chief Solutions Officer at Pimcore Global Services (A Happiest Minds Company). He is responsible for designing high-performing and scalable cloud applications and managing engineering and pre-sale functions across geographies. Pimcore is an open-source platform for product information management (PIM/MDM), digital asset management (DAM), content management system (CMS), and eCommerce.