People who own an online or offline retail business would be familiar with the concept of inventory management. It refers to how a company’s inventory is ordered, stored, processed, and sold. It is of the utmost importance that you have a robust inventory management process for an optimum customer experience, in-store or online.
An effective inventory management solution can give you a competitive edge over your competitors while enhancing customer satisfaction. What are some other things you should know about it?
Why is inventory management necessary?
Inventory management is necessary because businesses face many challenges and constraints while managing inventories. One of these is procuring or gathering stock from warehouses in multiple locations, suppliers, and stores.
The challenge could also arise from the number of channels you use to sell your products, including stores, markets, and e-commerce. Businesses also find it challenging to reserve stock, differentiate them according to various customer categories, and balance customer services with their business requirements.
Specialised retail inventory management is all about improving customer experience through technology suited for the purpose and quickly delivering the desired result.
What technology is used in inventory management?
There is no specific technology or approach when it comes to inventory management, as the requirements of each company are different from the other. However, all of them seek to control and provide relevant information about your stock.
Usually, most end-to-end retail solutions use tracking technology like bar codes and automated identification and data capture (AIDC) technology like RFID to gather information and control the movement of goods or stock.
What are its various advantages?
There are several benefits of inventory management through proper technology, from smoother customer returns to cash flow improvement, and these are some you should know.
Maintain the right amount of stock
By tracking stock in real-time with the right technology like OMS (order management system), you can substantially reduce stock shortages without storing large amounts of them.
That way, you can ensure the customer orders are constantly fulfilled and retain your image as a reliable supplier. Simultaneously, you avoid the high carrying cost of storing too much stock that is difficult to sell in the short term.
Calculate the seasonal demand accurately
Even though you might have a reasonably reliable stock control system, it will have its limitations. For instance, you might witness increased demand without the required amount of goods, and if that happens during the peak season, you could face noticeable losses. An automated inventory system will enable you to calculate the seasonal demand accurately and meet the requirements accordingly.
Reduction of lead time
In the retail industry, lead time is referred to the length of time between the time a customer orders a particular product and receives it (after it reaches the company’s warehouse and is prepared for delivery).
The lead time varies between suppliers, and it’s generally higher if more suppliers are involved in the supply chain. Customers will always prefer companies with low lead times that fulfil their orders within the shortest period. Inventory management software makes this possible by immediately ordering inventory against customer orders.
Easy recall using reverse logistics
The customer should find the return process as easy and smooth as the purchasing process. An efficient inventory management solution with reverse logistics helps you with product traceability, analyse the reasons behind the returns and develop strategies to reduce their occurrence.
You could also use reverse OMS to make automated decisions regarding returned products. If there is an in-house product, you can decide which channel it will go once a customer has returned it.
These are some benefits of using inventory management for your business. It will establish your reputation and relationships with the customers as a reliable supplier and trusted brand at all times.
