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Innovate With Invent

Are Economic Challenges Impacting Your Inventory Strategy?

Welcome back to our new blog series: Innovate with Invent!

To recap, I host a live “huddle” on LinkedIn on the first Thursday of each month. We chat about trends and challenges that really matter to today’s retailers, as well as insights I’ve learned from working with some of the world’s leading retail organizations.   

After each session, I recap the highlights here on our blog. Last time, we covered “3 hot topics in inventory management.” And now, we’ll dig a little deeper.

Let’s dive in! 

Are Economic Challenges Impacting Your Inventory Strategy?

Economic challenges are now top of mind for everyone in retail, from corporate executives down to inventory planning teams. As inflation and interest rates rise, retailers are operating under serious financial constraints. They’re looking to reduce costs in every area of their business—including inventory investments.  

Of course, retailers still want to avoid out-of-stocks and keep customers satisfied. But at the same time, inventory carrying costs matter more today than any time in the last two decades. So, retailers need to be mindful about how they manage and position inventory across their network of distribution centers, fulfillment centers, and store locations. 

However, making the most of available inventory is easier said than done. Based on my conversations with many retailers, it’s clear that several dynamics are impacting inventory strategies in these tough economic times:  

New omni-channel pressures  

When omni-channel emerged on the retail scene, most retailers saw an exciting opportunity to satisfy customers in a whole new way. Planning teams could get all the inventory they needed, place it everywhere, and fulfill customer desires without so much worry about those costs.

But in today’s economic climate where every nickel and dime are scrutinized, this “appease all'' approach to omni-channel just doesn’t work anymore. Planning teams are under pressure to get more strategic about what inventory is purchased and where it all goes. Every decision they make is under increased scrutiny, which brings me to our next point.

Omni-channel customer shopping on mobile phone  

New involvement from CFOs

Within retail organizations, the role of the chief financial officer (CFO) is evolving as they get more involved in inventory management and the planning process. In some cases, inventory management teams and supply chain teams now report to the CFO. And CFOs are assigning them a seemingly impossible task: decrease inventory, while increasing sales.  

This shift in dynamics is primarily driven by the current economic environment, and it’s creating a lot of tension for planning teams who feel like they’re in a no-win situation. Inventory planners are trying to figure out the perfect inventory balance, yet they’re held back by outdated systems and processes. 

New involvement from CFOs    

New needs versus old systems

Most retailers still use traditional rule-based systems and manual processes for inventory management. This means inventory planners have to manage an overwhelming amount of data, rules, and exceptions. They’re constantly jumping between multiple systems and spreadsheets, adjusting different parameters to meet exceptions, then doing it all over again. 

And now, everything is more complicated. CFOs are putting new pressure on planning teams, yet planners are still stuck within the confines of their same old outdated systems. They spend hours upon hours pulling data out into spreadsheets and working different scenarios trying to find the magic answers that will keep inventory costs low, but sales going strong. 

This old way of doing things just won’t cut it anymore. Planners need a better solution. However, most retailer leaders worry about the costs, time, and uncertainty involved in completely replacing their existing systems.   

New needs versus old systems

Invent Analytics

Striking the right balance

At Invent Analytics, we’re uniquely positioned to help planning teams balance CFO directives and customer demands during these challenging times. Using the power of hedge fund math, AI, and automation, our solutions give planners the outputs they need to optimize inventory for profit. Planners are now in a position to reduce inventory investments and increase sales—all while maintaining the all-important customer experience.

Again, thanks for joining me and be sure to tune into our next huddle session. Until then, keep on innovating! 

Check out the full recording of our huddle on this topic here

Ready to talk sooner? Reach out here.

Jonathan Alves
Jonathan Alves
VP of Strategic Accounts