Hot Topics in Inventory Management
Welcome to our blog series: Innovate with Invent!
As one of our VPs of Strategic Accounts, I get to have a lot of great conversations with retail leaders about their business goals, biggest challenges, and hot topics in the industry. And we’re happy to share insights we’ve learned with you!
On the first Thursday of each month, we host a live 15-minute chat on LinkedIn where we cover a range of trends, problems, and best practices. It’s all geared towards helping you reimagine the way you think about inventory optimization, customer experience, profitability, and more.
We'll recap highlights of each huddle right here on our blog, making it easy for you to get the insights you need to succeed in the new world of omni-channel retail.
Ready to dive in? Let’s go….
3 Hot Topics in Inventory Management
If there’s one word that sums up the last few years, it’s uncertainty. And retailers have certainly dealt with more uncertainty in the past three years than any time in recent history. We’ve seen unprecedented shifts in consumer buying behavior, as the pandemic accelerated the need for more flexible ways to browse, buy, and return goods. Now, consumers expect seamless and convenient retail experiences—no matter how, when, or where they choose to shop.
In short, consumers have gone full omni-channel. Combined with all-too-common supply chain issues, this shift has created the perfect storm for inventory problems. So, it’s no surprise that inventory optimization was a hot topic at NRF 2023: Retail’s Big Show, held earlier this year.
Invent Analytics exhibited at the show, where our team had the chance to talk with hundreds and hundreds of retailers. And every single retailer shared that they’re dealing with inventory management challenges. Here are three big takeaways from our conversations:
1. Retailers need to reduce inventory investments, while increasing sales
Inventory planning is a delicate balancing act between reducing inventory costs and boosting customer satisfaction. Without the right amount of inventory, in the right place, at the right time, retailers lose sales and customer loyalty. But with excess inventory, they wind up dealing with high carrying costs and painful markdowns. Unfortunately, it’s nearly impossible to strike that perfect balance using the manual, rule-based inventory planning systems most retailers still rely on today. They need a better approach to fit the omni-channel environment.
2. Planners struggle with conflicting KPIs and mountains of data
Every retailer wants to increase their profit margins. But the metrics often used for success just don’t line up. For example, weeks of supply is a metric measured in time, inventory investment is measured in dollars, and service level is measured as a percentage. These are three very different types of measurement. How can planners possibly tie them together to make the right decisions to hit their profit goals?
Similarly, inventory planners have access to so much data from multiple systems, including customer data, historical trends, forecasts, and more. The data holds insights that could guide planners in making smarter decisions. The problem? The data is stored in different forms, across multiple siloed systems. It’s impossible for planning teams to bring everything together and make it actionable. Instead, all their valuable data goes to waste.
3. AI is the path forward
Considering the first two points I covered, our final takeaway is a big one: inventory challenges in omni-channel retailing can’t be solved with traditional planning systems and human judgment. That’s why artificial intelligence (AI) in retail is such an exciting prospect.
AI-based solutions can make sense of massive amounts of data. More than just generating better forecasts, these solutions can make actual decisions to achieve the best outcomes. Retailers can use these solutions to optimize everything from inventory allocation, replenishment, and transfers, to pricing, markdowns, and returns—ultimately, profit-optimizing their supply chains from end to end.
Best of all, innovative AI-solutions—like the solutions we offer at Invent Analytics—are making it easy to introduce AI without disrupting your entire infrastructure. We know retailers have already invested in robust technology systems to support their supply chains. Instead of ripping and replacing everything, we can help you make the most of your investments by adding the AI component.
All in all, our conversations at NRF were not all doom and gloom. After chatting about what’s possible with AI-based solutions like ours, retailers left feeling more excited and optimistic for the future.
Until next time, keep learning, keep innovating, and we’ll keep the conversation going in the next installment!