Manufacturers have always struggled to obtain the most accurate inventory levels possible. While an out-of-stock issue may seem minor, it could result in the loss of multiple-item orders, especially among e-commerce shoppers. In fact, up to 52 percent of e-commerce shoppers abandon their carts when they learn one product they want is out-of-stock. Meanwhile, failure to notify consumers about out-of-stock items during purchase could result in the permanent loss of a customer. A need for real-time inventory management has arisen, but until now, we didn’t have a way to make it a reality.
In our predictions’ blog post from earlier this year, we noted how customization will begin to replace traditional inventory management, and essentially, customization goes back to using computer analytics to generate a more accurate, successful view of inventory management. Let’s take a closer look at why such systems have the power to radically change standard inventory management operations.
1. Real-Time Inventory Management Eliminates the Risk of Not Telling Consumers About a Product’s Inventory Status.
Consumers want to buy what they know they want, and they want to know that when they buy it, it will arrive as planned. Nothing is more frustrating than ordering an item only to discover that it will not ship for weeks afterward. In some cases, selling products that are not currently available can result in the levy of penalties or fines from governments.
2. Cloud-Based Inventory Management Systems Give Customers Access to Your Company’s Whole Stock.
This might sound obvious, but it is worth consideration. Cloud-based inventory systems that update after each sale allow customers to find a product at other stores when their favorite brick-and-mortar store is out. Similarly, this technology can be leveraged to help e-commerce sales by providing alternative originations for shipments.
For example, consumers can purchase products online from one Walmart store and pick them up at a different location within a day or two. Depending on where you live and operate, the actual pickup time frames may vary. The key is ensuring customers know when a product will arrive at their doorstep and into their hands.
3. Real-Time Inventory Management Reduces Costs of Maintaining Inventory.
Some inventory, especially perishable products, requires additional measures for keeping it intact during storage. For example, perishable products may require refrigeration, and not moving inventory fast enough may lead to the loss of product. Considering that most companies have up to 43-percent more product than what customers actually spend, this can amount to millions in lost revenue.
Additionally, real-time inventory management gives companies greater flexibility in diversifying the products they sell. If a new product comes out, companies can distribute it appropriate and reship it to locations that are selling faster. Essentially, the connected inventory control system gives companies the ability to get products to consumers just in time.
4. Real-Time Inventory Management Is Standard Among Major Retailers.
If your company does not have the product customers want, they will go somewhere else, probably Amazon. Amazon has accomplished many great things, and the company is approaching omnichannel status. However, this means your company needs to keep costs down, which translates to eliminating excess inventory and keeping all customers happy. In other words, you need to keep the “right number” of products in stock, and analytics can help you determine the quantity needed.
5. Real-Time Inventory Management Can Benefit From Automation.
Automated data capture promotes inventory management by giving systems control over the tallying of products. Although point-of-sale systems already aggregate and analyze patterns among sales, using the same systems to track inventory increases risk.
Theft and damage may occur. Inventory may be returned to other stores, and adding and subtracting numbers will not do the trick. However, automated systems can cross-reference sales, returns, damages and other points-of-contact to generate an accurate inventory report.
For example, radio frequency identification (RFID) tags can be used within the same security system tags most companies have in place today. These systems can automatically detect changes in inventory. Depending on the level of sophistication, including data synchronization speed, vendor inventory tracking and lead times, track the movement of products in your store. In turn, you can determine if certain items are being put back on the shelves in exchange for a different product.
Retail Is Becoming More of an Omnichannel, Multi-Channel Experience.
The clear majority of consumers have purchased a product online within the past year. Meanwhile, the sheer volume of consumers shopping across all channels is growing with remarkable speed. As explained by the Global Dispatch, manufacturing revenue is expected to climb 4.6 percent through 2017, but this statistic could easily decrease if manufacturers do not implement accurate, real-time inventory control systems.
Most importantly, these systems must be integrated with all existing systems that involve inventory, including transportation management, enterprise resource planning, warehouse management and beyond. Real-time inventory management truly is the new normal.