Inventory Efficiency for Customer Satisfaction: Delivering Frictionless Customer Experience
Improving the customer experience increases sales revenues by 2-7% and profitability by 1-2%, according to McKinsey & Company.
Customers will have a positive experience if every aspect of their interaction with the business supports fast and efficient service and shows that the business understands their needs and comes through for them.
One key way for retailers to come through is with inventory efficiency—maintaining optimal inventory levels, avoiding stockouts and overstocks, fulfilling orders on time, and increasing inventory turn — ensuring customers can get what they want without friction and increasing customer satisfaction as well as business outcomes.
How can retailers improve their inventory efficiency? Let’s take a look.
Retailer Challenges Linked to Poor Inventory Efficiency
For any type of sales channel, customers expect to find what they want and get it quickly and smoothly. Unfortunately, there may be obstacles standing in their way, obstacles that retailers must get to the root cause of to increase customer satisfaction.
Stockouts and Overstocks
We all understand how stockouts negatively impact the customer experience. They expect to purchase something, and they can’t. It’s an immediate lost sale and can impact customer loyalty. What is not as obvious is that overstocks can also be a detriment to the customer experience. Excess inventory can become outdated and can limit shelf space for new or trending products. Customers may not realize it, but if retailers offer excessive discounts to clear overstock, it can undermine the perceived value of the brand and create pricing inconsistency.
Order Fulfillment Delays
Shipping should be fast and convenient. That expectation has been solidified in consumers’ minds today, and retailers cannot back down from this challenge if they want to stay competitive. Any delays can cause customer dissatisfaction, erode trust with the retailer, and lead to increased returns.
Limited Information and Options
Customers want detailed and accurate information on availability and shipping options to make informed decisions. If they need a particular item as soon as possible, is it worth driving to a store across town, where the website says it is in stock? They may drive there and learn it is actually unavailable. If they must choose between ship-to-store and ship-to-home, which option is faster? Retailers must help customers make the best choice for their needs by providing more and better information.
What are the Root Causes of Retailers’ Inventory Challenges?
If retailers want to address their inventory efficiency challenges, they must take a closer look at the systems and technology they use.
Likely, there is an issue with inadequate visibility. This stems from the lack of a unified system that synchronizes inventory data across all sales channels. Fragmentation leads to discrepancies where an item may appear in stock in one channel but is actually sold out due to sales in another channel. Legacy systems can cause delays in inventory updates and increase the likelihood of overselling, as can manual processes in updating inventory records.
Retailers may also rely on planning systems that are unable to accurately predict demand and optimize inventory replenishment. If the system isn’t using advanced data analytics and all sources of data — including ERP, OMS, POS, and CRM systems — retailers will have difficulty with market segmentation (resulting in items positioned inefficiently) and responding to market changes fast (resulting in stockouts for trending items and overstocks for items no longer in high demand).
How to Approach Tech-Enabled Inventory Efficiency
The goal is inventory efficiency, but this can seem like a massive challenge to overcome. How can retailers begin to address it effectively? In short, there are three critical component parts to an effective solution.
Integration with the Entire Tech Stack
First, it’s essential that all sources of data are available to use, meaning the solution must connect with the entire tech stack, including OMS, eCommerce platforms, POS, ERP, IMS, TMS, etc. Dropit approaches this as a system-agnostic platform that sits atop the tech stack, gathering data into a secure data lake, where it is cleansed, structured, and synchronized.
Live, Unified Inventory Visibility
The result of this integration is complete inventory visibility that is live and provides transparency across all sales channels, with no more data silos. It allows retailers to grasp their entire ecosystem holistically and make the best decisions by accurately understanding the interconnected pieces of the inventory efficiency puzzle.
Advanced Machine Learning
The last piece is what makes inventory optimization possible — advanced machine learning models that leverage inventory visibility plus the business’s unique rules, objectives, and revenue structures to guide inventory decisions, big and small. With the continuous learning of Dropit’s platform, retailers gain insights for micro decisions — small course corrections that collectively have a significant impact on overall inventory efficiency.
Inventory Efficiency is Made Easy with Dropit
With an advanced, machine learning-powered solution like Dropit, retailers can optimize inventory management, align supply with demand, and minimize the risk of friction and delays for their customers, driving positive customer experiences and business success.
Dropit makes inventory efficiency easy to achieve without the need to rip and replace any part of the tech stack, to get retailers on the path to inventory efficiency fast.
To learn more or get started, visit https://www.dropit.shop/contact and sign up for a free demo today.
