Problem, Solution: Leveraging Inventory Efficiency to Solve Strategic Omnichannel Challenges
More sales channels bring more challenges. Inventory management wasn’t always as complex as it is today, but with the industry continually evolving and the rise of eCommerce, strategic omnichannel challenges are today’s mountains to overcome.
How can retailers be sure they're approaching everything with the best strategy, whether navigating the obstacles of data integration, visibility, logistics, and fulfillment or adapting to ever-changing customer expectations?
Today, we’re discussing the strategic challenges that come with omnichannel selling and what can be done to increase inventory efficiency.
Today’s Retailers Face Significant Omnichannel Challenges
Efficient inventory management is critical for managing costs and capitalizing on sales opportunities. This has always been important, but for omnichannel retailers, the costs of inefficiencies are higher.
Just imagine the scenario of an online-only retailer with a significant amount of inventory sitting in a warehouse for a long period of time, waiting to be sold. It has tied up cash, and the cost of storage continues to accumulate every day. This is inefficient, but it is only a single channel.
What if multiple channels are involved? In short, these retailers have bigger obstacles standing in their way.
Supply Chain Complexity
Supply chain complexity is a major factor adding friction for retailers trying to achieve inventory efficiency. Omnichannel selling means increased complexity that can amplify the negative impacts of inventory inefficiencies.
Each channel may have different needs, requiring tailored strategies. The challenge, then, is in achieving efficiency across all channels. Similarly, different fulfillment options, like ship from stores or buy online pick up in store (BOPIS), add complexity. And once reverse logistics is factored in, which can easily lead to inventory imbalances, inventory efficiency quickly becomes a moving target, a goal that can seem impossible to achieve.
Poor Inventory Visibility
The problem is approaching this supply chain complexity without adequate inventory visibility. How can retailers know what is going on in each channel if each is operating in a silo, disconnected from the others? Retailers likely have multiple systems with different data structures, updating at different frequencies. Inventory visibility would mean getting everything on the same page, but if this were an easy problem to fix, everyone would have already.
In reality, a lack of live data accurately reflecting all channels creates blind spots, making it difficult for retailers to gain a holistic view of their inventory and sales. As a result, retailers encounter inefficiencies like overstocking and stockouts that lead to missed sales opportunities. To address this, their data must be unified across all channels as the foundation for an elevated level of decision-making and inventory efficiency. (More on this later.)
High Customer Expectations
We must not forget that these strategic omnichannel challenges do not exist in a vacuum. They are subject to customer expectations that change and evolve but, as a whole, are trending in the direction of, “If I have to compromise, I might just go somewhere else.” Product availability, fulfillment options, and shipping cost, speed, and transparency — whenever customers lack flexibility themselves, this is where retailers must try to make up the difference in order to keep their customers.
Customer expectations might seem lofty — shipping is never really free, nor is every customer just a short drive from the nearest distribution center — but this is what retailers must answer to if they want to compete in the marketplace. This is also where the opportunity for inventory optimization comes in.
Inventory Efficiency: The Key to Effective Omnichannel Logistics
For retailers to be competitive, answering to their customers’ expectations must be done in a way that reduces costs, reduces waste and loss, and increases efficiency.
But to make decisions that fit this bill, retailers must consider the wide range of factors in their complex supply chains and ask, “For the present data across every system I have — actively tracking, calculating, segmenting, predicting, etc. — what is the optimal arrangement of decisions, across the omnichannel ecosystem?”
The solution must have these three facets.
Unified Inventory Visibility
Decisions should be made within the context of the whole ecosystem, across every channel, which means unified visibility — with data that is cleansed, synchronized, and structured — is a must.
Machine Learning Models
Machine learning models must analyze the data, extract insights, and continue to learn and improve. The value of these insights depends on the sophistication of the machine learning models.
System-Agnostic Connectivity
At Dropit, we believe this solution wouldn’t be complete unless it is system-agnostic and sits atop the tech stack, seeing everything without the need to rip and replace systems. Dropit’s platform provides a transformative layer of analyzing and informing no matter what tools the retailer already uses.
Increase Inventory Efficiency with Machine Learning
This is how Dropit helps retailers make decisions that increase inventory efficiency. Every decision made by our machine learning models’ advanced algorithms responds to current data, analysis, and predictions, enabling retailers to continuously correct and stay on course for efficiency that reduces costs and waste.
Reach out to us today at https://www.dropit.shop/contact to see a free demo and learn how to get on the path to omnichannel inventory efficiency.
