How inventory management is changing
There are few concepts in business as double-edged as inventory management. To keep budgets balanced, shelves stocked and customers happy, businesses need to effectively track and predict when and where inventory will be needed, and how they can eliminate waste. By striking a balance between supply and demand, a company can shave significant amounts of capital, investing this extra cash into other key areas. Too little stock at the wrong time, however, can have drastic consequences.
Agile inventory management hinges on selecting the right warehouse management system, and this is even more evident in the case of e-commerce. In fact, the explosion in online sales has forced retailers large and small to relearn everything they thought they knew about inventory management.
As The Wall Street Journal reported, the e-commerce boom has brought sweeping changes to retail supply chains in every corner. While big-box retail outlets had previously made a point of keeping a week or more in stock on the shelves for customers, many are now aiming to make do with mere hours of inventory. With demand from online channels growing as foot traffic declines, these companies have realized that they must reallocate inventory to achieve balance.
"Smart inventory management is a key indicator of growth for retail."
WSJ and other experts found this to be the case just about everywhere, from hardware stores to local grocery outlets. When online sales first became an option for customers, many of these businesses opened new distribution centers to handle the demand. This came at the expense of potentially duplicating inventory, a costly misstep. Many brands have also attempted to turn retail locations into fulfillment centers themselves, but this often leads to more work for employees.
Ultimately, America's biggest retail brands are trying their best to do more with less. Some of the biggest names in the industry have succeeded in paring down inventory, while others miss the mark. WSJ found that a few select retail brands increased their return on inventory sales from as low as 40 percent to more than 80 percent from 2010 to 2015. In the same time period, others have fallen behind.
Indeed, the fate of some of the world's biggest names in retail may now hinge on the success of their inventory management strategy. According to a recent report from Green Street Advisors, as many as 25 percent of retail locations under the nation's biggest department store brands may need to close if they hope to see the same productivity levels as 10 years earlier.
|Getting inventory management right is the first step toward increasing profit margins.|
The story is essentially the same for any business operating in the retail sphere. Now that demands from the public have shifted rapidly, everyone from big-box corporations to mom and pop shops are scrambling to make the necessary changes. The fast implementation, quick turnaround time and real return on investment offered by a cloud WMS can help retail businesses meet these stringent demands.
Flying blind on inventory management is no longer an option. With a best-of-breed WMS at the helm, retail operations are sure to grow and succeed.