Omnichannel sales are the new norm for many businesses that want to reach customers across multiple platforms and devices. But how do you manage inventory for omnichannel sales without wasting resources, losing sales, or disappointing customers? In this article, you'll learn some best practices and tips for inventory management in the omnichannel era.
The first step to managing inventory for omnichannel sales is to understand your customer demand patterns. You need to know how, when, and where your customers buy your products, and how they prefer to receive them. For example, do they shop online and pick up in store, or do they order online and expect fast delivery? Do they buy more during certain seasons, holidays, or events? Do they have different preferences for different channels or locations? By analyzing your sales data, customer feedback, and market trends, you can forecast your demand more accurately and plan your inventory accordingly.
In the context of omni-channel retail, it's valuable to take into account purchasing patterns and seasonal trends when making forecasts. For instance, analyzing what products customers add to their online carts ahead of time, identifying spikes in basket sizes during promotions, and understanding whether purchases are influenced by price or promotions rather than brand, necessity, or desire can enhance inventory predictions. Incorporating these factors can optimize inventory planning to make the most of your purchasing resources for both online and offline sales.
The next step is to optimize your inventory allocation across your channels and locations. You want to avoid overstocking or understocking your products, which can lead to higher costs, lower profits, or lost sales. You also want to balance your inventory levels with your service levels, which means meeting your customer expectations for availability, delivery, and quality. To achieve this, you need to use inventory management software that can help you track, monitor, and adjust your inventory in real time. You also need to set up inventory rules and policies that define how much inventory you need for each channel and location, how often you replenish it, and how you handle transfers, returns, or exchanges.
The third step is to integrate your inventory systems across your channels and locations. You need to have a single source of truth for your inventory data, so that you can have a clear and consistent view of your stock levels, availability, and movements. You also need to ensure that your inventory systems can communicate and synchronize with your other systems, such as your order management, fulfillment, accounting, and marketing systems. This way, you can streamline your workflows, reduce errors, and improve your efficiency and productivity. You can use cloud-based or API-based solutions that can connect your inventory systems with your other systems seamlessly and securely.
The fourth step is to automate your inventory processes as much as possible. You want to reduce manual tasks, human errors, and delays that can affect your inventory performance and customer satisfaction. You also want to leverage the power of technology, such as artificial intelligence, machine learning, or IoT, to optimize your inventory decisions and actions. For example, you can use automation tools that can help you with demand forecasting, inventory optimization, replenishment planning, order fulfillment, inventory auditing, or anomaly detection. You can also use automation tools that can help you with inventory reporting, analysis, or visualization, so that you can gain insights and recommendations for improvement.
I think this is eventually the main leaver for companies to enable them for different omni-channels. The automation should control everything from ordering to volume management and outflow monitoring. essentially a supply chain will become an omnichannel when it is monitored and managed automatically preferably by AI solutions that can learn and adapt to the demand and service level. We have experienced that today even the most basic supply chains suffer extreme inefficiencies if they are not moving towards automated omni-channels.
The fifth step is to monitor and measure your inventory performance regularly. You need to track and evaluate how well your inventory management strategy is working for your omnichannel sales. You also need to identify and address any issues, gaps, or opportunities for improvement. To do this, you need to use inventory metrics and KPIs that can help you measure your inventory efficiency, effectiveness, and profitability. Some examples of inventory metrics and KPIs are inventory turnover, inventory accuracy, fill rate, stockout rate, inventory carrying cost, or gross margin return on investment. You can use dashboards or scorecards that can help you visualize and compare your inventory performance across your channels and locations.
The sixth and final step is to adapt and improve your inventory strategy based on your performance results and feedback. You need to keep up with the changing customer preferences, market conditions, and competitive pressures that can affect your omnichannel sales. You also need to test and experiment with new ideas, technologies, or practices that can enhance your inventory management. For example, you can try different inventory models, such as centralized, decentralized, or hybrid; different fulfillment methods, such as dropshipping, cross-docking, or ship-from-store; or different inventory optimization techniques, such as ABC analysis, EOQ model, or safety stock. You can also seek feedback from your customers, employees, or partners on how to improve your inventory management for omnichannel sales.