How can Shippers Improve Inventory Accuracy for Efficient Supply Chain Management?

In today's retail landscape, customers quickly turn to competitors when faced with stock shortages, delays, or unfulfilled promises. Inventory accuracy is critical, yet the average U.S. retail operation has an accuracy of only 63%, highlighting the widespread issue and its potential impact on customer loyalty. On top of this, global inventory issues (like shrinkage, stockouts, and overstock) are running up an eye-watering $1.1 trillion price tag.

Improving inventory distortion requires a clear understanding of stock levels and movement at every stage, from sourcing to final delivery. Accurate, real-time data is essential for effective supply chain management and meeting customer demands.

In this piece, we'll explore the consequences of inventory inaccuracies, examine the reasons behind low accuracy rates, and discuss how data automation and centralization can help shippers overcome these challenges. By addressing these issues and leveraging the right strategies and technologies, shippers can improve inventory accuracy, enhance efficiency, and deliver the seamless experiences customers expect.

Why is inventory accuracy such a problem for retail and CPG shippers?

In customer-centric retail, where experience reigns supreme, poor inventory accuracy carries a heavy price tag. Beyond the frustration of empty shelves and missed sales, inaccurate inventory leads to negative consequences that negatively impact sales, customer satisfaction, and operational efficiency.

One of the most direct consequences is lost sales due to stockouts. When retailers' inventory data is flawed, retailers may believe they have a product in stock when they actually don't. As this report reveals, 70% of consumers believe stockouts are more common now than during the pandemic, pointing to a worsening trend.

On the other hand, inaccurate inventory records can also lead to overstocking, tying up working capital, increasing carrying costs, and leading to obsolete or expired stock that must be discounted or written off. According to this census, U.S. retailers are sitting on approximately $1.36 of inventory for every $1 in sales, underscoring excess inventory's burden on retailers.

Inaccurate inventory also hinders effective omnichannel fulfillment. Retailers who can't trust their inventory records struggle to offer new services like buy online, pick up in-store (BOPIS) or ship-from-store – leading to lost business to competitors.

Much further downstream, without accurate, traceable inventory records, retailers may struggle to identify and remove affected products from their supply chain, leading to potential safety risks and legal liabilities. This makes it difficult for retailers to comply with regulations and manage recalls.?

What are the root causes of inventory inaccuracies in shippers’ supply chain and operations management?

Maintaining accurate inventory records is a constant challenge for retailers despite its undeniable criticality. Several root causes contribute to these inaccuracies, leading to negative consequences cascading through the supply chain.?

Here are the most common culprits:

1. Manual data entry, prone to errors, creates discrepancies between physical and recorded inventory.
2. Disconnected data systems lead to inconsistent information and inaccurate overall inventory visibility.
3. Poor warehouse practices and lack of real-time tracking contribute to stock discrepancies.
4. Inaccurate demand forecasting leads to overstocking, understocking, and lost sales.
5. Unforeseen events disrupt the flow of goods and cause inventory level discrepancies.
6. Vendor errors, like incorrect quantities or delays, impact inventory accuracy at retailers.
7. Theft and shrinkage distort inventory records and affect accuracy.
8. Neglecting technology like barcodes and warehouse management systems perpetuates manual errors.

How can shippers eliminate inventory errors and inaccuracies that impact operations?

To eliminate inventory errors and inaccuracies that impact operations, retail and CPG shippers must address the challenges of highly inaccurate, unstructured and semi-structured data and data silos across various systems like WMS, ERP, and TMS. Our studies show that up to 80% of this data is unstructured, and 90% of data is processed manually, resulting in 40% more human errors.?

The solution? Data automation and AI-powered data enrichment.

By extracting information from unstructured and semi-structured sources and using AI data enrichment to fill in missing information, correct errors, and provide additional context, shippers can reduce manual errors by up to 90% and significantly improve data accuracy.?

GenAI platforms also break down data silos and provide a unified view of inventory across the entire supply chain, enabling real-time visibility into inventory levels, movements, and trends through generated insights, solutions, and recommendations.

Instead of relying on multiple disconnected systems, APIs, and EDIs, Stardox allows retail and CPG shippers to centralize data on a single platform. This is key to eliminating inventory errors and inaccuracies. Stardox, for instance, improves data accuracy by 100%, virtually eliminating the mistakes that plague manual data processing and siloed systems.?

By automating data capture, validation, and enrichment, Stardox reduces data processing time by over 80%, allowing shippers to access critical inventory insights faster in response to evolving customer demands and market conditions.

Conclusion

At Stargo, we understand the importance of accurate and actionable data in supply chain management. Our GenAI-powered platform, Stardox, developed for the freight, logistics, and supply chain, enables retail and CPG shippers to structure, cleanse, enrich, validate, and correct inventory data errors, providing a single source of truth for all stakeholders. Contact us today to learn more about turning your inventory into more revenue.