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Advice For Inventory Management

The principles of supply and demand are fundamental to any retail business, and successful retailers have a firm grasp on how these trends affect their bottom line. To prepare for potential shifts in consumer demand, retailers must understand their supply and how to adjust it to meet changes in consumer shopping habits. This process, known as inventory forecasting, can make all the difference if retailers implement it successfully.

The pandemic has wreaked havoc on several industries, but the retail industry is one that has been hit the hardest. While online shopping has been on the rise for the better part of two decades, the pandemic brought massive growth in e-commerce as consumers decided to shop from the comfort — and safety — of their own homes. As such, retailers must now find ways to optimize their inventories to keep pace with the digital retailers who have begun to take a firmer hold over consumer markets.

“To successfully manage their inventory, a retailer must be able to plan for demand,” says Anil Varghese, CEO of retail solutions provider Proxima360. “Without adequate planning for demand, you could be left without enough inventory to fulfill customers’ orders, or massive amounts of product that you can’t sell.” According to Varghese, retailers must find the balance between fulfilling consumer demand and being prepared for unexpected needs while taking care not to overstock their stores.

The costs of inadequately planning for changes in customer demand can build up significantly. On one hand, if retailers don’t have enough inventory and can’t fulfill customer orders, potential sales could be lost. On the other hand, if retailers have excesses of a certain product that isn’t selling as well as initially expected, they end up wasting money on the costs of storing that product — a cost higher than they would make from selling it.

Economic Order Quantity and Accurate Forecasting

Proxima360 can help retailers effectively implement an economic order quantity model. This means ordering the right amount of product to fill demand while minimizing storage costs. However, there are many aspects that go into reaching this ideal point in inventory management. Finding the perfect number of how much inventory to order requires retailers to analyze data from a variety of sources.

Real-time metrics are paramount in understanding consumer demand at any given moment, and how retailers must both prepare and effectively manage their inventory to maintain a sustainable level of sales. Demand can fluctuate based on several factors, such as seasonality and changing trends, which dictate what — and how much — consumers are purchasing. Understanding this data can allow retailers to prepare their stock for what will be needed in any given sales period.

One form of data that can be particularly useful for retailers is customer demographics. “Customers of different age groups, geographic locations, and ethnicities have entirely different shopping habits,” says Varghese, “so retailers must stock differently according to what demographics they cater to. The best way to do this is to analyze customer behaviors and apply this information to their own sales practices.”

That information, as Varghese mentions, is especially important when retailers add new products to their inventory. “The demand for a new product can sometimes be astronomical, and underwhelming at others,” Varghese adds. “Accurate forecasting can ensure that a retailer is not underprepared for a product launch that is being embraced by the public, or left with a surplus of product if consumer demand simply isn’t there.”

Optimizing your Retail Operations through Inventory Allocation

Proxima360 offers a module that provides accurate inventory allocation for retailers, helping retail operations to run more efficiently. As Varghese explains, this software helps ensure that storerooms always have the right amount of stock available to complete sales and cut labor costs by alerting retailers exactly when and where employees will be needed to manage inventory effectively.

Content matching, or product matching, is another solution offered by Proxima360 that can help retailers reduce overhead costs by managing inventory. This process involves matching the same products from a variety of inbound sources through learning technologies that mimic consumer buying behaviors. “Content matching increases warehouse and store efficiency by enhancing cross-docking and receiving operations,” Varghese says. “This practice allows for reduced redundancy and repetitive inventory management processes by automating related workflows.”

For retailers, successful implementation of inventory forecasting comes down to understanding what the customer is looking for, and how to adjust product inventories to meet that demand. Effectively managing that inventory means less time and money wasted. “Given what the retail industry has faced these past few years, many businesses don’t have much to spare in regards to extra inventory costs,” Varghese says. “Our software offers all-encompassing solutions that will help them recover.”

Release ID: 282754

Prodigy Press
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