Inventory management can be a wild ride. Some describe it as a bouncy house for adults. Others say it’s like riding a roller coaster.
It’s among the most important elements of your business–and it’s often subject to the wild winds of economic change, demand and the ability to deliver every time, without exception.
It can also be costly and complicated.
Maybe that’s why many companies put their inventory management programs on autopilot and hope for the best. After all, products in combined with products out adds up to revenue, right?Unfortunately, it’s not that simple.
Here are five reasons why inventory management for retail is much more important than you think:
1) Knowledge is power
What is monitored is managed, and if you are not strategically monitoring your performance, you may be missing out on opportunities to save money, add value and grow your business.
For example, product managers who have a precise understanding of fill rates and inventory turns can ensure that the right products are in the right places at the right times. They can also be able to look for opportunities to create cost savings through consolidation strategies (ensuring that trucks are always traveling as close to capacity as possible).
Of course, your managers will need information in order to turn it into powerful (and profitable) action, and that means leveraging technology.
2) Technology and time matter
Technology has changed everything in the inventory management business–but only if you commit to using all of its tools.
Using technology, such as a transportation management system, allows you to gain insight into every aspect of your supply system–and develop scenarios that help you plan for the unforeseen.
It can help you reduce costs, improve service and find ways to make your operation more efficient. Fulfilling orders in a timely fashion is critically important to your success. It keeps customers happy, cuts down on the confusion that can lead to empty shelves and lets you know exactly where products are at every step of the supply chain.
Leveraging the power of technology allows you to create an inventory management system that saves time and money.
3) Trends can take you places
Local sourcing is all the rage right now because it’s good for local economies, it’s good for the environment and it can be good for your business as well.
Studying, understanding and anticipating sourcing trends can be a great way to keep your company ahead of the competition.
Let’s say customers increasingly want locally sourced products and you know about it. You can leverage that information to open new markets locally and regionally.
4) You might be missing opportunities to automate
There is an international movement afoot to automate. It saves time, reduces personnel costs and increases productivity.
But if you’re inventory management is on autopilot, you will never know how your retail business could benefit from automation. On the other hand, if you know with precision how your supply chain works (and doesn’t work), you might be able to invest in automation in order to build an inventory management and supply chain that allows you to expand beyond borders.
5) There’s gold in global emerging markets
Global emerging markets are making an enormous impression on the retail industry. According to Bloomberg, investors and companies have poured more than $50 billion into broadening their horizons into places like the Philippines, Morocco, Brazil, Indonesia, Zambia, and China.
Companies that are able to create export systems to efficiently and cost-effectively move products into global emerging markets will be better positioned to build both their brands and businesses as large new markets continue to emerge.