Inventory management in the multi-channel retail marketplace can be difficult due to the changing demand from different channels and different geographic locations. It requires dramatic changes from retailers to their purchasing procedures to support the consumer demands for purchasing. The consumer shopping demands are blending channels and the consumer lifestyle is fueling these changes that are also driving changes to the consumer purchasing patterns and methods. All of these changes are then fueled by mobile technologies and improvements in wireless networks to support the consumer shopping and purchasing demands. All of these changes in consumer practices then drive changes in retail requirements to support these consumer practices.
These changes in consumer practices require that retailers blend their capabilities across channels to support direct to consumer shipments from all channels. This simplifies the inventory planning to some degree because it blends the total inventory demand forecasting into a combination of inventory demands from all retail channels. It makes it more difficult in the manner in which the inventory is then consumed and the forecast to determine the channel. From a simplistic approach though, the inventory planning and resulting consumption in this new retail multi-channel marketplace should result in lower overstock inventories and increased sales.
There seems to be a disconnect though between the current reaity what I describe as an expected inventory forecasting and changes to the inventory management that would result in improvements to inventory management outcomes. We are seeing instead what appears to be no change in the levels of overstock inventory, especially in the large legacy retailers and in fact the overstock inventory seems to be increasing in the case of one retailer. This is where big data analysis comes into the picture to help retailers understand the changes to the flow of inventory by channel and by region to allow them to improve the inventory management to meet the consumer demands.
A considerable challenge for retailers to enacting these changes is presented from both the business process, including culture, revisions requirements and the cost of technology upgrades required to implement forecasting and inventory management improvements along with the business process changes. Blending the support of purchasing across all channels requires that all channels efficiently execute the particular processes across channels. Bottom line the retail store must have the ability to ship customer orders using similar processes as a distribution center configured to ship orders to the consumer. These changes to forecasting and inventory management require significant change to business process in addition to technology. This means that the retailer must increase efficiencies and capabilities to fill customer orders shipped from the local store, along with improvements in inventory movements between stores and regions to support these demands.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumer's experience? Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?