The omni channel retail marketplace requires a dramatic re-evaluation of inventory strategy from the planning and forecasting to the placement of inventory to support the consumer purchasing demands. This new strategy must be fluid in order to support the discontinuous change in consumer demands and most importantly must not be complacent or settled in the way in which the retailer's strategy is monitored and managed. Now more than ever retailers must implement a rigorous continuous change process to sense marketplace and consumer changes so they can quickly respond and adjust their inventory strategy accordingly. The omni channel market requires a fluid and flexible inventory strategy that is based on changing consumer demands rather than on retailer existing practices.
The omni channel market is disrupting the retail inventory management requirements in a manner that has not been seen for a very long time. We are in a time now where the omni channel market is changing so frequently and these changes are now combining into a market disruption that is reverberating across the market. Retail stores are becoming more important as showrooms for products that consumers then order online, or consumers are foregoing the retail store altogether as a result of their changing lifestyles. This is extremely difficult to predict and so it requires retailers to redefine their inventory strategy to place inventory strategically across their entire supply chain in order to react to the fluctuations.
Where does this all lead? Retailers must be prepared for dramatic shifts in inventory demands across channels with a moment’s notice and must be able flex inventory based on these demands. This requires increased flexibility and smaller shipments to stores, shipments to consumers from the store and shipments from warehouse to warehouse or any combination of shipments from the warehouse. In other words retail and especially omni channel retail inventory shipments will shift closer to the direct-to-consumer model of small and single quantity shipments of eaches rather than large shipments of cases or pallets.
These shifts in shipment makeup will also impact the cost to support the new shipment models. This will require a re-evaluation of the inventory placement to adjust for the changes to last mile delivery. This shift in the inventory placement strategy will require that retail stores take on a greater role as direct-to-consumer distribution center as well as sales channel outlet. The challenge for retailers will be the fluctuation according to season and consumer demands.
Strategic inventory placement is going to be one of the most difficult challenges for the omni channel retailers because of the fluid and volatile demands of consumers that will fluctuate with very little warning. Retailers must become experts in sensing and adjusting to these changing demands and this means that the importance and dependency on a the supply chain capabilities will also increase dramatically. The extended supply chain of the omni channel retailers will make or break the retailer success and this means that supply chain leadership must step up their game to provide leadership and support for these changes.
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?