Inventory management is a systematic approach to obtaining, storing, and profiting from non-capital assets (i.e., raw materials and finished goods).
The goal of retail inventory management is to optimize deliverability of your products at all times, while keeping your costs, product touchpoints, and hangups to a minimum. This means holding the right stock at the right levels, in the right place, at the right time, and at the right cost.
Without proper inventory management, you run the risk of facing:
If you don’t have control over your inventory, you’ll eventually end up in a spot where you’re unable to fulfill your customers’ orders as expected. Whether this means they receive a subpar product, shoddy service, or nothing at all … their relationship with your brand will surely suffer.
As mentioned, retail inventory management involves knowing how much stock you have at any given moment.
Too much stock leads to spoilage and a potential interruption in service from your suppliers. And, if you have too little stock on hand, you won’t be able to provide for your customers, period.
That said, you must have a firm grasp on your stock levels at all times — both for the present moment and in the future. This means using data and software to forecast demand and anticipate lead time, then making adjustments to your approach to ordering, storing, and transporting products as necessary.
Retail inventory management is also about knowing where your products are at all times.
Smaller warehouses can get away with using more rudimentary tracking systems (such as Excel or Google Sheets).
However, you’ll eventually want to opt for a more automated system, such as barcoding or RFID scanners. These tools will allow you to quickly identify individual products as they move throughout your warehouse on their way to store shelves.
What’s more, product scanning systems also provide reports that can aid in optimizing both inventory forecasting and warehouse management tasks. Without these automated tools powered by emerging technology, retailers are liable to overlook seemingly minor inefficiencies with far-reaching consequences.
All inventory-related information should be fed into a single, centralized database that is connected to all other digital technology within the organization.
Without this syncing, you run the risk of delivering contrasting inventory data to each channel you operate on. In turn, this can lead to stockouts or cases in which a customer’s order is automatically rejected because it appears that you’re currently out of stock.
As omnichannel retail becomes more the norm, centralization of data becomes paramount. In keeping your inventory data current and accessible at all times, your various retail channels will be able to continue operating like clockwork.