Is Stock-Out, Over-Stock and Inventory Status Becoming a Challenge for You – The Key to Address This is to Use Real-Time Inventory

3 Mins read

Every Retailer recognizes that key to successful retail business and increased Profits lies in Inventory Management and Inventory Control. An over-stock situation forces the Retailer to mark down prices and an out-of-stock situation leads to Loss of Sales and Customer Loyalty. Both these situations in the business directly lead to sales loss and drop in profit margins.

In almost all the organizations planning of various operations for instance, Inventory planning to Merchandize Planning to Location Mix, are handled by different independent teams. As a common practice, various Stakeholders are given responsibility for Open-To-Buy (OTB), What-if driven planning and Unit Flow Planning on department levels. Multiple departments are involved in division, class and subclass of Inventory. However for efficient Inventory Planning- Managers need to have a comprehensive view of Data including both Historical Data as well as ongoing Store demand supply trends. This Data will provide them critical information on Store Behavior / Customer Buying Trends at Location and Store Levels. Such Data driven information will enable decision making on Inventory Planning whereby they can minimize over-stock and out-of-stock situations.

Once the Revenue and Inventory planning is done at the initial level, the stakeholders need capability to monitor the planned deployment. This needs to be followed by close monitoring of the planned versus actual performance data so as to enable timely improvisations and replenishment decisions by the stakeholders regarding the inventory requirements. The real-time information on stock levels and store performance enables the Retailers to take well informed timely decisions, act fast and move stock quickly in the best interest of their business and customer satisfaction.

Efficient Real time inventory planning and Accurate Inventory Prediction to minimize Stock-out situation or Over-stock scenario is the key business focus point for every retailer. The availability of the right stock at the right place at the right time is what leads to customer satisfaction, maximized Profit margins and achieving the store sales goals. The above said business need can be addressed by using advance SAP Retail tools such as Forecasting and Replenishment (F&R) planning tool. Use of advanced forecasting tools can help you significantly reduce surplus stock and stock-out situations in Stores. The greatly improved Replenishment planning can play a key role in the growth of your Retail business.

With the increasing Ecommerce and Omni channel trends in Retail, inventory forecasting is becoming more and more complex. Demands patterns are now dynamic in nature and Sales are not restricted to Brick and Mortar Stores. Retail Channel inventory planning and channel specific inventory allocation is making the inventory forecasting complex and risk prone to overstock or out-of stock situations. In Order to make sure Stock fulfill is in sync with Store Demand or e-commerce Orders, Replenishment system has to be geared up to consider the aggregate demand across Channels. The logistics system should be capable to handle the distribution of stock efficiently and more importantly- on timely basis to prevent loss of Sales.

Another key element that influences the stock out and/or over stock inventory situation is Festivals. Being prepared for festive shopping has always been a challenge for Retailers. During Festival Seasons the demand spikes and builds stress on Inventory planning. Accurate forecasting and efficient replenishment in the current scenario of omni-channel retailing is more complex and challenging than ever. In order to cater to the Festival demand spikes, building and maintaining a Retail Calendar is the key, which is strongly recommended to be an integral part of Retail inventory planning and Replenishment planning.

Integrate your planning tool with advanced Inventory Analytics with Exception monitoring tool based on SAP Analytics. This helps you increase transparency in the supply chain through effective analysis and provides conclusive information derived from Data that supports the Retail Planning Team in efficient decision-making. Identify, implement and use the ‘best fit’ inventory forecasting algorithms that predict right stock levels across Stores and vastly enhance Inventory Planning for your Retail Business. These Analytics Algorithms along with best usage of SAP Retail logistics system can be instrumental in managing effective stock levels across shelves, stores and distribution centers.

SAP Retail Solution and SAP Forecasting and Replenishment system along with advance Assortment Planning processes can help your Retail Business stay ahead and continue to provide the customers with Quality Service. The focus of various stakeholders in the business should be to understand the needs, gaps and best-fit tools given the unique nature and specific requirements of their business.

An often neglected fact is that it is important to hand hold and support the team in change management, ensuring a smooth transition and minimal impact. Many times it is seen that the efforts on developing the best of solutions and on the implementation may go wasted or grossly underutilized due to lack of comfort level and adaption by the team. The acceptance of the new processes and a shift from legacy driven processes to real-time inventory enabling; performance monitoring; tracking and effective re-planning advanced system in your business will be vital to achieve success in the efforts to make Real time Inventory Management seamless across your business channels and customer facing locations.

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About author
Sanchit Chhabra provides consultation in SAP S4 for Fashion, SD module, and functional thought leadership. With his proven skills Sanchit can drive strategic direction and use of the platform. As a Principal Consultant at Groupsoft, he plays a role in improving the quality and efficiency of the business community by delivering best practice solutions both within the SAP environment and through end-to-end integration.
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