One of the toughest parts of online selling is inventory management. Excessive supply leads to loss and very less turnover. Stock-outs result in back-orders, lost sales, and dissatisfied customers. So, what remains ultimately? It’s tough to balance its impact on manufacturer’s revenue stamp.
This article strikes how analytics can enhance inventory management and are important for retailers.
Best performing channels
Analytics offers ample data that can be of a great help for marketing strategies. A good marketing strategy has to be more than what just meets the eyes i.e. moving beyond your page views on the website. The trick lies in integrating different channels in more efficient way than ever before. With this you can also take into consideration data from other sources like blogs, email marketing, social media etc. as it will add a touch of personalization to the customer experience.
Having channels at one place you can verify the data, identify the new opportunities to cut on inventory liabilities and enable inventory growth for vendor and partner. Using sales in and sales out data helps in understanding inventory trends and figure out anomalies in data, letting you get better insight in identifying potential issues.
Algorithms are the new crystal ball
Algorithms now do the heavy lifting on your behalf. Your expressed interest with a proactive recommendation is now supplemented by algorithms. For instance, you may never stock branded watches and not even be in the mood to look for them. However, the algorithms can help you in gaining clear insights of how much is the market of those watches in your area, who are the tough competitors and how much can selling the watch make a difference to the business.
This happens due to the advancement in tools and technology. It looks at the bigger picture that is the stated geographical market and gathering data such as how much worth is the product and how much are your competitor selling it for. This can help you in making an advanced and informed decision.
You now no longer have to revisit the past data of customer’s purchasing behavior, as this focuses more on what lies ahead. Its a predictive analysis of what your customer is likely to do based on what it has done. And having a better comprehension at customer’s choice and preferences you can stock inventory based on what the customer will be looking for.
Safety level stock
Not just the backorders and sales loss, running out of the product also leads to disappointed customer and loss of business. Hence, when it comes to managing inventory, it is crucial to know when to refill products from vendors. Safety stock determinations are not just to eliminate all stock-outs, it varies from service to service.
When making orderhive, we have kept this in mind. Our inventory control software is very efficient at managing preorders and backorders.
As much as important it is for you to cover vendor’s delivery times, and keep a note for day to day stock consumption, you must also realize that holding too much inventory will affect your company’s gross profit heavily.
Hence it is necessary that your stock level suffices your vendor’s delivery times, covers your customer demand but not high to the degree that you lose finance due to carrying costs.
So let’s say your firm has a standard transit time of 15 days with your vendor. These 15 days is the ideal time vendor takes to deliver the required product. Under such circumstances, you need to account for 15 business day when you calculate for stock.
Avoiding Overstock situations
Retailers can now avoid stock-out or overstock by analyzing customer demand for the products and his purchasing behavior. A proper analytics can offer clear insights on purchasing behavior and enhance your supply chain.
With advancing time, retailers can now look beyond available data on post sales and out-of-stock inventory levels to deduce customer demand. You can link your stores to data generated by actual customers and observe the product interactions from reading reviews to conducting price comparisons.
For instance, the data accumulated by transactions done by suppliers and rivals can be tailored to your inventory management system and can be linked to supply chain.
The data-mining shift can create an accurate picture of product demand and enhances coordination in the decision-making process.
Refine the accumulated data
Analytics offers pre-season statistics to determine the purchase quantity by its allocation, size quantities bifurcated by store, as well as obtaining historical data for product assortment.
Analytics can offer the medium to deduce the financial costs of product and inculcate that data with that of sales to get a clear idea of product’s profitability and letting them make more informed decisions on items to be included or not in assortment.
Identify slow-turning locations and products
You can use analytics to figure out products with stagnant turnover ratios or products with stock on hand but with almost no sales. Such products indicate a failure and stop you from filling shelves with products that actually sells. You can thus identify insufficient demand for the product at the location in question; non-competitive pricing; ineffective marketing; or poor planogram layout.
It is crucial to make sure your inventory data in refiling ordering system is precise. You can use Business Intelligence (BI) to automatically generate schedules for verification through physical counts. Keeping in mind the sample of products based on particular features, its sales trends, its filing status and prior count discrepancies, you can cut down on your labor needs, annoying service delays and the daunting task of inspection.
Retail analytics growing importance is evident more than ever before due to the rapid expansion of sophisticated database, statistical, analytical and decision modeling solutions. Although, some of these tools are found on traditional statistical model, there are several tools that are guarded by complex algorithms that can offer improved insights on optimizing your inventory with analytics.
Orderhive Plus facilitates its users with Customized inventory management software that offers high-volume features and workflow. It offers accurate data aids retailers in archiving and optimizing inventory effortlessly. With precise BI analytics and tools, optimizing inventory has never been easier. It also helps you in cutting down costs, saving a fortune on labor costs and helps in managing products efficiently across multiple channels.
Devarshi is an enthusiastic writer, active twitterati and educator offering creative content for effective e-commerce marketing and strategies. She brings along her experience in extensive research and branding. A passionate writer by day and an avid reader by night she packages for a blend of technical and creative write-ups.
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