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Product availability will make first-time shoppers bounce on their first visit if the product is unavailable 31% of the time, up to 50% on their second visit, and climbing to 70% on their third. The friction of unavailability is higher than loyalty, and customers have a low tolerance for visiting a store that does not have their size, or have what they are looking for - no matter the promotion or incentive. Not being able to satisfy the customer's visit on the availability of the product will not only make you lose out on sales, but also can damage your brand equity as customers will know you as a "tease" - all show, but no go. In order to avoid the excess stock, and managing your inventory control requires the use of big data to optimize your cash flow, and timing your purchase orders on all points of sales. Every small business needs to manage its inventory turnover to build and grow its business, now this is possible with inventory management software, and big data is helping the business owner by sharing the best practices in the industry.
Today's inventory management
Business processes and effective inventory management are now surpassed by adding best-of-breed big data insights to your business sector, business type, and business model. Historical data, industry data, and current fulfillment lead times are factored in with seasonality, and demand sensitivity while looking at your cash flow statement and making recommendations on your inventory replenishment. With Big Data, the inventory management system will provide you insights into customer behaviors, product performance, and channel performance - avoiding excess inventory in product categories and tied up cash on shelves. Information on the following will be delivered:
- Stock availability
- Replenishment window timing
- Sales Demand
- Product returns
Big Data is analyzing large data sent such as large inventory, and large sales volumes and recognizing patterns and behaviors of your stock levels, and seeing what your expected demand will be all the while looking to minimize excess inventory. This will include:
- How much inventory is needed to be lean yet not "out of stock"
- How to maximize the management of your stock and minimize your cash flow exposure
- Product recall minimization
- Recommending cross-selling to accelerate slow-moving stock
- If you manufacture: Raw materials to finished goods projections and look at your operating cash flow.
- Manages supply chains on multi-vendor management for raw materials as well as multi-brand finished products.
- Optimizes the purchasing process with the above insights so as to manage your suppliers to ensure to meet expected demand.
4 key ways Big Data is impacting inventory management
Here are some deeper dives that Big Data is making inventory management a key necessity for any business owner to engage with, and how it impacts your Purchase Orders, manages your cash flow, and ensures you have stock on the shelves based on projected demand.Improving operation efficiency - without compromising quality, or being out of stock you have to competitively optimize your product portfolio's availability. This is a scaling enabler since it is already a challenge for small businesses to manage this with limited product offerings, when the demand grows and diversifies your collections it becomes an even bigger challenge. To keep your balance sheet improving, and make your business grow inventory management is a requirement. There isn't an easy answer to growing complexity when it comes to selling and/or manufacturing larger collection sets. Leveraging the insights of sales, seasonality, and expected demand in your collections it becomes increasingly more difficult to juggle cash, materials, products, and sales all at the same time. All of these insights resolve friction on the supply chain side such as:
- Unavailable product and out-of-stock missed sales - impacting revenue and cash-in.
- Incorrect stock levels may lead to overselling and impacting customer experience, and order cancelations.
- Slow order fulfillment results in a bad customer experience affecting the reputation of the business brand.
Stock-outs: Customers looking to purchase a particular product will immediately look to other retailers if they are out-of-stock on the item, or its size or color. This impacts the brand and its loyalty to the brand. Calculating your lead times with suppliers, and your operating time to manufacture if you create the finished good takes logistics and time. Your projected time to be ready for sales for just that one product is increasingly important. Disruptions in supply chains then disrupt your production schedule which results in gaps in product availability. A good inventory management system will calculate your "safety stock" provide you with windows and alert you if you are missing the window and what the downstream effect will be.
Avoid Overselling: With Enterprise Resource Planning (ERP), you can connect to your various sales channels and marketplaces and see your overall sales and inventory levels. Overselling easily occurs when you are maximizing your sales exposure by offering your products in multiple locations - consolidating the demand for your products into one system in real-time makes the issue more transparent, as well it will give the inventory management system a better way to project demand by looking at the channels and seeing its historical trends and give you an estimate of short term requirements.
Speeding order fulfillment: Based on the location of the customer, and your warehouse, an order can more effectively be processed by automatically identifying the products that are to be shipped out. Having a closer location can improve customer experience. This can be driven further with pick-pack-ship process by order batching in the warehouse and providing delivery bundles to the shipper to make the process even more efficient when it comes to logistics partners.
- Maximizing Sales and profit margins: For a frictionless customer experience when it comes to converting a customer, not having a missing item getting in the way of conversion is key. This means that your collections need to be reviewed to ensure that color, sizes, and combinations are all in order for customers to select, add to their basket and be ready for fast checkout. Having a frictionless checkout experience starts with product availability, size, and colors too.
- Increasing customer satisfaction: There are many touch points when it comes to ensuring customer satisfaction, it isn't just the ability to reach the checkout with a good experience, but it is the full process of logistics and order accuracy. Order accuracy starts from the product description on sizing as well as function. The more accurate you are in this area, the better it is for a satisfied customer to receive their goods. The fewer returns you have, the more loyal the customer becomes.
- Reducing costs: Inventory costs in carrying excess stock are considerable and depreciative. This means you have to optimize your stock levels to what you are projected to sell, and within the window of replenishment. Now, there are effects though when it comes to inflation, disrupted logistics, and having materials on hand. This then requires human intervention on focusing on the key out-of-norm items to ensure that the business performance is optimal considering the special disruption in the process.
- Reducing inventory shrinkage: Based on theft, damage, and end-of-life stock. Just because you have stock on the shelves, they are still vulnerable until they are sold. Having a lower stock count that gets replenished at a regular frequency keeps your stock fresher and less vulnerable to not being sold, and will keep your stock levels more accurate.
Inventory Management has become an increasingly big part of smaller businesses looking to expand and doing so in a controlled fashion. Systems like Enterprise Resource Planning such as Veeqo which is now offered at a very competitive price not only allow you to manage your various channels but also manage your order fulfillment all in one place. PO numbers are tracked and even can become templates for recurring orders. Last but not least, all your ordering activities are easily exported to the likes of QuickBooks for your taxes and financial reporting of your income statement. For your Shopify Store, or BigCommerce Store to be integrated with the right ERP to gain this capability, feel free to reach out to us at email@example.com