Right positioning of inventory critical in building omnichannel excellence

Right positioning of inventory critical in building omnichannel excellence

Right positioning of inventory critical in building omnichannel excellence

We often hear about retail re-inventing itself, but to be honest the key elements of retail has not changed much over the years. “Unified Commerce” and “omnichannel are the new buzzword, but it’s still ‘retail’. The fundamental didn’t change which is about getting the right product at the right place at the right time.
One of the most critical challenges for any retailer is to get the most preferred inventory closer to where the customers need it to be. But before thinking about this challenge, there are other fundamentals which retailers need to dwell upon.
Prior to moving into an omnichannel environment, there are a number of things retailers need to get right in terms of changing the way inventory is positioned and how resources are allocated.

You are the best judge of your own requirement

There is no thumb rule for an omnichannel success. An efficient approach across channels will vary from retailer to retailer, depending on the business model, so it’s important that a retailer understand their inner mechanics before deciding on adopting a strategy.
Let’s start by discussing the sourcing of product from the supply chain. For instance, the strategy for a Himalaya and that of a Big Bazaar will be completely different – one retailer carries its own branded FMCG products while the other sells a variety of items from a whole host of brands. How the products are sourced vastly differs from the other, so one size fits all theory doesn’t work here. Himalaya has the visibility and control to push supply chain decisions, whereas Big Bazaar has third-party dependencies to factor into the process.

Creating a road map based on capabilities

Robust planning and allocation process coupled with manpower are key to pushing inventory to where it needs to be. More than adopting a newer strategy, what is important is refining existing processes. However, if your current technology is unable to deliver on customer expectation, act quickly to find a solution that can fill those gaps. As with any organizational shift, you would need internal top-down support to deploy a new system, if needed.

The first step to a successful omnichannel inventory strategy is to create a road map or updating the existing one. The road map acts as a guiding star with the changing demands of the retail landscape and what is needed to meet that. While technology forms the core of this road map, it also considers other factors such as people, systems, and processes that are needed to deliver a successful omnichannel strategy. How to strategize changes to systems and processes to both maximize return and minimize risk – is one of the questions that every retailer has to answer.

Whatever omnichannel capabilities you want to develop as a retailer – BOPIS or ROPIS capabilities, online returns in-store, ship from store, mobile app development, etc. – the roadmap will be informed as you formulate the steps needed to achieve those goals. Developing a detailed road map is also important for gaining internal alignment across key touch points of the organization -from senior executives to key managers and across peer group.

Leveraging retail stores for omnichannel delivery

The centralized warehousing concept is archaic as technology today can help retailers deliver in new ways. This is where Distributed order management system (OMS) makes sense for many retailers, and with this in place, utilizing stores for delivery can be planned. Retailers can take advantage of key store location with a physical inventory capacity in key markets, using those stores to fulfill eCommerce orders, rather than shipping all orders from a distribution center.

For instance, a retailer can identify a store that has a large footprint but isn’t a high-volume store. Therefore, it can be leveraged as a mini distribution center by pushing more inventory and build staff capability for necessary packing and shipping tasks. This option is much more viable and cost-effective, rather than investing in a new warehouse facility. It’s cheaper from a shipping standpoint, more convenient for the customer, without hampering the core function of a physical store.

It can also create liquidation option for aging store inventory beyond in-store markdowns, as it gives an added option of selling this inventory across online channels.

A successful omnichannel inventory strategy focuses on efficiency while keeping a seamless customer experience top-of-mind. Creating and executing an efficient inventory management strategy depends on how the brands implement the right technology and quickly adapts to the changing demand of customers.

Looking to build an efficient inventory management system?Learn more.

Karishma Kiran
karishma.kiran@aceturtle.com
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