3 Simple Ideas to Improve Inventory Management
Effective inventory management is a prerequisite for success in omnichannel retail. Driven by relentless consumer demand, today's leading retailers leverage real-time visibility, collaborative reporting and other tools to create first-rate shopping and fulfillment experiences.
Yet despite the important role inventory management plays in the marketplace, some brands are still relying on last generation inventory management practices and are suffering from a competitive disadvantage as a result. In many cases, these retailers are finding that their inability to quickly scale inventory management to marketplace realities is the primary obstacle preventing them from achieving targeted growth benchmarks.
Improving inventory management should be a priority for any omnichannel retailer. Here are three simple strategies to make your brand more competitive and improve the effectiveness of inventory management across your operation.
1. ABC analysis and cycle counting: Cycle counting (i.e., the periodic counting of just some of your inventory) is a more accurate substitute for the costly and time-consuming process of complete inventory counting. Rather than experiencing regular business interruptions for full inventory counts, cycle counting allows you to limit counts to the items dictated by a pre-defined count calendar.
Using ABC logic, the fastest-moving inventory is counted more frequently than the slowest-moving inventory. For example, you might count A inventory (your fastest movers) monthly, B inventory quarterly and C inventory (your slowest-moving inventory) only once or twice a year. This means that while all goods are counted at least once a year, more valuable SKUs are counted as much as four times in a 12-month cycle.
The benefit of a cycle counting approach is that it dramatically improves accuracy, visibility and the ability to quickly identify trends or locate misplaced inventory. Cycle counting software streamlines the process even further and can create inventory accuracy levels of 99.5 percent or greater.
Maria Haggerty is CEO and one of the original founders of Dotcom Distribution, a premier provider of B2C and B2B fulfillment and distribution services. She received her Bachelor of Business Administration from University of Houston, C.T. Bauer College of Business with a concentration in Accounting. Maria plays an integral role in developing and defining all aspects of the business, including sales and marketing, operations, finance and IT. As CEO, she is responsible for providing strategic leadership, establishing long range goals, and developing strategies for the senior leadership team. Maria has developed the systemic and procedural infrastructure necessary to provide timely and accurate analysis of budgets, financial reports and financial trends in order to assist the Board, senior executives and clients in performing their responsibilities while achieving favorable results. She works closely with the leadership team to enhance, develop, and enforce procedures that will improve the overall operation and effectiveness of the corporation. During her tenure at the Dotcom, Maria has developed an environment of continual improvement by supporting the Senior Leadership Team and their department managers on continuous process, space labor, automation, and financial best practices. Prior to founding Dotcom, Maria was a CPA at Arthur Andersen and was later the CFO of GoodTimes Home Video where she helped grow the company’s distribution business. When Maria is not in the office, she enjoys traveling around the world and practicing her photography skills.