Managing Inventory in the Age of Coronavirus
The impact of COVID-19 has been felt throughout supply chains worldwide. With much production impacted, and facing an uncertain future, many retailers are wondering how to manage existing inventory in the short and long term. For retailers with longer seasonal lead times, spring and summer inventory is likely already in stock, or at least secured. However, fall and winter stock may very well be disrupted by decreased production, limiting product availability. Whether you’re focused on increased sales or simply staggering SKUs to keep business running continuously, here are some of the best practices for managing inventory efficiently during a production slowdown.
Perform an Audit
Inventory is synonymous with money. You paid money for your inventory, and when you sell it, you’ll get that money back. Therefore, just as you would want to account for all your cash, so should you account for how much inventory you have in stock. This will ensure accuracy, identify shrinkage, tell you how fast each item is moving, and whether you have enough stock to meet forecasts. If you have a third-party logistics (3PL) provider, talk to it about the warehouse technology and solutions it has in place to implement an inventory audit for your business.
Be nimble and create campaigns around what you have available. Good inventory management systems allow you to analyze how quickly any given SKU is moving, providing you with insights that tell you when you need to push slow-moving items with sales, discounts, bundling and other special offers.
For beauty and apparel brands, consumers have historically preferred to try out products in person before making a purchase. With physical stores closed, those shoppers must now make decisions based on what’s available to them online. The good news is this will set the stage for becoming more comfortable doing so in the future, but it makes the availability of virtual try-on technology more important than ever. A majority of online shoppers seek out customer reviews before making a purchase, therefore retailers in this space should also look at putting more effort behind encouraging and promoting these, as well as tutorials and influencer campaigns.
Embrace a Single-Channel Focus
There are a few silver linings in the cloud of omnichannel brands being forced to shut down physical stores. One is that brands that haven’t fully developed their digital channels are now afforded the opportunity to divert all resources toward them. Now that most or all sales are being funneled through e-commerce platforms, it’s more important than ever to make sure inventory availability remains accurate and updated in real time.
Using an automated inventory management system is an ideal solution, as it will automatically upload your products onto your website and allow you to automate order fulfillment and inventory quantity updating. Once you enter your inventory quantity, it can be automated across all your sales channels.
Work Closely With Suppliers to Find Alternatives and Savings
Your primary goal now is to sustain the continued receipt of goods. Therefore, while you may be accustomed to securing the items you need based on cost, you should be exploring alternate suppliers to help alleviate risks in the event a problem arises with your primary supplier.
Exploring alternatives with your existing suppliers or souring what you need elsewhere can lead to new opportunities, such as finding new products to sell. And don’t overlook the potential benefits of working with local suppliers, which can provide you with more control over your materials, increase time to market, require lower minimum buys, and reduce overall costs.
Good inventory management goes hand-in-hand with good cash flow management. It helps analyze sales patterns, implement accurate forecasting, prepare for the unexpected, and keeps your business operating and profitable. The sooner you take control, the better positioned you'll be to navigate uncharted waters.
Maria Haggerty is CEO and one of the original founders of Dotcom Distribution, a premier provider of B-to-C and B-to-B fulfillment and distribution services.
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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.