Inventory management in an on-demand world is one of the biggest challenges in the supply chain today. No longer is a business merely buying in bulk and selling from just a brick-and-mortar store. Customers now have the ability to buy from many places online and also expect to be able to return things easily too. Inventory management involving brick-and-mortar stores as well as eCommerce is ever-evolving and more dynamic than ever before.
This article looks at how inventory management is paving the path forward in an on-demand world and what this means for business owners.
Where the challenges come from
Brick-and-mortar and eCommerce are two fundamentally different demand streams. A store gets inventory stock on specific schedules whereas customer demand significantly drives eCommerce in a pull inventory model. This can create many complexities in itself.
Take for example the question of where the distribution centre of a company should be located: closest to its stores or closest to a main parcel distribution centre? What if the distribution centre manages both store and eCommerce inventory stock?
Leading retailers are now trying to reconcile inventory management practices between these two order streams. What we are seeing is often procurement is separate although the company is buying many of the same items. In the same way, inventory management is just as separate even though it is often all in the same distribution centre. In addition, fulfilment is separate and often not equal.
Then there is the issue of managing returns, which is again, separate and difficult at best. However, some companies are beginning to blend the two streams. This raises another question: Which demand stream should be given priority in the distribution centre? A shipment to a store is not actually a sale yet, but an opportunity. On the other hand, an eCommerce pick, pack and ship is a sale that has already been paid for. So, blending the two fulfilment streams is not the answer for all businesses and when it comes to preparing for an on-demand world, it depends on what makes more sense to your business.
Service and customer satisfaction
When it comes to service and customer satisfaction in an on-demand world, there is a lot less time between when a customer wants something and when they have it. Take for example Amazon’s express delivery services; consumers now demand shorter delivery times. Other expectations include being able to return products. This creates a reverse flow into a distribution centre that has to be processed and the inventory managed correctly. Yet, many retailers today handle returns with far less sophistication than they do with orders going out. We see companies are now developing dedicated systems for outbound inventory management. However, what’s important here is that every inventory management strategy needs to be tailored to the company’s supply chain strategy to deal effectively with an on-demand world.
Protect and streamline processes
Getting successfully more automated in this new landscape will be important to gain a competitive advantage in relatively new territory. Business owners and suppliers alike are looking to streamline their processes. Accurate, real-time reporting and data management of inventory stock is playing a major role in successful inventory management and control and not just in terms of efficiencies. It is also playing a major role in overcoming obstacles in compliance with the increased risk of technological threats of security.
Take for example being able to strictly monitor the number of devices using asset management as a part of your inventory management system. After all, if you don’t know where all your laptops and software are located how can you tell regulatory bodies that customer information is being kept private and within the regulations?