Inventory is a big part of your retail business investment – up to 80% of the total in some cases. Flawless inventory management is therefore one of the most effective things you can do in order to reduce costs and maintain smooth operations.

When it comes to managing inventory, advances in flexible technology platforms have enabled smart replenishment – which helps to address these challenges. Smart replenishment technology uses real-time data (‘what we have now’), and predictive analytics (‘what we’re likely to need’) to automate stock level optimization and re-ordering.

In this article, we’ll explore the three key steps to implementing smart replenishment, enabling mid-size retailers to streamline their inventory keeping processes and reduce costs.

Step 1: Establish a single view of inventory

The foundation of any smart replenishment strategy is having a clear picture of what stock is where and being able to manage inventory in one place. For retailers with multiple stores and distribution centers (DCs), multi warehouse inventory management can lead to inaccurate stock counts, lost inventory, and unnecessary reordering.

For mid-size retailers inventory visibility is crucial. A single view of inventory allows you to flawlessly manage stock across multiple locations – and make decisions based on up to date and accurate information.

The best way to achieve inventory visibility is by using powerful inventory management software, integrated with your point-of-sale (POS) system. With an integrated POS and inventory management software system, businesses can avoid these pitfalls and start laying the groundwork for a more efficient inventory management process.

An integrated POS and inventory management software platform allows you to track stock in real-time, bringing together stock levels in stores, warehouses, and fulfillment centers, with sales data and purchase orders, and even incoming shipments. This unified inventory visibility provides a clearer understanding of what products are available and where they are located.

Step 2: Leverage real-time inventory updates

Along with a single view of inventory, your POS-integrated inventory system will also allow you to track stock updates in real time. You’ll be able to see not only which items are where, but how quickly they are being sold. Changes to stock – whether from sales out or new arrivals in – will be reflected across the entire business instantly.

Having an inventory management system that automatically updates stock levels in real time eliminates the risk of manual errors, reduces time spent on physical inventory counts and stock takes, and prevents the common problem of under- or overstocking.

For mid-size retailers, real-time updates are particularly valuable during peak sales seasons or promotions when stock levels fluctuate rapidly. The ability to see exactly what is on hand, in transit, or awaiting arrival at any given moment allows you to respond quickly to demand, ensuring you never run out of popular products or tie up capital in excessive stock.

Additionally, real-time inventory management makes it easier to identify slow-moving stock and make adjustments to promotions or markdowns to clear it out. By optimizing stock turnover, mid-size retailers can free up valuable storage space and reduce carrying costs.

Step 3: Implement a smart replenishment engine

The final step in reducing inventory costs is implementing a smart replenishment engine. If you have a POS and inventory system that includes this technology, you’ll be able to automate the process of reordering products by setting specific thresholds that trigger reorders once stock levels fall to a predetermined point. Smart replenishment engines rely on historical data, sales patterns, and real-time inventory updates to predict demand accurately and ensure optimal stock levels.

Automating the replenishment process in a mid-sized retail business can significantly reduce human intervention in the replenishment process. This frees up staff for other tasks and prevents costly human errors. The smart replenishment engine analyzes sales trends and historical patterns, identifies when stock is running low, and automatically generates purchase orders for restocking based on your preset stock level thresholds.

Lower costs, higher profits

If you’re looking to reduce costs and make inventory management more efficient, then smart replenishment could be the answer. It helps to lower inventory costs with a ‘Goldilocks’ approach – not too much stock, nor too little, but just the right amount. It frees up staff resources to focus on customer experience and growth. Investing in smart inventory management will position you to thrive in a competitive marketplace.

FAQs

What is the impact of real-time stock updates?

Untimely stock information can cost money – either because you think you have stock, and delay reordering, or because you think you don’t have stock and therefore miss out on fulfilling an order. With real time updates though, when a customer makes a purchase, the system immediately reflects that sale, adjusting the stock levels across all locations. Similarly, when new inventory arrives at a warehouse or is transferred between stores, these movements are logged automatically in the system. This constant flow of information helps you stay on top of your inventory and ensures that your stock data is always accurate and up to date.

How flexible are smart replenishment engines?

Smart replenishment engines can be customized to suit your business needs. For example, if certain products are in higher demand during, say, holidays or festivals or seasons, you can adjust the system to account for these fluctuations. By ensuring that you always have the right amount of stock on hand, you can reduce the risk of over-ordering, minimize storage costs, and avoid the financial strain of tying up cash in excess inventory.

Content Sources:

Shopify

PWC

Forbes