Most retailers regard and often treat their stocktake activities as a rather burdensome compliance process. However, stocktakes can boost marketing and supply chain performance and provide a regular barometer of business efficiency. That’s because stocktakes can – and should – generate a consistent flow of data about every aspect of the business.
During the stocktake process, retailers need to identify how their inventory levels have varied from year to year, as well as determine the overall value of this inventory. This information provides retailers with a basic litmus test of their supply chain efficiency: if your held inventories are increasing without a clear reason for doing so, your business will need to quickly rectify the divide between supply and demand.
However, retailers should take the opportunity to drill deeper into their inventory performance. By assessing inventory value and levels based on more granular criteria, like SKUs (stock keeping units) or product categories, they can identify which product segments are outperforming the rest and which are failing to move off the shelves. That, in turn, should influence how retailers provision their inventory levels for the coming year, or take even more immediate steps like cancelling orders or placing supply contracts under review.
Inventory management and optimisation should be common practice to all retailers – but many put off doing so because of the huge amounts of time and labour involved. That’s why, during stocktakes, retailers should develop a rigorous appraisal of their inventory levels, rather than simply coming up with rough valuations of their current assets. In fact, more sophisticated retailers will already be thinking: how can I automate this process so I have more regular insights into inventory data that can assist me with my business decisions.
Taking the sting out of stocktake
Retailers can reduce much of the effort associated with stocktaking by adopting software and systems that do the job for them.Today’s ERP platforms not only track retailers’ inventory levels across multiple points of sale, warehouses, and distribution centres; but update those stock volumes in real time based on data about incoming sales, fulfilment, and even returns.
Many of these platforms operate in the cloud, allowing them to be integrated with a range of points-of-sale functions – from e-commerce to cash registers – as well as the systems that third-party logistics providers use to track the status of their deliveries and fleets. And once installed, these platforms automate much of the work associated with tracking, updating, and sustaining inventory levels to meet demand across different parts of the business – significantly reducing the time required for stocktakes.
So, what does real-time inventory management mean for retailers? It gives retail managers insight into how to match their sales and marketing efforts with their inventory levels. If certain SKUs are selling fast, the retail manager can spot the trend well before a shortage occurs and not only request extra stock, but identify how quickly they may need the request to be fulfilled. Greater held inventory of some SKUs – especially when retained for longer periods – may indicate that sales and marketing campaigns haven’t truly been effective amongst customers, giving retail managers a chance to pivot these mid-campaigns rather than keep pouring money into tactics that do not yield results.
When applied on a macro scale, retailers can also begin to identify which of their sales channels and geographies perform better than others. That can help them better manage everything from investing in new stores to training new staff, moving away from a “one size fits all” policy approach to one that’s more supportive of local needs and operating conditions.
Most retailers already understand this at an intuitive level: after all, the classic stocktake sale addresses issues of oversupply and undersupply that the stocktaking process brings to light. However, integrating stocktake into the retail cycle can give retailers much more finesse when it comes to optimising their inventory and improving sales throughout the year.
ERP software, analytics, and a growing number of other technologies – like “Internet of Things” – devices that replace manual counting with sensor-based monitoring – have made inventory management far simpler and less time-consuming than ever before. This year, use the stocktake period to put some of those technologies in place throughout your supply chain and sales channels: the investment will prove well worth it come the next end-of-financial-year period.
About the author
David Bray is the Sales Director, Retail for NetSuite in ANZ and is responsible for the retail go-to-market strategy aimed at delivering ongoing operational value to retail customers and prospects. David has nearly 20 years of experience in working with many leading retailers in ANZ and across Asia to transform their businesses by blending leading practices with retail solutions to deliver measurable results. David has extensive experience in key retail business process areas such as Merchandise and Supply Chain Management as well as Planning and Assortment.