The Formula for Inventory Strategy Produced by Math and Science
At a time of unprecedented innovation in retail, even the most sophisticated retailers are struggling with inventory management. The blurring of the omnichannel lines has created a heavier promotional schedule than ever before, putting inventory planners at their wit’s end trying to predict product demand.
For many, traditional legacy or home-grown systems are not robust enough to deliver a predictive inventory plan. The statistical heavy lifting is often more art and less math and science. As illustrated by data from RSR Research, 75% of retailers report inaccurate inventory levels in stores, with 50% or more reporting other significant inventory issues that inhibit profitability. Frustrations abound from retailers who cannot sell what they do not have in stock.
Forward-thinking retailers are taking the guess work out of inventory optimization and benefiting from analytics that can identify what customers want and when they will want it. In doing so, they keep up with the pace of retail innovation and manage the delicate balancing act between supply and demand.
To solve this challenge and differentiate their business, retail inventory planners must:
- adopt a multi-method approach to accurate forecasting,
- optimize cross-tier policies to synchronize inventory needs and identify stocking strategies that will improve profitability,
- seek a smarter solution that generates and maintains forecasts at different levels of product and location nodes.
By leveraging best in class math and science, inventory planners are positioned to more accurately predict product demand and significantly impact the bottom line.