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Specialty Retail Series: Part 3 of 4
In Part 2 of this series, we talked about how ridiculously time consuming it is to conduct inventory management tasks manually. We discussed the reasons for this and shared how inventory automation is making life easier for demand planners with Specialty Retail Replenishment SKUs. Today, we want to talk about the importance of ‘adaptability’ as you prioritize future retail technology investments.
Interactive voice search apps, chat bots, augmented reality, beacons and robotics are at the forefront of newer customer-facing technologies in retail. These shiny new objects are indeed impressive, but successful brands have found it’s more important to use the right technology for your business; for your customers; and for the overall economy.
The first step in prioritizing your retail technology investment is to understand that winning in 2020 is NOT about who can stock the coolest products, but who can be the most profitable. Who buys and replenishes inventory the smartest? Who has the most agility to react when something shifts a consumer demand pattern? Does it take months for you to adapt? Weeks? What if you could adapt in just one day?
Retailers that invest in supply chain planning technology to adapt quickly to erratic demand trends in the macro-economy will be able to react first and finish first in the market.
Mastering the art of change
Elusive consumer demands have a wicked ripple effect on demand planners, who feel they are always one step behind when it comes to inventory planning. There’s always way too much or too little inventory, and the cost of that imbalance is cringe-worthy:
Supply chain solutions pick up the heavy lifting which humans no longer have the capacity to handle. These planning systems monitor consumer demand on a daily basis and use intelligent calculations to deliver recommendations for what to order, how much, and when – in lock-step with what’s going on with the bigger picture.
New import tariffs and inflation, for instance, are forcing manufacturers to pass costs downstream to customers. With goods more expensive, sales/demand for certain higher-cost items will slow down, too. A supply chain solution can react to that. Likewise, a supplier looking to stimulate sales might offer a temporary discount or deal – at which point you might consider a forward-buy. Inventory planning and supply chain solutions help you sense these changes and adapt your core infrastructure on the fly to seize more opportunities.
Another example is the emerging possibilities with big data and personalization through AI/connected devices. Massive opportunity awaits those who can adapt to big changes coming with the AI market. There are currently 15 billion connected devices on the planet, estimated to grow to 50 billion in 10 years. Connected devices make up a universe of micro-sensors that track everything consumers do, from the inventory in our refrigerators to the tread depth on our tires. If we can track demand trends to such a detailed degree, and even at a regional or micro-economy level, we can eliminate a great deal of stockouts, surpluses and surprises.
Supply chain solutions put you in the best position to adapt to these macro-economy changes and respond in a virtually automatic way. Rinse and repeat. Like a well-oiled machine that literally works while you sleep.
Applying supply chain solutions to win
Now that we’ve established adaptability as the key to profitability in 2020, we’ll let you in on a little secret. Your success with retail supply chain solutions depends heavily on the types of items you sell.
Earlier, we discussed the difference between Fashion goods and Specialty Retail Replenishables. The spectrum is wide. On one side you have Fashion items, which are short-lifecycle goods such as seasonal apparel that involve high-turnover SKUs and a ‘one-and-done’ plan/purchase process. On the other you have Replenishable SKUs, which sell repeatedly throughout the year across a longer period of time. Specialty Retail Replenishables offer the greatest ROI for your supply chain solution. Here’s why…
Think about the volume of products purchased on a replenishable basis. A higher volume of products means a higher likelihood and frequency of change in demand patterns. More to track and more to keep up with. Establishing a highly adaptable and automated inventory planning solution drives huge competitive advantage. According to Retail Prophet,
Supply chain planning solutions continuously analyze the consumption trends of replenishable goods, which can vary greatly even at regional or store levels. These systems pick up on these differences, alert you DAILY with recommendations, and communicate those changes with extended supply chain partners to optimize your inventory as a holistic unit. So it’s not just about turning inventory, but gaining profitability through mastering the art of change up/downstream. Brands that can do this will gain significant market share in 2020 and beyond.
In the next post we wrap up this series with Part 4, “Inventory Optimization Strategies for CX Domination.”