How Frictionless Inventory Flow Delights Customers

At this point in the game, every merchant should assume they’re competing with Amazon’s vision for the future. If you set that as the bar, you’ll achieve greater things than just incremental improvements. That said, very few merchants are actually prepared for that battle, especially in terms of inventory management – and inventory flow.

Here’s a great example. Two years ago, I bought a dryer from a major home improvement store. I recently went in to pick up a part I needed to stack the units. They didn’t have it. While that was inconvenient, the rest of the experience was downright annoying.

First, they had no record that I ever bought they dryer because they only had purchase history for the last 90 days (only 90 days, really? But that’s another article, for another day. More importantly, I was limited in my alternatives for getting the part I needed. The retailer couldn’t even tell me if the part was available in another store, because they only update inventory nightly. So although they showed one unit in stock someone could’ve already purchased it that morning.

After hearing that, I certainly didn’t trust the product availability shown on that merchant’s website. You know what I did? I left the store, ordered the part on Amazon and had it in two days.

To save the sale, the associate should have been able to see accurate inventory, order it and ship it to my house. It’s not that merchants don’t want to do this, it’s that they can’t. It requires software that doesn’t greedily covet inventory status and instead offers an open API to allow it to talk to other systems (like point-of-sale or ecommerce) easily and in real time.

Real-time inventory visibility is key

To solve this problem, merchants first need to gain real-time inventory visibility. Inventory has been traditionally handled through store polling, where it is updated across all systems at certain intervals in a batch mode. But today’s shoppers expect product availability to be accurate at the moment they’re seeing it. Nothing kills trust and loyalty more than placing an order and getting an email saying the product is out of stock when the buyer was looking for a delivery date.

Not only does accurate visibility influence customer experience, it also drives all downstream operational decisions including fulfillment, allocation and distribution. Just like you can’t manage cash flow unless you have an accurate bank balance, you can’t manage fulfillment without inventory accuracy.

flow

Merchants that want to compete with Amazon need to treat inventory like a service, meaning it’s tracked in one central location whether it’s in a store, a third-party warehouse or by a drop ship supplier. As transactions occur, that system is updated and automatically pushes real-time inventory values out to all sales outlets, online and in stores.

A great example is a $50 million safety footwear merchant I once worked with that sold product B2B and fulfilled orders online, from stores and from warehouses. Their mobile stores visited client sites daily and needed to be stocked with the right assortment based on the client type (i.e. hospitals needed different footwear than construction).

Accurate inventory was critical to ensure they knew exactly how much was in each unit and to drive replenishment, including how to stage inventory in various warehouses in order to stock the mobile units based on the schedule of client visits. It also prevented them from making client visits if they were not able to stock the unit fully. Furthermore, they accepted special orders and needed to know if the item was in stock, when it would ship and when the client could expect delivery.

The foundation of their mobile sales unit was the inventory software and its ability to keep inventory updated in real time as transactions occur – and not just sales transactions but also inventory receipts and transfers. After replacing their batch inventory system with a centralized real-time application, the company credited the next three years of positive growth and profit to the new way they managed inventory.

Let your inventory flow like water

While multichannel offers the best opportunity for supply to most quickly meet demand, it also increases complexity especially when there are multiple fulfillment channels. Like water, inventory should flow from the seller to the buyer through the path of least resistance. For the buyer this means delivery time should be as fast as possible and cost as low as possible. For the seller, this means the lowest shipping cost and holding the least amount of inventory possible.

The key for merchants who want to evolve with the changing landscape is to implement a system that can present available inventory in each location in real time. Combined with data on location of the buyer, replenishment schedules, etc., they will be equipped to dynamically make sourcing decisions, generate purchase orders and fulfill orders faster and more efficiently – ultimately delivering a better customer experience.

Steve Weber is President and CEO of nChannel

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