Commentary

IoT A Great Inventory Management Tool

According to the RSR most recent benchmark report, presented by Paula Rosenblum, “The Internet Of Things: Identifying REAL Benefits,” 98% of Retail Winners (those whose comparable sales outperform the industry) cite “Inventory management across the enterprise” as a very important capability driven by the IoT. And 45% of those same Retail Winners cite “pressure to cut operational costs” as a top-three business challenge.

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The Omnichannel fulfillment revolution has created tremendous profit leakage for retail enterprises, says the report. Big box apparel retailers particularly find their employees wandering the selling floor looking for product that has been promised to a customer, either from another store or from a digital order.

A sidelight of the Omnichannel revolution is the introduction of “BORIS” – Buy online, return in store. In traditional retailing, returns weren’t a terrible problem. The merchandise was returned to the place it was bought, and store employees put the product back in stock.

But, as the percentage of apparel sales (in particular consummated on line) continues to rise, return rates are skyrocketing. Direct-to-consumer retailers typically experience a 25-30% return rate: more than triple the return rates of brick and mortar retailers, says the report. 

And, if the returned merchandise can easily be dropped off at a store that doesn’t even carry it, what motivation do store associates have to process the return, and how many retailers have clear processes and incentives in place to do so?

The combination of poor visibility and lost inventory accuracy doesn’t just lead to profit leakage, they also lead to lower turn and larger working capital requirements. When 30% of your inventory is “somewhere” that you can’t identify, the most expedient solution is to buy more next time to create safety stock across the enterprise, says the report.

The “real value” of the Internet of Things is in improving the quality and efficiency of inventory management, says the report. This is why using the IoT to find and create alerts around “dead” merchandise is so important.

An ancillary value to using the IoT to “manage inventory rather than customers” is that it avoids privacy concerns. While it’s tempting to use various tracking technologies to deliver personalized offerings and make store layouts more efficient, using these technologies without explicit permission can be a retailer minefield, says the report.

The day may come when both the industry and consumers are ready, and able to track effectively, says the report. In the meantime, it makes more sense for retailers to capture the somewhat low-hanging fruit of poor inventory visibility and accuracy with the IoT. This will help retailers gain knowledge of how to best use the IoT, get used to managing the vast amount of data that it generates, and prepare for future projects, concludes the report.

For additional information from RSR, please visit here.

 

According to the RSR most recent benchmark report, presented by Paula Rosenblum, “The Internet Of Things: Identifying REAL Benefits,” 98% of Retail Winners (those whose comparable sales outperform the industry) cite “Inventory management across the enterprise” as a very important capability driven by the IoT. And 45% of those same Retail Winners cite “pressure to cut operational costs” as a top-three business challenge.

The Omnichannel fulfillment revolution has created tremendous profit leakage for retail enterprises, says the report. Big box apparel retailers particularly find their employees wandering the selling floor looking for product that has been promised to a customer, either from another store or from a digital order.

A sidelight of the Omnichannel revolution is the introduction of “BORIS” – Buy online, return in store. In traditional retailing, returns weren’t a terrible problem. The merchandise was returned to the place it was bought, and store employees put the product back in stock.

But, as the percentage of apparel sales (in particular consummated on line) continues to rise, return rates are skyrocketing. Direct-to-consumer retailers typically experience a 25-30% return rate: more than triple the return rates of brick and mortar retailers, says the report. 

And, if the returned merchandise can easily be dropped off at a store that doesn’t even carry it, what motivation do store associates have to process the return, and how many retailers have clear processes and incentives in place to do so?

The combination of poor visibility and lost inventory accuracy doesn’t just lead to profit leakage, they also lead to lower turn and larger working capital requirements. When 30% of your inventory is “somewhere” that you can’t identify, the most expedient solution is to buy more next time to create safety stock across the enterprise, says the report.

The “real value” of the Internet of Things is in improving the quality and efficiency of inventory management, says the report. This is why using the IoT to find and create alerts around “dead” merchandise is so important.

An ancillary value to using the IoT to “manage inventory rather than customers” is that it avoids privacy concerns. While it’s tempting to use various tracking technologies to deliver personalized offerings and make store layouts more efficient, using these technologies without explicit permission can be a retailer minefield, says the report.

The day may come when both the industry and consumers are ready, and able to track effectively, says the report. In the meantime, it makes more sense for retailers to capture the somewhat low-hanging fruit of poor inventory visibility and accuracy with the IoT. This will help retailers gain knowledge of how to best use the IoT, get used to managing the vast amount of data that it generates, and prepare for future projects, concludes the report.

For additional information from RSR, please visit here.

 

 

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