Retailers face multiple sales channels and broad ranges of products. So, what stock should be maintained and how to offer the best level of customer service? Discover it in the following Knowledge Article, where we will share ten tips to manage wide ranges of products that are continually expanding while controlling costs.
CHALLENGES TO MANAGE BROAD PRODUCT RANGE
Inventory management is, in essence, straightforward. These are two questions: how much should you order and when? What makes inventory management, so complex is the fact that everyone sees it differently. For example, a CFO examines capital costs and obsolete stocks, while a Logistics Manager often thinks in terms of the number of pallet locations and line items. However, for a Sales Director, inventory means more revenue, more profits and more satisfied customers. For these reasons, managing a wide range of products can be somewhat complicated.
A HYBRID SUPPLY CHAIN
In addition to the complexity, there is the fact that the “traditional” Supply Chain no longer exists. Instead of all products going from the manufacturer to the wholesaler, the retailer and then the consumer, many of the current Supply Chains have become hybrids. So, where should you maintain your actions to offer the best customer service? With the expansion of product ranges, more sales channels and more inventory points, the reality of inventory management has become much more challenging. Based on our experience of working with more than 900 companies around the world that use our inventory optimization software, we came up with the main tips to manage wide ranges of products:
TIP 1: FROM THE STRATEGY TO THE EXECUTION
Turn your company’s strategy into appropriate business rules and associated automatic scenarios. For example, a high-end store like Ralph Lauren and a store that stands out for its discounts as H & M both have white shirts, however, pursue very different inventory and acquisition strategies.
TIP2: STATISTICS NEVER LIE
Use copious amounts of data! This allows you to use statistically reliable models to arrive at an accurate and (often more important) forecast to calculate the appropriate level of inventory daily, even in the case of extremely different products.
TIP 3: ABC FOR YOUR APPROACH
In a great variety of long-tail, it is impossible to pay the same attention to each one of the products. Sharpen your focus by frequently performing a comprehensive ABC / XYZ analysis based on forecasts. Which products add more value in terms of profitability, income and number of clients?
TIP 4: STORE OR NOT STORE?
Consider the three-question model: Does the article fit into the product range? Do you need to keep the item in stock? If so, how many units? The second step is the most important. Much depends on the disposition of the client and the private office of the provider.
TIP 5: DIFFERENTIATION OF CHANNELS
Physical stores, web stores, and online platforms: retailers must manage more and more sales channels. With the expansion of the product, ranges come the fragmentation of demand. Optimize your profit margins by assigning the right products to the proper channels.
TIP 6: PRODUCT LIFE CYCLE MANAGEMENT
Keep a close eye on the life cycle of each product. Each phase requires a different owner within the organization and a different product management mechanism. You must align your inventory and acquisition strategies accordingly.
TIP 7: MANAGEMENT BY EXCEPTION
It is impossible to check every SKU every day. How many exceptions are you willing and able to handle? What do you want to automate and what decisions could / should a planner make? Be sure to achieve the correct trade exchange between efficiency and effectiveness.
TIP 8: COLLABORATION
Collaboration is critical, both internally and externally. Share information with your suppliers to improve performance and do not wait too long to share information with Marketing to solve problems related to inventory and possible stock shortages as effectively as possible.
TIP 9: MODEL STEP BY STEP
Professionalize your supply chain step by step, making sure you establish a firm foundation. The Slimstock model supports a structured approach.
TIP 10: PROVIDE CONTINUOUS TRAINING
Inventory management is like a high-performance sport. Invest continuously in your staff to improve your skills and keep them in your company for longer!