Advanced Inventory Management Solutions

12/09/2022

AS INFLATION RISES, SO DOES SHRINKAGE!

CEO Doug McMillon told CNBC Tuesday that theft is "higher than what it has historically been." Walmart is just one of several top retailers reporting concerning levels of retail theft.

The National Retail Federation in September reported the total losses from shrink—a retailer term for theft and other inventory loss—reached $94.5 billion in 2021. Retail crime incidents rose an average of 26.5 percent last year, Fox Business reports. Retailers like Walmart, Target, and Rite Aid note particular problems in storefronts in urban locations, where liberal leaders push soft-on-crime policies.

McMillon told CNBC if authorities being lax on prosecuting theft isn't "corrected over time," then "prices will be higher and/or stores will close."

"I think local law enforcement being staffed and being a good partner is part of that equation, and that’s normally how we approach it," McMillon said.

Rite Aid CEO Heyward Donigan noted in a September earnings call that her chain experienced "unexpected headwinds" from shrink, "particularly in our New York urban stores." The company saw a $5 million increase in shrink this year, according to CFO Matt Schroeder.

"This is an industry-wide problem that is often driven by criminal networks, and we are collaborating with multiple stakeholders to find industry-wide solutions," Target’s CFO Michael Fiddelke told investors in mid-November. Target's year-to-date shrink "has already reduced our gross margin by more than $400 million versus last year, and we expect to reduce our gross margin by more than $600 million for the full year."

Home Depot has "been doing more physical security," Vice President of Asset Protection Scott Glenn told Fox Business, "and innovating some new tools and technologies to make it a little bit harder for the bad guys and girls to steal products."

12/09/2022

How “Co-Opetition” Can Help Overcome the Obstacle of Retail Overstock
Retailers can employ a trifecta approach using AI and data analytics to reduce overstocked inventories and prevent future accumulations

By Shubhankit Verma
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The retail industry has struggled to cope with the unprecedented changes in the last few years spurred by the pandemic, leading to a scarcity of goods and overstocking in many cases. Additionally, snarls in supply chains resulted in bulk purchases until inflation changed consumer shopping patterns. Failure to identify and forecast changes resulted in excess inventories and markdowns or write-offs. As a result of these bloated inventories, the retail sector loses over $50 billion each year. Also, the oversupply led retailers to offer discounts of up to 70 percent on furniture, electronics, apparel and workout equipment.

A recent report estimates that companies will spend around $300 billion on warehousing each year, and that amount is increasing as global supply chains and e-commerce become more prevalent. Excess inventory now exceeds 30 percent for many retailers, forcing them to resort to heavy discounting, which eats into their profits.

“Co-opetition” is, therefore, key to overcoming the retail overstock issue. The term co-opetition refers to cooperation between competitors. Although it sounds contradictory, it's a very effective way to do business. In the era of globalization and technology, co-opetition will likely become increasingly important for retail companies. Through co-opetition, retailers can develop strategic plans to liquidate excess inventory quickly and efficiently while making profits for themselves and their partners. Without sharing confidential and strategic data with partners, retailers can build cohesive strategies, which can help all involved weather the storm and come out on the other side stronger than ever.

Trimming the Fat: How Can Retailers Reduce Overstocking?
Before exploring strategic partners that would fulfill the co-opetition option, retailers should try to sell off their excess inventory. Smart recommendation engines can be useful and provide unique avenues to explore for selling excess inventory.

Therefore, it's recommended that retailers employ “a trifecta approach” using artificial intelligence and data analytics to reduce overstocked inventories. This three-phased approach can help prevent further accumulations, creating a more sustainable system.

Related story: Solving the Supply-Demand Puzzle

Phase 1: Igniting the Engine
Insufficient inventory can result in stock-outs and lost sales, while excess inventory can result in write-offs. However, by implementing some internal measures using advanced analytics, retailers can get back on track within a few weeks. The first step is to rebalance inventory levels by identifying slow-moving items and adjusting stock accordingly. Retailers can also use ship-from-store capabilities instead of relying on central warehouses to fulfill online orders.

A second step entails implementing markdowns guided by data. Determining the right prices and timing for markdowns will help retailers clear out slow-moving items without eating too much into profits. The third step is to bundle products together based on analysis to maximize the network's use of overstocked products. This can help to reduce overall inventory levels, while still providing customers with the items they want.

Phase 2: Building the Momentum
This is the phase where retailers should open themselves up to explore the idea of co-opetition. There are many examples of co-opetition in the retail industry. A notable example of this is the relationship between Best Buy and Amazon.com. In 2018, the two companies partnered to sell Fire TV Edition smart televisions in Best Buy stores and on Amazon's website. This gave Best Buy access to Amazon's huge customer base while also expanding Amazon's potential audience for Alexa-enabled products. By collaborating with each other, these two retail giants have been able to reach a larger audience and boost their sales. This co-operation is a win-win for both companies, and it's a great example of how co-opetition can be beneficial for businesses.

Despite evidence that collaborating in the supply chain can reduce inefficiency and result in mutual gain, parties don't wish to collaborate if they have to share their proprietary information. The main reason for their privacy concern is that the party doesn't want to lose its competitive advantage by giving away company secrets. With the advancement in data science and data engineering and the sophistication with which new-age digital platforms are built, it's very much possible to build a platform where partners can be onboarded with the details of their excess inventory — SKUs, volume, and price — without revealing this information directly to their partners. Collaborative optimization algorithms can be applied to such problems in the supply chain, where secure multiparty computation is incorporated as part of the algorithm to preserve the privacy of the parties.

With these platforms in place, all collaborating partners can together sell off the pooled excess inventory. One partner gets the customer on its website and the other partner fulfills it and they both share the total profit in a pre-decided proportion. Through this, one partner doesn’t lose its customer, while the other partner is able to sell off the inventory which otherwise it wasn’t able to. And they keep switching roles dynamically until all of them sell their excess inventory.

Phase 3: Achieving Escape Velocity
This phase is all about being better prepared for the same situation in future. A predictive analytical solution is key to preventing future inventory pileups. By identifying the buying patterns and trends in customer behavior, retailers can make better inventory and pricing decisions. Additionally, these solutions help retailers source goods more efficiently, ensuring they always have the right products in hand. This involves:

Dynamic sourcing strategy: Helps retailers identify potential disruptions in sourcing and adjust their strategies.
Demand forecasting: By analyzing historical trends and patterns, retailers can anticipate future demand and prevent inventory shortages.
Real-time inventory optimization: Monitors sales data and customer behavior to ensure retailers never run out of inventory.
Advanced return policies and behavior-based pricing: Assess how customers interact with products and help retailers keep the right mix of items in stock and price them to maximize profits.
The Road Ahead
Overstock is a pressing issue for many retailers, but it doesn't have to be an insurmountable one. By being agile in thinking, collaborating with peers, and making use of AI and data analytics, businesses can begin to take back control of inventory levels and keep the stock in the backroom moving towards the consumer.

12/06/2022

5 tips to take the stress out of year-end inventory counts
Published Dec. 5, 2022

By ECRS
Year-end physical inventory counts for grocers are critical for tax purposes and to get an accurate snapshot of inventory levels, but they can be costly, time-consuming and labor-intensive. To make the most of your efforts, you need an effective strategy along with tools that can help you complete the count as quickly and accurately as possible.

1. Start planning early
Year-end inventory counts typically coincide with the busy holiday season, and to ensure everything goes smoothly, you should start planning early. Let these tips guide the way.

Make sure you have adequate staff, and if necessary, plan to bring in temp workers or hire extra help.

Decide which team members are doing the count early to avoid conflicts with time-off requests during the holidays.

Schedule the count around holiday crowds so shoppers aren’t decimating your inventory as you’re counting.

Break the job into sections and create a map detailing which order you’re going to count various aisles and departments.

Ensure you have the tools you need to complete the count.

Depending on the volume of your inventory, you should start planning anywhere from one to three months in advance.

Pro tip
Try doing a “dry run” practice count during the planning phase. This will help you get a better idea of how many staff members you’ll need to get the job done without hiring more help.

2. Tidy up your inventory
If you miss counting items, your inventory ends up artificially low. At the same time, overlooking inventory also inflates your shrinkage on paper and fails to give you an accurate overview of which items have been selling.

To avoid missing items, devote time to cleaning up your inventory before you start the count and ask yourself these questions:

Are there items in break rooms, receiving areas, or other places that are likely to be missed in the count?

Do we have certain items in two or more locations and are they all noted on the map?

Have we accounted for end caps and special displays?

Pro tip
Not only does this task help you get organized for the new year, it can also be a great time to evaluate and update your store’s planogram if needed.

3. Invest in the right tools
To streamline the physical count, arm your team with solutions that quickly scan your items and upload accurate information to your records in real-time. While it can be tempting to send out your team with consumer-grade devices and software, they slow down the process, impede accuracy and have high rates of failure.

Coupled with CATAPULT’s hand-held terminal (HHT) software module, industry-leading hardware devices empower employees to effectively execute inventory counts over the store’s Wi-Fi. CATAPULT’s HHT software communicates directly to the back office in real time and allows users to receive and handle inventory, update prices and inventory records, apply discounts and change shelf labels from anywhere in the store.

4. Set up two-person teams
Two-person teams can focus on the granular counts more quickly. If you can break up counting tasks into small teams of two:

Your staff members are less likely to feel overwhelmed.

It makes the task seem less intimidating and more manageable.

Pairing two people together makes them accountable to each other, improving quality control for the inventory process.

When you pair a more experienced team member with a new team member, you combine experience with a new set of eyes, giving you a more effective level of oversight into the inventory process.

Remind teams to look out for items being stocked in multiple places. Back stock and end caps are sometimes overlooked.

Pro tip
Pairing a more-experienced associate with a less-experienced one may be beneficial. While one member of these two-man teams may be less knowledgeable about the process this time around, they’ll be able to learn from their more-experienced teammate.

By the end of the count, they’ll be acquainted with the process for next year and can help lead. This can also be an opportunity for a less-experienced associate to become more familiar with the products you carry.

5. Schedule the count strategically
Ideally, you need to pause operations while you perform the year-end count, but you don’t want to sacrifice your bottom line for your count. Many stores do their inventory in the middle of the night and if you take this route, remember to plan well in advance so that you have ample staff members available.

If you have to close the store to do your count, communicate the changed hours clearly to your customers over multiple channels including updating Google business listings, posting on social media channels, sending e-blasts and hanging signage well in advance.

Final Takeaway: Having the right tools makes it all easier
A comprehensive technology can help you stay competitive and help with each of the best practices listed above. The right tech and hardware stack can help you master these best practices, down to a science.

A retailer whose store is already fully connected from the POS to inventory:
Will know the best possible time to schedule a physical count.

Can digitally track and categorize stock; clean up and organization should be a breeze.

Can easily reconcile inventory changes that happen during a physical count.

Physical inventory counts ensure that the rest of your store systems are accurate and in proper order. When you’ve already got a unified store system that gives you a real-time 360-view of inventory on-hand, the physical count becomes a step to affirm and assure your 360-view, not provide it.

12/06/2022

Almost Time

To make the most of your efforts, you need an effective strategy along with tools that can help you complete the count as quickly and accurately as possible. 

12/06/2022

To make the most of your efforts, you need an effective strategy along with tools that can help you complete the count as quickly and accurately as possible. 

12/15/2020

Dunkelberg On Regional Disparities In Small Business Optimism. NFIB Chief Economist Bill Dunkelberg wrote in Forbes (12/9, Dunkelberg) about regional disparities in small business optimism. The Small Business Optimism Index “is proportionately the highest in the East South Central states. ... Second highest were owners in the Mountain states...West South Central states...and South Atlantic states (24 percent). Least optimistic...were owners in the Pacific states, followed by owners in the West North Central, and Mid-Atlantic states where only 20 percent scored over 120.” Dunkelberg added, “Overall, 23 percent of owners are very optimistic with Index score of 120 or more and 13 percent are very uncertain about the future. The top problem for 30 percent of small business owners are taxes, direct or regulatory related, and 30 percent face labor market issues. The Covid-19 crisis has exacerbated many of these issues and the decline of federal and state coffers will likely impact small businesses by way of higher taxes post crisis for some time to come.”

08/04/2020

What she says...

Amazingly, June retail sales rose. Not just compared to May, but even compared to a “regular” June,

07/28/2020

As the economy begins to reopen, this inventory challenge, particularly the seasonal products, will certainly slow or eliminate profits as retailers are forced to liquidate. Great bargains are coming for customers.

Deborah Weinswig on turnover rates and ways to alleviate losses.

07/17/2020

The retailers keep getting further begind...

Online sales may be a saving grace for pandemic-battered retailers with fewer shoppers in their stores. But many retailers, from department store chain Macy's Inc to essential retailer Target Corp, are grappling with higher expenses related to e-commerce.

07/06/2020

Of all the formulas and ratios, inventory may be the most meaningful for the health of the retailer

Inventory turnover measures a company's efficiency in managing its stock of goods. The ratio divides the cost of goods sold by the average inventory.

07/06/2020

As we open back up, the problems begin to mount. Retail has been hit hard and it will only get worse.

The advent of COVID-19 in the U.S. caught store chains' buyers by surprise and left them stuck with too many goods that are now tough to sell.

04/29/2020

It's going to be difficult foe all the clothing stores.

Every shirt sitting in a warehouse is a wasted cost.