By Daniel Shim
We previously talked about the need for smart and effective inventory management, yet many retailers allow individual business units to manage their respective inventory, which keeps the information siloed. In today’s omni-channel environment, evaluating inventory turnover in isolation will lead retailers down a path of confusion and unintended actions. There are a number of causes and implications. Here is the first of two of the more relevant examples that should be considered to avoid misguided decisions.
The impact of fulfillment across channels
One of the key mantras of an omni-channel strategy is the “buy anywhere, fulfill anywhere” value proposition. It’s a boon for consumers and retailers alike. While still in its fairly nascent stage, leading retailers are enhancing their ability to provide visibility into inventory across the supply network to efficiently fulfill orders where consumers demand it.
One manifestation is by enabling consumers shopping in a brick-and-mortar location to make a purchase even if the products are not physically available in the store, or ecommerce shoppers who choose to receive or pick up their purchases from a local retail outlet. This is a game-changer as it positively impacts sales, but it can be a potential nightmare for inventory managers who must account for the following variables:
Retailers will ultimately be the ones to decide how to answer these questions based on the policies they set. But the impact on inventory turnover – and how it’s measured – can vary greatly based on their decision.
Stay tuned to learn more about proper performance evaluation.