Managing stock in an uncertain context

Sales that are increasingly less predictable and a growing number of references. In this situation, stock management can be a difficult equation to solve. How can a retailer avoid stock errors and turn this challenge into an asset?

OVERVIEW

Expanding the offer, multiply the challenges

The problem is twofold for retailers. In addition to expanding their offer (see the omnicommerce booklet #1), their sales are becoming increasingly less predictable. Indeed, with the web, the fashion trends move faster and highlighting products, which is efficient in store, is more complex on the Internet. It is difficult to know if an article on the home page of an e-commerce site will be a best-seller, as so many Internet users browse in so many different, multi-channel ways. In contrast, good sales of a product featured at the entrance to a store seem more certain, as all consumers will pass by it. Not to mention that the product highlights on the web are often based on the best sales, which amplifies the fashion phenomena.

Managing-stock-in-an-uncertain-contextIn other words, references are multiplying while sales are becoming increasingly uncertain. In this context, stock management becomes more complex. It is for this reason that stock errors have been increasing in recent years, favouring new models, such as those based on private sales. To overcome this problem, retailers cannot work on a just-in-time basis, since their production units are generally located outside of France and consumers have become accustomed to delivery in under 24 hours. However, as complex as it may seem, the problem of stock management is not insurmountable.

TAKING UP THE CHALLENGE

How to find the best model?

Part of the answer to this logistical challenge lies in the diversification of supply cycles for the same product. To put it another way, retailers set up two sourcings: a long cycle for most of the production and a short cycle with units closer to the points of sale for emergency replenishments.

As a second step, comes the question of the stock management model to be put in place. Should we tend towards a zero-stock company as do some marketplaces? Even if it is not necessarily to be followed through to the end, this model makes it possible to massify levels of stock by combining the products of several partners: manufacturers, wholesalers, suppliers or resellers. Moreover, these partnerships - which mean that the company no longer owns 100% of its stock – replenishment is made easier, since the stock is geographically dispersed, and the financial fixed assets of retailers are reduced.

However, building partnerships to massify stock can lead to lower levels of service at a time when consumer expectations are becoming more and more pressing (read omnicommerce booklet #4). Therefore, the utmost attention should be paid to these issues.

Changing the stock management model requires a thorough rethink of IT tools. Indeed, it is impossible to have a centralised view of stock — regardless of the partners involved — without appropriate tools.

To achieve this, Order Management System (OMS) software retrieves stock reports from all partners in real time and shares them with all stakeholders. Similarly, the OMS optimise logistics management based on order flows and sales processes (store to web, click and collect, etc.). With this centralised and shared database, retailers can transform their stock management while maintaining a high level of service for increasingly demanding customers.

Managing stock in an uncertain context

 #Expert Voice

A challenge for quality of service

"Beyond stock management, it is the level of service offered to customers that is at stake. Unavailability of articles, unfulfilled promises, inconsistency of offers with products available on the web and not in stores... the pitfalls and annoyances are numerous. Hence the importance of acquiring high-end IT tools."
Pierre Gressier, Head of Distribution & Services Sector, Gfi Informatique.

#Gfi Solution 

The Order Management System by Gfi

Based on IBM technology, Gfi’s OMS integrates all retailers' information systems. In particular, it interfaces with the product catalogue and all the blocks of the IS to provide relevant and real-time information to all stakeholders. With the product catalogue, it forms the winning duo to offer all products and stock for sale across all channels, in store to web or web to store, and much more...

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KeywordsOmnicommerce

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