Tired of losing sales due to inventory mismanagement? Customers find the perfect product online but can’t get it in store. Or they place an order to pick up at a local shop – only to find the item never arrived.
Sound familiar? If you’re in retail, it probably does.
In the multichannel sales world, good inventory management is brutal. Without the right tech and processes in place, businesses lose money every day.
Omnichannel inventory management solutions exist to solve these problems. Done correctly, they bring all the stock data together in one system. This gives retailers a 360-degree view of their stock across all sales channels.
The right omnichannel inventory management solution can level up customer service and increase sales.
In this article, the top omnichannel inventory management implementation best practices are listed and described. These are the practices that work.
Table of Contents:
Contents
- Why Omnichannel Inventory Management Matters
- The Core Components of Omnichannel Inventory Management
- Top Omnichannel Inventory Management Implementation Best Practices
- Common Omnichannel Inventory Management Mistakes
Why Omnichannel Inventory Management Matters
Let’s start with the numbers…
Retailers lose a lot of money from poor stock visibility. When businesses can’t provide customers with accurate information on product availability, sales are lost.
Retailers surveyed by Firework found 71% of consumers expect to see inventory visibility both online and in physical stores. Customers have high expectations.
But what makes omnichannel inventory management worth the investment?
Customers who shop omnichannel are more valuable. They buy more. They buy more frequently. And they tend to stick around longer than one-channel customers.
The first step to unlocking this value is optimizing retail inventory across all channels. Stock data must be consistent and transparent from the online store to the warehouse to the shelf.
Omnichannel inventory management is a big deal, right?
The Core Components of Omnichannel Inventory Management
Before jumping into the best practices, it’s important to understand what makes omnichannel inventory management solutions tick. There are three key elements to these systems:
Real-Time Stock Visibility
Real-time stock visibility is non-negotiable.
Each sales channel, including the online store, physical locations, and warehouses, needs to see the same stock levels at the same time. Accurate data is essential.
When a customer buys online, the physical store stock should update instantly. The same goes for back-end warehouse inventory levels. When data is out of sync, overselling happens. Customers are disappointed.
Centralized Data Management
All the inventory data must come together in one place. Simple to say but in reality, retailers run multiple disconnected systems.
With a centralized approach, there is:
- One single source of stock truth
- Product information consistency across channels
- Quick decision-making for replenishment
Flexible Fulfillment Options
Retailers that offer only one method of picking up an order will not succeed in today’s omnichannel environment.
Customers want and expect flexible fulfillment options:
- Buy online, pick up in-store (BOPIS)
- Ship orders from a physical location
- Same-day delivery
- Ship-to-store
- Order online, return in-store
An omnichannel inventory management solution should facilitate all these options without creating a stock nightmare.
Top Omnichannel Inventory Management Implementation Best Practices
Now for the main event. These are the practices that separate the omnichannel inventory management winners from the expensive mistakes.
Start With an Inventory Audit
Don’t skip this one.
Before introducing any new system, businesses must know where they stand with current inventory accuracy.
Cycle counts need to be performed, problem areas identified, and existing processes refined.
Only when the basics are right should new technology be layered on top.
Integrate Systems Properly
This is where many retail businesses make mistakes…
The omnichannel inventory management solution needs to connect to all other software used. Point of sale (POS), ecommerce platform, warehouse management system (WMS), and enterprise resource planning (ERP) systems must all integrate.
Poorly done system integrations result in data silos. And data silos result in inventory errors. Inventory errors lead to angry customers.
Map all the integration touchpoints in advance. Test. And test again. Before going live.
Implement Safety Stock Strategies
Retailers that run out of stock pay a high price. Running warehouses and back rooms full of excess stock is a drag on resources too.
Safety stock levels are the sweet spot in the middle that allow companies to balance these costs.
Safety stock strategies consider:
- Lead times from suppliers
- Demand variability across channels
- Seasonal fluctuations
- Historical sales data
Finding the right safety stock level can reduce both out-of-stock situations and excess stock dramatically.
Train the Team
Cutting-edge technology isn’t worth much if staff don’t understand how to use it.
Team members from all parts of the business must understand:
- How to use the new inventory management system
- The importance of accurate data entry
- What to do if there is an issue or error
Invest in training. Run refresher courses. And ongoing training is the name of the game.
Set Up Automated Alerts
Manual inventory monitoring is a non-starter.
Automated alerts should be set up for:
- Low stock thresholds
- Sales spikes
- Inventory counts
- Fulfillment delays
The alerts give teams time to take action before a small problem becomes a big one.
Common Omnichannel Inventory Management Mistakes
Things can go wrong. Even when following best practices there are pitfalls to watch out for…
Trying to Do Everything Simultaneously
Retailers often get overly ambitious when starting.
Rolling out omnichannel inventory management across all retail locations, channels, and warehouses is asking for trouble.
If problems occur, teams are stretched thin trying to contain them.
Better to do a pilot launch at one store or location first. Make mistakes. Learn. Scale up the rollout in steps.
Ignoring Data Quality
Garbage in, garbage out.
The most sophisticated and expensive system in the world won’t make bad data go away. Product information must be accurate and consistent. SKUs need to be correct and well-managed. Stock counts must be reliable.
Meteor Space reports only 9% of businesses have full inventory visibility. Retailers who make data quality a priority will stand out.
Forgetting About Returns
Returns are an essential part of omnichannel.
Any successful omnichannel inventory management system must include an understanding of how returned items are processed and reintroduced into sellable inventory. How do returns get processed? Which locations process them? How quickly do they become available for sale again?
Neglecting to factor in returns can lead to inventory ghosts. Stock that is in the system but not actually available for sale.
Underestimating Change Management
New software equals new processes. New processes equal change.
Change is hard for people to accept. Change management is the process of making it all work.
Getting buy-in from the top to the frontline staff takes work. Clearly communicating the reasons for changes. Celebrating the early wins. Identifying and solving issues quickly.
Pulling It All Together
Omnichannel inventory management is not optional. Customers expect to be able to shop seamlessly across all retail channels.
Retailers that can’t provide this level of service will fall behind their competition.
The omnichannel inventory management implementation best practices in this article provide a framework:
- Audit existing inventory first
- Integrate systems well
- Plan safety stock levels
- Train teams
- Automate monitoring
- Avoid the common mistakes
The solutions and strategies exist. The technology is available.
Retailers just need to apply the willpower to use it correctly.
