The effect of internet of things on inventory management is the next huge thing in progress. In any typical business, the process of ordering, storing, tracking and managing goods is a day-to-day requirement. As with all high investment top-tier businesses, this process becomes more complex with increasing amount of shipment volume. Mismanaged inventory can create significant financial problems for a business leading to overall hick-ups and coughs.
What is important for the retailer?
Efficient inventory management is the key to retail success. Efficiency refers to having the right amount of inventory as in the sole purpose of overall supply chain management. Especially in multi-channel retail, having the right quantity and mix of inventory is crucial. In order to achieve multi-channel success, transparency, timeliness, and accuracy in inventory management systems are imperative.
Multi-channel requires retailers to show the accurate inventory quantity to their customers anytime. So that they are not overselling and not damaging their customer service level.
Lack of visibility into real-time inventory poses a problem for both the consumer and the retailer. When shoppers add an item to their cart and then find that it is out of stock at checkout, they will abandon their cart and be annoyed with your store. To prevent this, online retailers need to show shoppers the stock availability for each product. By doing this you have another added advantage – shoppers have a tendency to quickly snap up a product if they find that it’s going out of stock. On the other hand, if you are out of stock, real-time inventory visibility makes it possible for you to tell your customers how soon they can expect the particular product to be available again.
Real-time and Accurate Inventory
Zebra Technologies’ study states that 72% retailers plan to reinvent their supply chain with real-time visibility enabled by automation, sensors, and analytics based on IoT. Zebra Technologies study also claims that almost 96% of retail decision makers are ready to make changes required to adopt IoT and 67% of respondents have already implemented IoT and another 26% are planning to deploy within a year. According to the RFIDJournal.com industry inventory accuracy is going around at about 65%. This percentage needs to be higher to achieve multi-channel success. Utilizing RFID platforms can boost inventory accuracy to 95%, while out-of-stocks can be reduced by 60% to 80% with item-level RFID tagging. RFID tagging also has the added benefit of being an efficient anti-theft mechanism.
The IoT offers much more than RFID and beacons. It also brings a host of real-time analytical capabilities. Data gathered from sensors, devices, and even social media can be integrated with cloud-based Business Intelligence systems. This helps retailers gain in-depth insights into customer behavior, that too in real-time. With real-time inventory analysis and insights, your business can move forward from just keeping track of erroneous inventory management decisions to foreseeing inventory issues before they turn into major problems.
It is estimated that IoT powered inventory management systems will help retailers identify;
- Products that are in high-demand and going out-of-stock
- Products with specific attributes (size, color) that would sell faster
- The exact revenue loss due to past-due orders
- Fast responsive suppliers
- Optimum replenishment durations
- Revenue loss because of theft and shoplifting