Inventory management is nothing new to retail business. But with e-commerce and omnichannel retail booming, it’s become more difficult to manage inventory across multiple channels. Retailers today need to stock optimal levels in their brick-and-mortar stores while fulfilling orders in their online store, mobile apps, Amazon, Walmart, and social channels.
It brings the need for strong multi-channel inventory management, which would give retailers a central view and control over inventory across all the sales touch points. These cross-channel challenges are now handled by modern inventory management systems and inventory software development services through their key capabilities.
The Need for Multi-Channel Inventory Management
A recent study found that as many as 94% of retailers now sell through more than one channel. However, only 49% of them feel they have full visibility and control over inventory across channels. This lack of visibility results in issues like:
- Out-of-Stock Situations: Customers find a product unavailable on one channel even though it’s in stock in another channel. This leads to lost sales and damages customer trust.
- Overselling: A product is available across channels, but the inventory level is not synced. So, it gets oversold on one channel, leading to order cancellations/backorders.
- Channel Conflict: When inventory levels and pricing are not aligned across channels, it confuses customers and cannibalizes sales.
Retailers must use an integrated approach to multi-channel inventory management instead of treating every channel in silos if they are to avoid such problems. Visibility and control throughout mobile apps, online stores, markets, social commerce, and brick-and-mortar retail all depend on a centralized inventory management system.
Key Capabilities of Modern Multi Channel Inventory Systems
Modern systems provide robust functionalities to handle all the complexities of a multi-channel retail operation. Here are some key capabilities:
1. Centralized Inventory Visibility
It integrates an inventory management system with all sales channels and gives a real-time view of inventory quantities, orders and sales across channels. Retailers can instead see and control all the inventory across all channels from a single dashboard.
Key features include:
- View of inventory across all locations and sales channels
- Updates on quantities, orders and sales in real-time inventory tracking
- Actionable insights from customized reporting and analytics
Retailers can make better decisions with real-time inventory data on inventory positions across the omnichannel to avoid out-of-stock and overselling situations.
2. Channel-Specific Business Rules
While central visibility is important, each sales channel also has its own business rules pertaining to delivery times, order processing, cut-off times etc.
Advanced systems provide the flexibility to configure channel-specific business rules, including:
- Replenishment rules: Min/max quantities and reorder points can vary across channels
- Delivery lead times: 1-day delivery for online orders, 2 weeks for Marketplace orders
- Order cut-off times: Different order acceptance cut-off times for each channel
- Customized order flows: Specific validation steps, routing logic for each channel
Setting up the right rules for each channel ensures orders are fulfilled accurately as per channel requirements while maintaining centralized visibility and control.
3. Inventory and Order Orchestration
Retailers in modern systems go beyond visibility and actually orchestrate inventory and orders across channels to optimize operations actively.
Key orchestration capabilities include:
- Cross-channel inventory allocation: Route inventory dynamically at a point in time to the most profitable or high-priority channel.
- Order sourcing and fulfillment: Optimal inventory location source order fulfillment across channels
- Store fulfillment for online orders: If there is stock out in the warehouse, ship online orders from the store inventory.
- Store-to-store transfers: Transfer stock between brick-and-mortar locations to meet localized demand
- Inventory reservations: Don’t oversell; reserve inventory for high-value channels like marketplaces
The system intelligently meets demand across channels through active inventory orchestration to optimize operational metrics.
4. Real-time Inventory Sync
Maintaining an accurate inventory count is extremely challenging in omni-channel retail, given the number of touchpoints involved.
Modern systems provide capabilities like:
- Real-time sync: Automatic sync of all inventory transactions across connected channels
- Perpetual inventory tracking: Maintain a continuously updated count rather than batch updates
- Automated adjustments: Identify and adjust mismatches between the system count and actual warehouse quantities
- Cycle counting: Frequent cycle counts across locations rather than an annual stocktake
For adoption, you must win user buy-in all around the company. Share the long-term vision and advantages at training seminars, including warehouse managers and store employees, among all the stakeholders.
5. Analytics and Reporting
The reams of data generated from an integrated inventory management system would serve little purpose without the ability to analyze and extract insights to drive better decisions.
Key analytics capabilities include:
- Interactive dashboards: Real-time KPIs including channel performance, stock levels, sales velocity
- Custom reports: Designed reports catered to the particular requirements of various employees
- Trend analysis: Over time, spot trends in consumer demand and channel performance
- Predictive analytics: Based on the analytics, precisely project future inventory needs
Data-driven insights on inventory, sales, costs, and fulfillment performance across channels help stores adjust their plans to maximize metrics and be ready for the future.
Best Practices for Implementation
However, the installation of advanced inventory management software is not enough. Retailers need to adopt certain best practices to ensure successful implementation:
Get Buy-In from All Stakeholders
You need to get user buy-in across the organization for adoption. Communicate the long-term vision and benefits through training workshops with all stakeholders, including store staff and warehouse managers.
Take a Phased Approach
Instead of going for the kill and connecting all the sales channels at once, take a phased approach by connecting the top 2-3 channels. Get learnings from the first implementation before scaling to more touchpoints.
Define Processes to Support Technology
Take advantage of the system’s capabilities by re-engineering processes. Updated roles, workflows and KPIs should be clearly defined and aligned with the new processes.
Clean Up Data First
Incorrect existing data will lead to inaccuracies in the new system. Invest time upfront in data hygiene – remove duplicates, verify inventory counts, and rectify issues.
Iteratively Enhance Over Time
No system will be perfect out-of-the-box. Continuously take feedback from users to understand pain points and enhance the system iteratively after going live.
The Future of Multi-Channel Inventory Management
Omni-channel retail is only expected to become more complex in the future with new emerging sales channels, personalization expectations and delivery models. Customer-centric capabilities like BOPIS (Buy online, pickup in-store), endless aisles and mobile checkout will also rise.
To stay ahead, retailers must invest now in building enterprise-class infrastructure with multi-channel inventory visibility, orchestration and analytics at the core. With the right platforms and processes, omni-channel commerce presents an exciting opportunity rather than a challenge.
Modern multi-channel inventory management systems provide the foundation retailers need to drive growth while delivering a seamless customer experience across channels.
