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Smart Inventory Management Solutions in Retail & Problems They are Designed to Solve
Inventory is retailers’ most valuable resource; unless you have it in the right place and at the right time, your business comes to a standstill. Overstocks, stock-outs and shrinkage cost the global retail industry $1.1 trillion annually.
Some of the biggest inventory-related challenges retailers have to address today include:
- Delayed delivery (which usually stems from documentation mistakes, order management system failures, logistics errors and a force majeure like bad weather).
- Discrepancies between supply and demand (even with just-in-time (JIT) inventory systems and manufacturing resource planning solutions, it can be extremely hard to avoid stock-outs and overstocks in industries with highly volatile demand).
- Marketing cost optimization (retailers constantly seek ways to improve merchandising, be able to predict future buying trends, identify missed sales opportunities and deliver more personalized messages to customers).
Why, it’s connectivity, continuous sensor data acquisition and real-time analytics – alongside the fact that the Internet of Things makes parts of today’s lengthy supply chains come together!
Examples of IoT Inventory Management Solutions in Retail
Warehouse & In-store Goods Tracking SystemsThere’s more to modern warehouses and in-store storage rooms than, well, storing inventory; welcome to the era of real-time monitoring throughout the entire product lifecycle!
Greater transparency can be achieved with the help of printed barcode labels and Radio-frequency Identification (RFID) tags placed on packages and goods items which contain detailed information about an object, including type of a product, its precise location, manufacture and expiration date, etc.The essential components of a tag-based goods tracking system include RFID readers facilitating wide area or target monitoring, tag printers, antennas and middleware – a piece of software which enables tag configuration, makes products visible to the Internet and transfers product data to a web-based or mobile business application. Retailers can also equip storage facilities and freight transport with temperature and humidity sensors to monitor goods’ storage and shipping conditions, effectively manage sub-par vendor relations (which make up 65% of a product’s value), reorganize their own production schedules and reduce shrinkage and theft. Some of the world’s leading fashion brands including Zara and G-Star RAW became the early adopters of the RFID retail technology. Before the implementation of a RFID-based inventory management system, the former only managed to perform storewide inventories once in six month; Zara’s employees had to scan barcodes manually, one at a time. With RFID tags and custom scanners, Zara now performs inventories every six weeks. This gives the company a more precise picture of what’s selling well and an opportunity to set up accurate reorder points.
Digital Shelves & Connected Carts for Real-time Goods Monitoring & In-store Navigation
Equipped with tag readers, motion sensors, video cameras and displays, smart shelves can improve retail store operations in several ways:
- Automate inventory replenishment. Working in sync with resource planning software, digital shelves take a precise measurement of how much inventory is left and generate purchase orders for products that have reached a preset reorder point. Digital shelves can also be programmed to track misplaced items and send timely expiration date alerts to managers.
- Measure foot traffic. By continuously analyzing and processing motion sensor data, digital shelves can help retailers determine most sought-after products and boost sales through better visual merchandising and dynamic pricing.
- Provide on-demand pricing information and promotional content. Considering the fact up to 85% of buying decisions are made in store, it certainly makes sense to enhance shelves with LCD strips and built-in screens which display video ads and digital price tags to customers when they pass by a shelf. Meanwhile, RFID readers can broadcast product info to the screen once a customer picks up an item from the shelf.
Back-office Data Processing Solutions for Transactional EfficiencyThe skills that made brands like Walmart, Target and Macy’s what they are now no longer matter in the digital era as customers – as well as their expectations – have changed. In order to reduce operating costs, increase supply chain transparency and unlock new revenue opportunities, modern businesses need to make data-driven decisions enabled by ready-made SaaS solutions like Manthan and Intel’s Responsive Retail Platform or custom web apps with machine learning capabilities. Although it might be wrong to separate data processing tools from the tracking solutions we enumerated above (after all, they use sensor data collected through goods monitoring systems!), the majority of retailers do use multiple software solutions in the workplace, including POS, CRM and resource planning applications. With IoT – and a little help from neural networks, – these apps can become proactive tools facilitating prescriptive and predictive retail analytics. Back-office analytics systems automatically extract data from multiple sources including cloud-based IoT servers, CRM systems, mobile POS solutions and order management software and provide real-time data on business performance. Thanks to retail analytics solutions, by 2021 almost 79% of brick-and-mortar businesses will be able to deliver tailored messages to customers in store – and that’s not to mention cross-selling options, ability to forecast product demand and maintain optimal inventory levels.
55% of retailers who took part in eMarketer’s 2017 survey named inventory management the top fulfillment challenge IoT can solve. In case you share their sentiment, it’s time to address an IoT developer with a solid retail solutions portfolio.