A planning solution can be a great asset in helping to optimise inventory levels and availability. But what happens if the data coming into the system is inaccurate and leaks into other areas of operations?
Mike Holmes, Solutions Consulting Manager at RELEX Solutions, and Robert Jenkins, Regional Programmer Director at RELEX Solutions explore more and discuss why identifying where there are problems in the inventory data stream can help maximise a solution’s usefulness and improve inventory management and accuracy as well.
Accurate data is vital to inventory management
As well as preventing a planning solution from performing at its best, incorrect inventory data can negatively impact other areas of operation, including store KPIs, customer availability, spoilage, and sales.
Data discrepancies aren’t restricted to negatively affecting store operations. Minor inaccuracies across a network of multiple stores all add up and can escalate into far more significant losses.
The worst-case scenario for a retailer with inaccurate inventory is financial loss from spoilage, and lost sales. Re-inputting these numbers by hand may help fix the problem but it’s time-consuming and negates the benefits of having an optimised inventory planning solution in the first place.
To avoid this, identifying where initial data collecting can go wrong is the first step.
Here are the four most common causes of inaccurate inventory data for retailers to look out for:
When products of a similar nature and appearance are placed next to each other, it’s easy for in-store staff to scan the wrong labels or count the same item multiple times when taking inventory.
Scanning these item types at the checkouts can also result in items being scanned more than once or rung up as a completely different product.
Products situated across multiple locations throughout the store can confuse inventory counts, with staff unsure whether all the products in-store have been counted.
Problems often arise when one assumes that all stock is in its proper location. A consistent unit of measurement across these different products during counting can help remove the complexity that might result in errors.
The timing of both stock counts and deliveries can impact the data reflected in inventory levels. A store with standard opening and closing times and delivery schedules might not have any issues. However, a 24-hour store or a store with irregular delivery hours is likely to miss inventory numbers in their morning or evening counts.
The internal consumption of store stock, such as in-store cafes or bakeries, needs careful documenting.
How to improve data collection and inventory accuracy
What appears as minor discrepancies in stock data can become significant problems in inventory accuracy. Implementing an effective planning solution lets retailers record when stock measurements change and evaluate key performance indicators. This in turn helps them identify scenarios where input data might be incorrect.
Investing in automated methods of maintaining stock record accuracy (such as advance shipping notices or other electronic tracking mechanisms) can help. However, they can be expensive and take a long time to implement. Once installed, retailers can analyse their inventory data to identify patterns that indicate a stock record error.
Proper retail planning can use available data to create views and alerts for users. Retailers should maintain a steady measurement of changes and inconsistencies in inventory levels to avoid the pitfalls of inventory data collection. They also need to ensure their planning system is proactive, not reactive and that their inventory plans are accurate and optimised.