Doug Murless, vice president, North America for Krunchbox, advised housewares sellers and buyers to sharpen their inventory level awareness in a presentation during the recent Inspired Home Show as part of the show’s Inspiration Theater industry education program.
Krunchbox specializes in retail POS data management to uncover insights that can guide strategic efficiency throughout the supply chain. Murless (pictured above) pointed out the way information from stores is processed sometimes can mask out-of-stocks. Further, phantom inventory, misallocated stock and dropped product/store combinations can cost a lot of money in lost sales, he said. If the retailer doesn’t know that a store or a number of stores are out of a product, if their systems are reporting that inventory remains when it doesn’t or if they otherwise aren’t aware they need to replenish, the consequences can be dire, he added.
“If you don’t address this, you’re never going to get another order,” Murless said.
As retailers set stock and replenishment terms, they set a maximum stock level and amount of inventory to be ordered in a given circumstance, Murless explained. When a store reaches a minimum stock level, the replenishment system generates an automated order. Retailers establish such systems to optimize inventory levels and ensure customers have products to purchase, but factors such as inaccurate forecasts and store and distribution center inventory data problems can cause failures.
To improve the situation, Murless said, a company or analyst has to mine product and store data over a series of weeks to see where they have the same record of inventory on hand with zero sales. After that, an effective way to proceed, he noted, is to prioritize what to fix and ask a retailer to zero out the inventory for the suspect product that may not be in store.
Vendors can also ask the retailer for a cycle count of the inventory of interest, and they can provide a phantom product list to the in-house merchandising team or a third party to check with stores and confirm inventory is missing. At that point, Murless continued, they can ask the retailer, store or department manager to mark the inventory as zero in their system if it isn’t there.
Companies can use available automation to reduce the manual effort otherwise involved and improve the speed and accuracy of replenishment orders. They can also request retailers to be more open and available in sharing results and provide data-based suggestions to help improve replenishments, Murless said.
