Beyond the shelves: the true value of inventory accuracy for retailers

May 11, 2023

Beyond the shelves: The true value of inventory accuracy for retailers

Do you know where your inventory is right now? How many products are on the shelf, in your warehouse, and across your supply chain? If you answered yes, you are in the minority. According to a recent study conducted by Manhattan Associates, only 6%* of retailers surveyed stated they had an accurate overview of their inventory throughout their entire supply chain (in-store and online) 100% of the time.

It is true that stock visibility has long been a challenge in retail, but new solutions are now available to assist businesses in dramatically enhancing inventory accuracy. Whether you are omnichannel or not, a lack of inventory visibility will have a big impact on your bottom line.

Item availability as key factor of customer satisfaction
Consumer behavior has evolved over time, and today, there is a sense of urgency that drives individuals to purchase right away. According to Avery Dennison’s recent study, The Missing Billions: The Real Cost Of The Supply Chain, 39% of buyers ranked "availability" as one of their top five reasons when making a purchase. 

Moreover, if things are out of stock, customers punish brands immediately: 37% of shoppers will go to another merchant to get what they need according to Manhattan’s, Unified commerce for specialty retail Benchmark Index. As a result, retailers risk losing or alienating customers if availability becomes an issue. Businesses can avoid this by understanding where their inventory is across their supply chains and anticipating the needs of their customers better.

Beyond the shelves: the true value of inventory accuracy for retailers

Overproduction and waste are consequences of low item-level visibility
A lack of visibility to stock levels can have consequences throughout your supply chain. How can you accurately plan for what you need if you don't know what you already have on hand? In the fashion industry alone 4% of stock goes to waste due to overproduction (Avery Dennison, The Missing Billions). This is driven from a lack of transparency regarding the amount of inventory that has already been created, distributed, and acquired. Item-level visibility and accurate forecasting can provide clarity to businesses and help to reduce waste.

Winning the omnichannel game through inventory accuracy
Consumer behaviors have shifted, and "omnichannel" is no longer a buzzword! Shoppers expect a seamless experience regardless of channel, which is why many businesses are trying to shift to an omnichannel approach, but frequently face challenges that make implementation inefficient and costly. People desire convenience without sacrificing the personalized experience they have come to expect from their favorite brands. Manhattan’s research highlights that almost a quarter of consumers (24%) now expect store employees to be able to verify availability in a nearby store, if a product is out of stock, or order that product for home delivery or in-store pickup, highlighting the convergence of physical and digital retail channels. 

Inventory accuracy and visibility has traditionally been a challenge in retail, but this is THE key enabler for efficient omnichannel offering and enhanced customer satisfaction, so businesses can no longer afford to disregard it. 

According to Auburn University, inventory accuracy in the apparel industry is around 65% when retailers use traditional inventory management methods. With the introduction of RFID technology they are now achieving up to 99% accuracy. However, in other industries, such as food and beauty, the problem is often overlooked because inventory accuracy can be perceived as a difficult issue to address. This can lead to a lower ROI, a poor customer experience, and millions of dollars lost.

Fortunately, technologies like RFID are available to assist retailers in addressing the root cause. The combination of RFID and cloud technologies, such as the Manhattan Active® Omni suite, can help retailers up their game by servicing their customers better, reducing waste, and being more sustainable, which naturally has a positive effect on bottom-lines too - a win, win for retailers and consumers alike.


*Recalibrating for the Next Normal

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