The Shelf Life Of Stuff: Inventory Management Goes Digital
The yin and yang of centralization and distribution
“It really depends on how you exercise the rules of allocation.” said Rob Ogelsby, associate partner at Parker Avery Group. For example, a customer who walks into a store has already invested time in seeking out a specific piece of merchandise.
“The reward should be instant gratification and the ability to walk out of the store with their selection.” he said.
In order to avoid disappointment, retailers must maintain continuous stock, fulfilled from the same central point that also fulfills online orders.
“From my experience, it is best to still forecast by channel – or even by customer.” Ogelsby said. “It is much easier to aggregate these forecasts to a common pool – and make decisions on ‘safety' once the aggregation is complete.”
Forecasts can be tested and challenged at the channel level, and channel managers can be held accountable for their forecasts, while the firm can leverage the power of the combined forecasts.
“Multichannel is the present and future. It's a fact of life. In order to simplify the process, it's imperative that a company take a holistic approach to managing inventory in a common pool across all channels they service,” Ogeslby said. “Once that philosophy is adopted, the inventory management system needs to be configured with the appropriate rules to ensure that inventory is utilized in the most efficient (and profitable) way.”