The world is changing how it buys goods. With ecommerce sales higher than ever before, customers are expecting faster, less expensive, and more transparent delivery. As retailers take an omnichannel approach aimed at meeting their customers wherever they are, many are dealing with new and increasingly complex inventory management challenges.
This shift creates challenges for retailers to have the right inventory, in the right distribution center, at the right time. If they aren’t able to deliver the product within a certain amount of time, they risk losing customers to competitors.
With too much inventory, they risk a low full-price sell-through rate. According to Coresight Research, the average full-price sell-through rate among US nongrocery retailers is 60%, with 50% indicating that inventory misjudgments pose challenges to selling products at full price.
Those that aren’t able to match inventory with customer demand have struggled to solve the inventory puzzle, hurting their business. Here are a few pressing inventory management challenges supply chains are facing and how transportation visibility and predictive insights can help improve planning.
Remaining Agile with Uncertainty Around Global Trade and Tariffs
On top of the inventory challenges that come with growing delivery expectations and an omnichannel approach, global trade conditions that have companies on edge. With uncertainty around tariffs and trade tensions, many organizations have been stockpiling inventory to beat tariff increases.
While it’s difficult to manage the volatility of tariffs and cross-border trade relations, gaining advanced visibility across shipments will allow supply chains to improve planning. With a comprehensive view into shipment location and delays related to congestion at borders, supply chains can increase agility and get ahead of issues.
Comprehensive insight across the entire transportation cycle allows companies to better prepare and reduce unnecessary inventory stockpiling.
Keeping the Environment Top of Mind
With growing concerns and regulations around the health of our environment, organizations need to think about the environmental implications of their supply chains. Because supply chains handle everything from sourcing materials to transporting goods across the world, they’re well positioned to have a substantial impact on a company’s sustainability efforts.
When retailers stockpile too much inventory in an effort to ensure they meet consumer demands, they end up with a lot of wasted product. Some apparel companies have resorted to destroying or throwing away large amounts of unused product.
Aside from the costs associated with wasted inventory, companies are being held accountable for their environmental impact. And many organizations are making sustainability a top priority, committing to finding the most efficient approach that will reduce their carbon footprint.
When supply chains can optimize inventory planning with high-fidelity insight into the entire transportation process, less product ends up in landfills or being destroyed.
Improving Lead Times and Variability with Predictive Insights
Even when challenges related to tariffs and sustainability are taken out of the equation, inventory management is still complex. The practice requires in depth planning and analysis across the supply chain. There are a few ways transportation visibility can enable organizations to better manage inventory and meet these customer demands while maintaining their bottom line.
Visibility into transportation and logistics provides supply chains with a better understanding of their in-transit inventory. They can leverage this data to improve lead times as well as the variability of lead time.
With access to real-time high-fidelity data about the location and ETA of the inventory, transportation teams can gain more accurate and predictive insight into lead times, allowing all the necessary teams to take action. Many times, supply chains calculate lead time variability based on the worst-case scenario, making estimates without comprehensive data. While it seems like a safer approach to prepare for the worst rather than the best, it’s ideal to find the most accurate estimate possible.
More detailed and real-time information about inventory location means companies can improve lead time variability, ultimately helping reduce costly inventory stockpiling practices.
Enhancing inventory management is an ongoing effort with many moving pieces. The emerging shared-electronic-scooter startups have learned the hard way. Several of the startups paid about 10 times the cost of regular shipping when they encountered parts and scooter shortages.
According to a recent Wall Street Journal article, “The companies have found it difficult to forecast demand, in part because of inventory systems that offered limited visibility across networks of regional warehouses, said Christine Chang, who worked on Lime’s logistics and supply chain team until last summer, and other current and former employees.”
To reduce inefficiencies and maintain margins, organizations need visibility not only into warehouses, but into in transit inventory as well. With a constantly evolving market and increasing external factors, such as global trade tensions and environmental sustainability, supply chains need to gain more data to take a complete look at their practices and implement long-term change.
