Roberto Mangual, President & CEO, Simparel discusses the importance of inventory management.
Effective inventory management has always been a competitive advantage for fashion businesses. Now that omnichannel commerce is the new normal, the importance of accurate, timely inventory information is greater than ever.
In the report “Omnichannel Inventory Optimization: Where Are My Products?” management consultant Danny Knopp, The Parker Avery Group, wrote:
“Inventory optimization is carrying a level of inventory that reduces the possibility of an out-of-stock situation, while at the same time ensuring the carrying cost of inventory does not hurt the bottom line. In the simplest of terms, inventory optimization means balancing demand and supply.”
Against this backdrop, apparel manufacturers and brands require the flexibility to ship their merchandise to retail customers’ distribution centers, third-party e-commerce warehouses and sometimes, directly to retail stores or even consumers’ homes.
More and more retailers are asking suppliers to break up shipments and reroute products to help them respond to late-breaking demand trends. Adding to the complexity, some manufacturers and brands are managing their own direct-to-consumer operations through outlets and online sales.
The theme of this year’s Global Retailing Conference — “Everywhere at Once” — is a reflection of the enormous focus on anytime-anywhere fulfillment. To execute to this challenge, fashion firms need agility and real-time inventory visibility. For them to maintain high customer service levels, there is very little room for error.
New Technology for Today’s Opportunities
There are new software solutions to help apparel businesses sharpen their inventory management. Next-generation ERP solutions include functionality specifically to manage omnichannel order fulfillment. Many apparel manufacturers have found that it is beneficial to implement a single enterprise system to obtain one version of the truth on all inventory, including goods warehoused in multiple locations.
Until now, if they wanted access to up-to-date inventory data, many apparel businesses had to run time-consuming reports, pulling from a complex web of custom interfaces between systems. This approach requires significant time and labor, and because it is not automated, there is risk for error as employees manually extract the relevant data from disparate software programs.
With confidence in their inventory accuracy, fashion businesses can carry less buffer inventory and reduce the high costs of liquidating a lot of excess products. Also, when they are leveraging the latest systems, companies can gain the ability to allocate business-to-business orders as well as direct-to-consumer shipments. Juggling both order types requires sophisticated pick/pack warehouse management capabilities. Newer enterprise systems have this functionality built-in, along with FedEx and UPS interfaces that are critical for business-to-consumer fulfillment.
Bonobos is a great example of a company that has leveraged technology for omnichannel success. Starting up as an e-commerce fashion business, the company has since opened 19 Guideshops across the country — showrooms where customers can touch and feel its merchandise, get fit guidance and place orders. The firm’s popularity and fashion savvy attracted the interest of Nordstrom, which has made the Bonobos brand available in its department stores and on nordstrom.com.
Seeing Inventory in the Supply Chain
To truly excel at omnichannel inventory management, companies need a single system for managing all product-related data and eliminating visibility gaps from source to shelf. Technology is available today to provide real-time visibility into not only the warehouse but also further upstream into the supply chain and product development.
For example, when companies have instant access to vendor production schedules and status updates through web-based portals, they have visibility into “virtual” inventory in the supply chain and can determine when it will be available to fulfill orders. When this information is coupled with visibility into “real” inventory they have already received into their distribution centers, they have a powerful, holistic picture of where all of their products are positioned.
Some progressive manufacturers are utilizing new computer systems to synchronize raw materials planning, sourcing and distribution plans with demand patterns. This is just one more example of how supply chain management is now intricately linked with inventory management. The closer to market apparel suppliers can react to trends, the more valuable they become as retail partners — able to supply the right product to the right place at the right time. And that is inventory management at its best.