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How Retailers Can Mitigate Supply Chain Risk and Maximize Success During the Holiday Season

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Mitigate Supply Chain Risk

As the holiday season approaches, retailers face the dual challenge of managing increased consumer demand while navigating potential disruptions in their supply chains. With supply chain risks ranging from transportation delays to inventory shortages, it’s crucial for retailers to adopt effective strategies to mitigate supply chain risk and maximize success during this critical time.

Supply Chain Challenges Retailers Face During the Holiday Season

1. Increased Demand Fluctuations: The holiday season typically sees a surge in consumer demand. Retailers must be prepared for spikes in sales, which can strain supply chains and lead to stockouts if not managed properly.

2. Shipping Delays and Transportation Issues: The increase in holiday shipments can lead to congestion in shipping channels and unexpected delays. Factors like bad weather, port congestion, and labor shortages can exacerbate these issues.

3. Supplier Reliability: Dependence on suppliers can pose a risk, especially if they face their own challenges, such as production delays or quality control issues. A single point of failure can disrupt the entire supply chain.

4. Inventory Management: Retailers often struggle with balancing sufficient inventory to meet demand while avoiding excess stock, which can lead to increased carrying costs and potential markdowns.

5. E-commerce Pressure: With a growing emphasis on online shopping, retailers face the challenge of efficiently managing both online and in-store inventory. This dual focus can stretch resources thin, complicating fulfillment processes.

Strategies to Overcome Supply Chain Challenges

1. Analyze and Forecast Demand

Understanding customer demand patterns is essential for effective inventory management. Retailers should use historical sales data, current market trends, and consumer behavior analysis to forecast demand accurately. This analysis will help identify peak shopping periods, allowing retailers to adjust their stock levels accordingly.

Key Steps:

  • Use Predictive Analytics: Implement tools that analyze past sales trends to predict future demand.
  • Monitor Market Trends: Stay updated with industry news, competitor activities, and consumer preferences.
  • Adjust Inventory Levels: Increase stock for high-demand items while minimizing excess inventory for slower-selling products.

2. Diversify Suppliers

Relying on a single supplier can lead to vulnerabilities. To mitigate this risk, retailers should diversify their supplier base. This strategy not only reduces dependency on one source but also provides options in case of disruptions.

Key Steps:

  • Identify Multiple Suppliers: Establish relationships with multiple suppliers for each product category.
  • Evaluate Supplier Reliability: Conduct regular assessments of suppliers’ performance and their ability to meet demand.
  • Negotiate Flexible Contracts: Create contracts that allow for adjustments in delivery schedules or quantities based on changing demand.

3. Invest in Technology

Leveraging technology can significantly enhance supply chain visibility and mitigate supply chain risk. Retailers should invest in tools that provide real-time data on inventory levels, order statuses, and supplier performance.

Key Steps:

  • Implement Inventory Management Systems: Use software that offers real-time inventory tracking and automated reorder alerts.
  • Utilize Data Analytics: Analyze supply chain data to identify bottlenecks and optimize processes.
  • Adopt Centralized Database: Use real-time access to centralized data analysis technology to enhance collaboration with suppliers and streamline communication.

4. Build Strong Relationships with Suppliers

Strong relationships with suppliers can lead to better communication, faster response times, and more reliable deliveries. Retailers should prioritize building partnerships based on trust and collaboration.

Key Steps:

  • Maintain Open Communication: Regularly check in with suppliers to discuss performance and any potential issues.
  • Share Forecasts and Plans: Provide suppliers with demand forecasts and plans to help them prepare for upcoming needs.
  • Collaborate on Problem-Solving: Work together to find solutions to potential supply chain disruptions.

5. Optimize Logistics and Distribution

Efficient logistics and distribution are critical for timely product delivery. Retailers should assess their logistics networks and make necessary adjustments to improve efficiency.

Key Steps:

  • Evaluate Transportation Options: Explore multiple transportation methods (e.g., air, sea, land) to find the most reliable and cost-effective options.
  • Utilize Fulfillment Centers: Consider using third-party logistics providers or fulfillment centers to streamline distribution processes.
  • Implement Last-Mile Delivery Solutions: Invest in efficient last-mile delivery strategies to ensure timely delivery to customers.

6. Create a Contingency Plan

No matter how well-prepared a retailer is, unexpected challenges can arise. Developing a comprehensive contingency plan will enable retailers to respond quickly to disruptions.

Key Steps:

  • Identify Potential Risks: Conduct a risk assessment to identify potential supply chain vulnerabilities.
  • Develop Response Strategies: Outline specific actions to take in response to various scenarios (e.g., supplier delays, transportation issues).
  • Test and Update Plans: Regularly test contingency plans and update them based on changing market conditions and business needs.

7. Enhance Customer Communication

Clear communication with customers can help manage expectations and maintain trust during the holiday season. Retailers should proactively inform customers about inventory levels, shipping times, and any potential delays.

Key Steps:

  • Utilize Multiple Communication Channels: Use email, social media, and website updates to keep customers informed.
  • Provide Transparency: Clearly communicate any potential delays or stock issues to customers as they arise.
  • Offer Alternatives: If an item is out of stock, provide customers with alternative options or estimated restock dates.

8. Focus on Customer Experience

In addition to managing supply chain risks, enhancing the customer experience can significantly contribute to a retailer’s success during the holiday season. Happy customers are more likely to return and recommend your store to others.

Key Steps:

  • Personalize Interactions: Use customer data to tailor shopping experiences, from personalized recommendations to targeted promotions.
  • Streamline the Shopping Process: Ensure your website and in-store experience are user-friendly and efficient, reducing friction in the purchasing process.
  • Provide Excellent Customer Service: Train staff to handle inquiries and issues promptly, ensuring customers feel valued and supported.

Conclusion

The holiday season presents both challenges and opportunities for retailers. By proactively addressing supply chain risks through enhanced forecasting, diversified suppliers, investing in technology, and optimizing logistics, retailers can build a resilient supply chain that meets customer needs. Additionally, focusing on customer experience and maintaining clear communication will further enhance their ability to navigate the complexities of the holiday season. With these strategies in place, retailers can not only survive but thrive during the most wonderful time of the year.

Transform Your Retail Supply Chain Management with ChainDrive

ChainDrive is an advanced retail management software that significantly enhances supply chain visibility, helping retailers gain real-time insights into their operations. By centralizing data and providing comprehensive tools for inventory tracking, order management, and supplier performance monitoring, ChainDrive allows businesses to make informed decisions and react swiftly to any disruptions. This visibility enables retailers to monitor product movement, anticipate demand, and optimize logistics, ensuring timely deliveries and minimizing the risk of stock shortages or overstocking. With ChainDrive, retailers can streamline their supply chain processes, improving efficiency and ultimately boosting overall profitability.

Ready to transform your supply chain management? Request a demo of ChainDrive today to see how it can improve your retail operations and help you stay ahead of the competition.

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Top 7 Omnichannel Inventory Management Challenges for Retailers

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Omnichannel Inventory Management

As consumers begin to expect a convenient omnichannel shopping experience, the use of alternative fulfillment options such as click and collect or same-day delivery is steadily increasing.

Now, it’s vital to give customers what they want, when they want it, and where they want it. Yet this level of customer-centricity puts tremendous pressure on retailers to ensure their supply chains can deliver the promises they make.

Here are seven top challenges retailers face in adapting their inventory management processes to win in this new omnichannel world.

1. Accurately predict omni-demand

Identifying and forecasting omnichannel demand is not an easy task. There are hundreds of factors that determine the inventory needed for each store or warehouse. Some events have a predictable schedule and can be planned in advance, like Christmas or Black Friday. But other events are more difficult to predict.

On the other hand, more and more retailers realize that predicting physical store sales is no longer sufficient. They must consider the effect of inventory transactions such as BOPIS (Buy Online Pick-Up In-Store) or home delivery from the store. They must also pay attention to the time gap between the sales order and the fulfillment order.

2. Lack of inventory visibility

Inventory visibility is arguably the biggest obstacle to successful omnichannel management. Without inventory visibility, you can’t access data for accurate reporting or promise customers that item will be back in stock on all platforms.

And when you expand to new channels, inventory visibility is the common denominator. It’s the piece you need to put in place within a centralized system, so you never lose track across sales platforms.

3. Serial returns

When customers purchase online, they are much more likely to return items. According to a recent study, one-third of online shoppers deliberately overbuy and return unwanted items. Few of them admit to ordering multiple versions of the same item (in different sizes or colors), so they can make up their mind at the time of delivery. Therefore, it is essential to consider an increasing return rate as a critical factor in inventory forecasting and planning, both in stores and distribution centers (DC).

4. Defining and accounting for lost sales

How retailers define lost sales in an omnichannel environment continues to evolve and has many implications. In the old retail world, unavailability was calculated as lost sales by taking into account factors such as day of the week and substitute goods.

Today, if a customer wants to purchase a new pair of shoes, but their favorite shoe store is out of stock for that size, they can still place their order from an “endless aisle” for home delivery. However, the probability of lost sales changes depending on the delivery time. So how do we interpret this and factor it into inventory management and replenishment decisions?

Rethinking the role of stores to improve omnichannel execution performance helps retailers use inventory more efficiently and reduce lost sales. It also helps deliver more convenient shopping experiences. You can solve your retail inventory accounting method challenges with ChainDrive inventory management software.

5. Dynamic Replenishment Forecasting

As part of the inventory management software, automated dynamic forecasting calculations are therefore gaining importance. These calculations are used to predict the optimal quantities to order during the replenishment process. In addition to seasonal fluctuations, relevant inventory and sales data from each location are taken into account. Key figures such as minimum and maximum quantities for individual items at specific sites are then used to calculate the respective order quantities.

However, the retail industry will continue to undergo profound changes toward customer-centric processes. As this change occurs, the supply chain must respond effectively on the consumer side. Only with the right inventory management software is omnichannel customer orientation within reach for retailers.

6. High inventory storage costs.

You need to have a plan to accommodate more storage space and costs before you create any kind of omnichannel strategy. Above all, different storage areas for different channels and the demand planning behind them.

Without smart demand planning, you end up with potential dead stock that takes up space and ties up funds for other lines of business. So, you plan ahead to prepare for peaks and valleys in traffic, and you don’t have to hold flash sales to rush out inventory that will cost you more than it is worth.

This capability increases when you add warehouses or distribution centers. Inventory data can be shared and viewed across all your locations in an omnichannel inventory management system.

7. Omnichannel Retail Technology

The true backbone of an omnichannel approach is an inventory or warehouse management system. Omnichannel cannot be achieved manually. With an automated retail technology solution, every process is streamlined. At the same time, order fulfillment is synchronized across all channels. Inventory data is readily available in a robust set of reports so you can make better buying decisions. With inventory management software in place, users can enjoy the benefits of the solution and the software integrations that connect to other areas of your business. Imagine having inventory data, shipping labels, and market channel information all in one place, with complete visibility.

To satisfy the demands of omnipresent consumers, retailers must create new planning and fulfillment methods to provide easy, predictable, and cost-effective delivery to their customers while also ensuring that inventory planning is optimal for profit. Large retailers are beginning to adopt new software that integrates omnichannel execution, store inventory management, central warehouse management, and replenishment that enable seamless implementation of omnichannel processes. This allows proactive and flexible responses to changing demand at the individual store level. With the right omnichannel retail software solution and an honest customer service experience, retailers can build an optimized omnichannel inventory management platform built for complete visibility as they grow.

Adopting and implementing ChainDrive’s inventory optimization solution is at the heart of supply chain operations in this new world. Our omnichannel replenishment solution will help retailers assess and forecast customer demand and integrate omnichannel execution with store and DC inventory management.

If you want to empower your brand experiences to keep up with changing customer expectations with our omnichannel inventory management platform, request a free demo with one of our software experts.

10 Powerful Steps in Retail Store Inventory Management

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Inventory Management

Retail store inventory management is the process of ensuring that you have enough of the items that customers desire on hand, but not too much or too little. Retailers fulfill consumer demand by controlling inventory to avoid running out of stock or having too much on hand.

Effective retail inventory management, in practice, leads to lower costs and a better understanding of sales patterns. Retail inventory management tools and procedures provide merchants with additional data to help them operate their companies more efficiently.

Here are ten powerful techniques that retail stores use to manage inventory:

1. Create centralized product management:

You may manage your items from a centralized place using the e-commerce gateway. That implies that fewer people take time to manage their inventory, away from customer services, merchandising, etc. Decentralized product management costs more money and takes longer across the retail chain.

To help people identify items, provide product photos and descriptions. This step is essential when you sell online. Place them in your inventory record when you add new products. Whenever changes in information like a supplier or wholesale costs, update them. Set inventory entry policies, including who is accountable for it and when. With rich data, we will unlock the power retail inventory management system

2. Track stock location and status of all merchandise:

A customer will eventually inquire about the status of their order. It is critical in many ways to track the location and status of each product before and after an order is placed. Real- time inventory monitoring saves retailers time and money.

Multi-store retailers and omnichannel vendors may have their inventory in warehouses, distribution centers, transportation, stockrooms, and store shelves. Missed sales and revenue are a result of misplaced or overlooked products. This may be avoided by using good retail inventory management techniques. It improves customer service while also simplifying and lowering the cost of replenishment.

3. Audit your stock counts:

Even if you have effective inventory management software, you should still count your inventory regularly to make sure that what you have in stock matches what you think you have. Businesses employ several approaches, such as an annual, year-end physical inventory that counts every single item and continual spot-checking, which is especially beneficial for goods that move quickly or have stocking difficulties.

4. Sync sales data with inventory data 

A retail inventory management system can combine sales and inventory information. The ideal way is to select a system that includes POS and inventory management functions on a single platform so that all of your data is stored in a single location. Make sure your retail analytics system allows you to customize your reports by slicing and dicing them. If you plan to get the data of your retail analytics, you need a system that will enable you to filter and display data in various ways. Use product data to determine when and how much to restock and when to provide promotions or discounts. They could use fashion retail inventory management software for small business to track their turns and sell through in order to avoid empty shelves.

5. Identify low stock

Out-of-stock items diminish customer satisfaction and may drive customers to your competitors. Prevent this by creating stock reports regularly that show products that are running low. Set a reorder point for your items, and make sure you’re alerted when supply levels reach a particular threshold so you can refill as needed. If you’re using a manual method, check to see which goods are sold out or at reorder points and add them to your shopping list. Purchases should be prioritized depending on their profitability, popularity, and lead time. 

6. Markdowns and Promotions:

Product sales might fall short of expectations for various reasons, including a cooling trend, obsolescence, or seasonal considerations. If you provide markdowns, be strict about discounting and moving sluggish sellers so that you may produce revenue and create a way for more profitable goods. Create a promotion strategy ahead of time to guarantee that you have the adequate product on hand to fulfill demand.

7. Stock buying Procedure:

It’s time to buy the stock once you’ve established your budget and looked at what inventory is doing well.

Look to your POS system for assistance. Purchase orders are built-in into a POS like ChainDrive, so you can handle this stage from the same location you control your inventory. Verify that the items of each delivery match the order by comparing them to the purchase order. Count cartons and pallets, ensuring the product type and numbers are correct and documenting any errors, damage, or shortages. Any concerns should be followed up with the vendors. You only need to scan your goods as it arrives to add it to your management system.

8. Seamless web order fulfillment, shipping, and Returns:

Creating a smooth product flow from the moment of the order to delivery is the key to profitable web order fulfillment. When a customer order a product on your website, you may swiftly fulfill it, prepare it for delivery, and send it to the customer when they expect it. By simplifying the process and keeping each product ordered on track, this seamless flow saves you money.

When a client returns an item, inspect it to determine if it is damaged or faulty, and then send it to the suppliers for repair, write-off, or return. If the item is sellable, include it in your inventory counts and place it where it belongs.

9. Handling dead stock procedure:

Inspect any broken or incorrectly delivered items, as well as any seasonal leftovers. Damaged products or returns that were not properly accounted for are frequently the sources of discrepancies in stock numbers. If you have a return stock room, look over these goods and ensure they have the same SKUs or descriptions. Items that fall within this category should be noted and removed from stock. Return damaged or faulty products to suppliers, or document and notify them, according to their policy.

10. Analyzing sales across channels:  Knowing how web orders influence your whole retail chain also means monitoring all products sales across channels, including brick and mortar. Each channel may be managed with greater efficiency and profitability.

Choose and track key performance indicators (KPIs) to measure the success of your process. Retailers must take advantage of the profitability, inventory value, selling rate, and turnover rate.

In order to achieve optimum efficiency in retail inventory management, the proper technology is required. To give consumers an outstanding shopping experience, all items must be shown in a single view across all channels and apply intelligent order management to your purchases. The right solution will grow with your company and allow for infinite expansion. It’s essential to keep track of your inventories in real-time. This is made possible via ChainDrive’s Point of Sale Software.

ChainDrive retail inventory management software for small business has a set of native capabilities for handling safety stock and cycle counts, tracking inventory in various locations, and calculating reorder points. 

If you want to simplify your retail business and get your stock back on track, request a courtesy demo, and we will show you how the ChainDrive inventory management software suite can help your retail chain to the next level.

3 Retail Inventory Accounting Method Challenges Made Simple With ChainDrive inventory management software

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One reason retail operation manager uses the retail inventory method of accounting is because it is quick and efficient to arrive at a current value of your inventory. However, it is neither accurate or sufficient. That’s why it’s important for retailers to perform a periodic physical inventory count. How often that count is performed is entirely up to each retail business, but it should be done two to four times a year is better. Retailers have to be able to respond to the changing business landscape, adapt and change, and pivot as often as possible is the new normal.

What is The Retail Inventory Method?

The retail inventory method is based on the cost of merchandise and how much you list your products for at retail. Accountants usually start with the cost of merchandise and divide it by the retail price to determine the cost-to-retail percentage. Next, you calculate the cost of goods available for sale. Then you calculate the cost of sales by multiplying the cost-to-retail percentage and sales amount for the period. Finally, you calculate the ending inventory by subtracting the cost of sales from the cost of goods available for sale.

Why the Retail Inventory Method is Not Always Accurate

While there are benefits to using this accounting method, there are few issues and challenges to reckon with. Here are three problems with the retail inventory method that retail operations managers should be aware of from the beginning:

1. It only works if you have a consistent markup across all products in your inventory. If you have products with wildly different markup percentages–and most retailers do–then your estimated ending inventory for the period could be off target drastically. The more diversity you have in your inventory markup, the more often you should perform physical inventory; which is time consuming as you know.

2. It’s based on historical assumptions that may not necessarily be true. If your markup is seasonal or different from what it was at the beginning of your inventory cycle, then the ending balance will be skewed. If you’ve recently changed your markup, you might perform a physical inventory to get started on the next cycle on the right track.

3. If an acquired retail operation is bought by a larger entity with huge amounts of inventory that bares a significant difference in markup percentage, it will skew the ending balance of the acquiring operation. This can be avoided by working through the process separately for each entity.

Is there a better way to avoid these blind spots and common pitfalls? You bet!

How to Scale-up with ChainDrive retail inventory management software

1. Identify the trend : If you want to sell the right product to the right customer, you have to identify ahead of time the shifting consumer behaviors before they happen, otherwise, you won’t be able to stock the right merchandise at the right time; so keep an eye on the fashion industry, current consumer trend in the market and shifting business models.

2.Effective planning and budgeting: Planning your retail budget is very important in retail industry. You have to operate your business within your budget span, but you must also meet the pent-up demand of your customers. After you decided which products to buy, you need to contact the vendors and place the orders accordingly. A centralized retail system that helps you do that more efficiently will benefit your retail store for a long time and your business resilience along the way.

3.Tracking the product: It begins at the time of ordering. Once you order a purchase for bulk merchandise, you need to find out where that product is in the supply-chain. And you need also to follow it all the way to your warehouse. Thereafter you need to track it from the warehouse to your stores, into the customer’s hands or his/her doorstep.

4.Allocation of Products: it’s important to allocate the right quantity of each product to each point of sale location. Retailers that sell well in one location may not necessarily sell at all in another geographic location or zone. Understanding retail business cycles, crowd thinking and changing buying patterns of customers at each retail store are essential precautions and barometers to keep on the watch list of driving factors.

5.Replenishment: you have to identify the right time to replenish your supply of each product, you carry and re-order at the right time. You need an inventory management software system that is agile-ready and that can help you customize your replenishment cycle to meet your demands.

Whether you are an apparel, footwear, jewelry, sporting goods, department store, home decor or specialty retailer, ChainDrive inventory software offers both the precision needed to benefit you as a retailer and the agility to address the peculiar nature of your specific vertical or niche market.

ChainDrive’s integrated accounting solution will definitely help you better manage your retail operations inventory and accounting functions while keeping your books immaculate and optimal for different operations.

If you still have more questions on how to ramp-up your inventory management system or want to see live how ChainDrive can help you step-up your heavy-duty retail operations, contact our retail management experts or log on to our site to book a free demo and consulting session.

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