Managing Inventory: The Highs and Lows

When vendors think about managing inventory, quite often they immediately think of those stores with insufficient inventory and how to resolve that.  Of course, this is a natural and valuable consideration, and a correspondingly considerable effort is made to eliminate inventory outages and prevent lost sales.   
 
But what of the flip side of that coin?  A June 26th article in the Wall Street Journal, titled “Retailers Cut Back on Variety, Once the Spice of Marketing,” cites Walgreen Co., Wal-Mart Stores, and Kroger Co. as examples of how retailers are concerned about too much inventory in addition to their concern about too little.  The article goes on, “these and a few of the other largest retailers are expected to slice the assortment of products in their stores by at least 15%, industry executives and analysts say.”
 
The difficulty for vendors, then, is how to manage both the highs and lows of their inventory throughout their supply chain.  Indeed, inventory ought to be managed at an item by store level, which in and of itself is a vast amount of data.  This is further complicated by the use of third party distributors and the various distribution facilities and warehouse networks used by each different retailer.  Simply getting the raw shipping and inventory information from each retailer and/or distributor is often a substantial task, and making use of the disparate types and formats of data is more often than not the task of a whole team of analysts, who in turn rarely do any analyzing, spending the majority of their time collating and standardizing formatting.  As a result, by the time the inventory situation is discerned, it’s often stale data and virtually useless.
  
This need for accurate, rapid, actionable inventory information has caused vendors to turn to third party partners like Accelerated Analytics to quickly identify those items that are both under-stocked and overstocked.  The Accelerated Analytics® Inventory On Hand Exceptions report continues to be one of our most popular reports because it allows you, the manufacturer, to define any inventory exception you might be interested in and get a report for every item at every store that falls into that category.  Accelerated Analytics integrated use of data received from a vendor, its retail partners, and its distributors, allows our clients to see what the current inventory situation is as recently as the current Week to Date.  But more than the one-dimensional EDI files, Accelerated Analytics® provides a multi-layered inventory look incorporating your own warehoused, shipping history, your distributors’ warehouses and shipping history, and your retail partners’ warehouses and receipts, so you don’t push a new order to a store that is low today. but will be receiving a shipment tomorrow of several new cases for the same item.  Using this type of exception report, in addition to Accelerated Analytics unique Sales Velocity Analysis reports, your analysts can actually analyze your information and pinpoint the items and stores that need your immediate attention in time to do something about it.  This, in turn, will increase your sell-thru, which just might keep your item(s) on the shelf at Wal-Mart, Walgreens, or Kroger!