Retail industry encounters the following problems
High over-stock level. Current assets are frozen in inventories. The need for current assets and credits grows. Loan interests grow.
Low level of top-mover goods availability. Lost sales happen due to lack of goods and decrease in consumer loyalty.
The chain incurs losses from non-seller sell-outs and expired goods write-offs.
It is difficult to reveal where exactly the chain suffers losses as calculating lost sales on each goods item in a storage point without specialized system is impossible.
There is no convenient tool to trace the commodity surplus reason in shops and at the central warehouse. Suppliers often “push out” goods in shops by offering discounts and bonuses.
Additional costs on off-schedule deliveries due to commodity shortages in a chain. Expenses on stock movement between shops and points of storage.
How can this situation be improved and store profits increase?Request a demonstration
There should be created a system for placing and managing inventories and orders that will ensure high goods availability level while keeping minimum stocks in the system.
In retail industry, business performance depends on effective inventory management. The most efficient method of inventory management is Theory of Constraints (TOC) and its tool – Dynamic Buffer Management (DBM). DBM algorithm allows to optimize the processes of order placement to suppliers taking into account demand fluctuations. It also helps to control product movement effectively and work in an environment where demand is difficult to predict.
Inventory management according to TOC gives a clear understanding:
- What to order?
- How many to order?
- When and where should inventories be kept?
Inventory optimization at a warehouse and distribution center significantly cuts down expenses on its storage.
What we offer
Analyzing processes and revealing “bottlenecks” in inventory and assortment management
Holding a seminar training on Theory of Constraints methodology for the employees involved in inventory management
Creating the system of dynamic buffer management based on the actual demand. Providing recommendations on all supply chain improvement: from orders to a shop counter
Automating inventory management and orders with ABM Cloud stock management
Providing technical assistance and efficient follow-up
ABM Cloud stock management is designed to calculate automatically the required stock level for each SKU at each stock location in accordance with actual demand fluctuations. Stock –M Inventory management algorithm is based on the Dynamic Buffer Management (DBM) method. Read more about ABM Cloud stock management features here.
- Growth of assortment representation. Product-line expansion due to shelf space optimization.
- Lost sales reduction by 30-60%. Income growth from square meter of a floor space (shelf).
- Overstock level reduction by 30-60%. Write-offs and spoilage mitigation.
- Increase in supplier order execution level by means of additional instruments of control.
- Minimization of mistakes when placing the order because of “human” factor.
- Staff cost optimization due to order placement processes automation.