The U.S. e-commerce market has nearly doubled in size since 2011, and is forecast to grow to $737B by 2022. Managing stock for a variety of commerce channels is becoming more complex, costly, and risky. As recent losses by H&M and other major brands illustrate, poor inventory management can be a major cause of financial distress. It’s clear that in the changing market landscape, where customers expect immediate and accurate fulfillment of purchases, companies need to look at their inventory management strategies with a fresh eye.
Two major challenges are facing retailers today. First, as priorities shift elusively from brick-and-mortar to e-commerce and back, it can be hard to pin down an optimal solution for storing and distributing inventory. Many companies are transitioning from primarily physical storefronts, to building or expanding distribution centers to account for rising online sales. The truth is that both B&M and online channels are popular among consumers, but brands need to keep a pulse on where demand for certain products is concentrated if they don’t want to be caught with a ton of inventory that’s just in the wrong place.
Exacerbating this challenge is the problem of siloed communication across the supply chain, leading to massive and unreported delays, bullwhip effects, overstocking, understocking, misplaced inventory, and wildly off-the-mark demand forecasts. Essentially, businesses need a way of keeping their ear to the ground within their own supply chain, so that they can turn their focus onto what matters — serving customers better.
There are a few solutions for the problem of inventory management in the omnichannel era.