Using Inventory Health to build a competitive edge

Dave Food on July 13, 2018

Right product, right place, right time is the essence of successful retailing. Simple in concept, but difficult in practice. 'Inventory Health' is a concept we believe is vastly under-rated and yet many retailers don't have as clear a picture as you might expect. Legacy systems, traditional working practices and siloed functions across organisations result in a lack of clarity around inventory and this inevitably leads to increased costs and missed sales.  


In recent research, Gartner, stated, “There seems to be a level of constant pressure to ‘optimise’ inventories, and, more often it translates into a need to reduce inventories. Without a clear goal, it feels like it is never right.” (Source: Build the Capability for Inventory Health Assessment, May 2017).

Putting Inventory Health in to perspective 

Gartner suggests that “to evaluate Inventory Health, companies should understand and improve stock strategies from a demand perspective. Companies deploy inventory strategies to protect the continuity of their supply and decouple their operations from demand volatility. The ultimate reason for all inventories should be to convert them to revenue within a reasonable amount of time. It is a measure of inventory holdings relative to the expected demand."

This means understanding the volume of each product / skew that is being sold within identified time frames to identify where sales are being lost due to lack of availability, monitoring demand changes by day of week, adjusting stock accordingly and measuring a decrease in sales of particular products due to external factors that affect consumer attitudes. The list goes on but the point is clear - Inventory Health is important, but what does it mean in practice and what are the steps you should take to start building a business-critical picture?

Practical steps to better Inventory Health

We have identified key actions that can rapidly help an organisation to build an accurate picture of its Inventory Health to make informed decisions:

1. Use analytics to identify all the customer data you have and analyse it to start building a more detailed picture of buying patterns. 

2. Use specialist software to automate the analysis of latest data and look cross-function to integrate supply chain with operations and merchandising

3. Work with inventory management experts who know your industry, understand the specific pressures your business faces and help you build a strategic approach to better inventory management 

The Brookes Inventory Health Audit is a structured process we have developed to give organisations real-time clarity on inventory in a way that will transform decision-making and enable major business to be achieved.

However you do it, better Inventory Health means better sales and cash flow. 

Want more information on how to achieve better Inventory Health?

Contact Us

Topics: optimisation, Forecasting, inventory, long tail, ROI

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