How automated is your inventory system?

by | Oct 16, 2018

Just how automated is your inventory supply chain to resupply the inventory into your store or warehouse?

If you’re a larger retailer, chances are you’ve been automated for years. But smaller retailers and suppliers are still dipping their toes into the EDI pool, using it for some things, such as order processing and product detail sharing, but are missing out on EDI optimization elsewhere.

Automation is making a big difference for smaller retailers, saving them time and money, helping reduce shrinkage and preventing instances of realizing that inventory is running low when it’s already too late. If you’re not using it, you’re wasting a lot of time, money, and staff resources.

Obviously, being as fully automated as possible would be ideal, but that’s not always possible. So, what are some of the best opportunities retailers can use for additional automation? How can it help save your business time, money and grow/retain sales? And if you can’t go full automation yet, where are achievable opportunities that will bring the best return on investment?

For one thing, automation works with suppliers, vendors, 3PLs, ensuring they have what you need for your customers. For example, if a supplier or vendor shares their product inventory with you — we call that transparency — you can see how many units they have of a particular item. You can set up an alert in your system to either notify you when your supplier is running low or even automatically place an order, so they’ll hold a certain amount of their inventory for you.

Automation and analytics can also notify you if a product isn’t moving. Typically, this would only be discovered during a weekly or even monthly review of your top selling suppliers, and you might skip the inventory reports from your Tier 2 and Tier 3 suppliers. But what if you had an alert set up to tell you that a particular item wasn’t selling in any of your stores, or more likely, wasn’t moving in an individual store. You could be alerted to the problem and take corrective action to ensure the product is either adequately placed or the entire stock is pulled and replaced with something that is more likely to move.

An automated EDI system can even notify you if an order is late or isn’t coming. For example, when you send out a purchase order (PO), your supplier should send a purchase order acknowledgment  (POA) back in return. This information provides you with insight on the suppliers’ plans for shipping or alerts you of any order discrepancies such as price or quantities. And when the order is ready to ship, they’ll send you an advanced shipping notification (ASN), so you can notify your warehouse and they’ll allocate the right number of staff to handle it. If you process dozens or even a couple hundred purchase orders per day, it’s easy to overlook when the POA or ASN shows a different quantity than what you listed on your PO.

So, what would you do if you didn’t discover the problem until the order was actually sitting on your dock, and you had made buying and promotional plans based on having the products and amounts you ordered? By setting up an alert when there is a discrepancy between the PO and the POA or ASN, you can take steps much earlier in the sales transaction to correct the problem and find a backup or an alternate source.

You can also use automation to process three-way matches between the PO, packing/inventory list, and the supplier’s invoice to the products, quantities, and prices to ensure they all match up properly. Rather than having an entire department of clerks poring over every invoice and communication in every single transaction, you canuse those resources to manage by exception while an automated EDI system can do the matching in a matter of seconds. Not only that but if there are regularly reoccurring errors, the system can even help you identify them and help you discover opportunities to improve accuracy.

Finally, you can point the automation toward your point-of-sale analytics. This can tell you when your own inventory is running low, and again either alert you to the fact, or just automatically place an order once inventory reaches a certain level. This can be especially useful for items you continually need and don’t need a season or special to reorder. For example, a grocery store consistently ordering soft drinks or a sporting goods store ordering athletic socks and baseballs during certain seasons

Automating your inventory with an EDI software solution can save you and your company time, money, energy, staff resources, and a lot of headaches. With automation, you can reduce your out-of-stock issues, analyze and prevent sales issues, find out if there are any problems with an order, and reduce the amount of human intervention in your transaction processing. Overall. EDI automation can unlock a new level of efficiency for your business.

To learn more about inventory automation and how to put it to work for your retail operation, please visit the SPS Commerce website or ask to speak to one of our automation experts.

Scott Bolduc

Scott Bolduc

Director of Supply Chain Strategy at SPS Commerce
Scott Bolduc is a multi-time winner of the Supply & Demand Chain Executive Pros to Know. He has worked with e-commerce retailers on their growth strategies and helped retailers transform their freight spending strategies to maximize efficiencies.
Scott Bolduc

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