The omni-channel revolution has created a new set of requirements for retailers; the most important is to be able accurately “see” inventory wherever it is in the enterprise, and to be able to commit to sell any unit of inventory to anybody in any channel.
This is according to a new study by Retail Systems Research (RSR), The Internet of Things: Identifying REAL Benefits.
Retail has been “hard-wired” over the past 100 years, where retailers buy goods from a supplier, ship them to the store and then sell them. If a product was not in the store a customer could not buy it. Today, even if the product IS in the store the customer may not buy it; he/she might they want it shipped to their home, which means buying online.
Inventory is not just about the store any more – it is about the entire supply chain – the ability to re-direct goods based on situational changes. In this age of instant gratification, customers want to be able to see what is available and where; buying it where and when and however they want.
According to Forrester, 60% of US adults want a retailer’s website to show in-store inventory. After all, why go to the store if they don’t have your size in stock? Winning retailers understand this and it might explain why 98% of them say that inventory management across the business is very important (see the chart on page 4 of the report).
Fashion (70%) and fast-moving consumer goods (75%) companies consider the IoT as a way to address inventory management (see chart page 11). This could be RFID or BLE (Bluetooth low energy) tags on items, or cases, as they move through the supply chain.
This technology also allows retailers to understand where product is within the store itself – closing the gap between the system saying the product is in the store and the store associate not being able to find it!
To get real value out of this kind of investment means connecting it to retailers’ existing infrastructures and being able to both visualize it and pass it to the place where it is needed. This could be a web commerce channel or for supply chain planning to aid decision making. As well as connectivity it may require custom applications, real-time analytics (94% of retailers see value from real-time alerts to changing conditions within the business).
The IoT can also help to reduce errors, enabling retailers to carry less inventory. Unfortunately, the report said, few have realized this yet: “It’s really disappointing to see that, having felt the pressure from their Boards to cut operational costs, retailers don’t see how IoT would allow them to reduce their inventory.”
Inventory visibility aside, retailers want to find other ways for the IoT to help them improve efficiency. But what happened to the excitement seen in past years for IoT use in customer-facing capabilities?
RSR’s report noted that IoT was still seen as big way to engage with customers but retailers realize that “achieving this is useless without system-wide inventory visibility and accuracy for cross-channel orders & fulfilment.”
In my next article, I will talk about how retailers surveyed believe the IoT can help to control operational costs.