Inventory allocation refers to strategically monitoring inventory levels across the distribution network. A proper portion of lists helps ensure that inventory levels and storage costs are optimized and be able to meet customer demand.
Manual inventory allocation
In the world of retail, many retail businesses have yet to make the leap to automated systems and continue to use manual methods for managing and tracking their inventory levels. Utilizing hand-held inventory control practices, business owners and staff members rely on physical inventory ledgers or tablets and manually gather data for decision-making pertaining to physical distribution.
Unfortunately, this traditional approach may present a myriad of challenges to retailers, particularly when it comes to overseeing the inventory in larger-scale businesses. One of the primary concerns with manual inventory management is the potential for inaccurate record-keeping. Given the room for human error in counting and data entry, discrepancies in inventory levels can lead to overstocks or stockouts, both of which can negatively affect a company’s bottom line. According to a study by Wasp Barcode Technologies, inventory inaccuracies cost businesses billions of dollars annually.
Additionally, manual inventory control systems are susceptible to inventory fraud, as employees can tamper with records more easily in the absence of an automated tracking system. In a 2017 survey by Retail Knowledge’s Global Retail Theft Barometer, it was revealed that employee theft accounted for 28% of inventory shrinkage, illustrating the significance of this issue.
Moreover, manual inventory management often lacks real-time inventory updates, making it difficult for you to actively adjust your inventory levels based on consumer demand. This can result in either surplus, tying up cash in excess stock, or shortages, risking lost sales and damaging customer relationships.
Tech-enabled inventory allocation
Every retailer must have been required to change the shipping destinations and you might come up with these following questions. Is it necessary to allocate additional stock units? Or should businesses transfer a larger portion of stock to the warehouse where the demand is rising? Or do the businesses need to order a larger quantity of products?
Many retailers have been adopting technology innovations to effectively keep track of inventories in real-time. Besides, some powerful innovations can also aggregate meaningful data that enable retailers to make appropriate decisions.
Technology innovations can be implemented in several ways. Commonly, retail businesses decided to invest in robust ERP inventory software. Small and medium scale businesses can consider using useful stock applications developed for small and medium-sized online stores to simplify decision-making for inventory allocation.
ConnectPOS is also developed as one of the most powerful innovations in the retail industry. This solution can greatly assist retailers in managing inventory and tackle problems related to allocation thanks to its various features such as automatically collecting data and generating inventory reports.
Why do you need inventory allocation?
Demand for inventory
Regularly forecasting customer demand can make great contributions to eCommerce businesses. Although you can never accurately predict the exact amount of possible demand, you can consider implementing tools or applications. These innovations will support you to collect, analyse, and predict future sales patterns over time. From these valuable data, businesses can make proper decisions in terms of expense, manufacturing, labor hiring and marketing.
Access to inventory
A significant aspect of streamlining order fulfillment is that products are stocked at the nearest locations to the shipping destinations of your customers. You can discard the risks of arising problems during the fulfillment process originating from manual mistakes.
In order to avoid fulfillment problems, an inventory tracking system should be easily implemented and can connect directly to your online stores. You can then synchronize SKUs and orders in one place to view all inventory numbers, completion center, sales channels, and customer information.
Easy enforcement with order
Proper allocation of inventory affects the speed of order performance as well as the shipping orders costs. For example, suppose you realize that laptop sleeves are via the rooftops in San Francisco and Chicago. In that case, storage space in or near these cities should allocate more inventory than storage space in further areas.
Online shopping businesses bring retailers endless chances to thrive in the retail market. However, when the number of orders increases rapidly and more warehouses are built, retailers will have to face inventory allocation problems.
The development of technology also can greatly support retailers in tackling possible problems such as fulfilling inventory demand or delivery requirements. ConnectPOS, renowned as a top-tier inventory management system, offers retailers an extensive array of remarkable features to streamline their business operations. Harnessing advanced technology, ConnectPOS supports businesses by efficiently tracking inventory levels, reducing human error, and improving customer satisfaction. You can benefit from practical examples such as real-time syncing with e-commerce platforms, detailed sales analytics, and multi-channel inventory management.
ConnectPOS proves its value as a global-standard Point of Sale solution. Don’t miss out on the opportunity – contact us today for a risk-free 14-day trial experience, and take your inventory allocation to the next level!