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How to Optimize Inventory to Deliver an Omni-channel Experience

Fri, Dec 12, 2014



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Effective management of inventory has remained a principal challenge for fashion retailers. On one hand, retailers must carry sufficient inventory to minimize possible out-of-stock situations, while simultaneously ensuring that they avoid allocations in excess of demand which could harm their bottom line. In other words, the success of a fashion retailer hinges on their ability to efficiently align supply to demand. This is not a new phenomenon, however, this challenge takes on new dimensions when viewed in the context of the ‘age of the internet’. 

Today’s fashion industry moves at a dizzying pace. Where the industry traditionally worked around fewer seasons in a shopping calendar that unfolded in a fairly predictable manner, today’s industry must navigate an unpredictable and frenetic, year-round calendar.

Meanwhile industry dynamics are being overturned as the balance of power continues to shift towards the modern, ‘connected’ consumer. Today’s consumers can easily view the latest fashion trends online and have become conditioned to expect a steady stream of styles from retailers. This heightened level of demand has created fresh challenges for fashion companies in terms of anticipating and responding to market shifts, while also leading to new opportunities for those that innovate and align their supply chains networks to become more responsive to consumer demand.

Pre-requisites for Delivering a Seamless Omni-channel Customer Experience 

Consensus as to the importance of omni-channel business models is building and it is safe to assume that omni-channel retail will play a pivotal role in helping companies to navigate the complex and volatile fashion landscape of the future.

Industry leaders have already made significant overhauls to their business models in order to incorporate omni-channel features that seamlessly integrate their brick-and-mortar stores with online and mobile channels.

Omni-channel functionality however, requires omni-channel inventory visibility. Companies must develop a comprehensive and up-to-date view of inventory levels and consumer purchase behavior across channels. This can be accomplished by integrating sales channels and combining a company’s inventory into a common pool.

Companies that succeed in gaining such visibility will be ideally positioned to accurately view supply and demand for their products and optimize inventory allocations to ensure the right product reaches the right sales channel at the right time.

Leveraging SAP Fashion Management to Optimize Inventory Management 

SAP Fashion Managment has much to offer companies seeking omni-channel visibility. Combining extensive real-time analytics capabilities of SAP HANA with powerful in-memory processing, SAP Fashion Management integrates business processes across retail wholesale and vertically integrated operations within a single solution to deliver unprecedented visibility into supply and demand.

Visibility is further supplemented by the advanced predictive analytics capabilities built into SAP HANA that empowers companies to move beyond analyzing past performance by using data to anticipate future demand.

Omni-channel functionality however, requires omni-channel visibility. Companies must develop a comprehensive and up-to-date view of inventory levels and consumer purchase behavior across channels. This can be accomplished by integrating sales channels and combining a company’s inventory into a common pool.

While  prior systems were limited to performing allocation simulations overnight, which led to a greater degree of inaccuracy, SAP Fashion Management is capable of performing allocation simulations 80% faster - meaning that it can perform multiple simulations within the same time frame. This results in more up-to-date projections which a company can then utilize when taking corrective action prior to finalizing an allocation. 

Fashion companies that leverage SAP Fashion Management to make the transition to an omni-channel model will be well equipped to deal with fluctuations in consumer demand in the unpredictable fashion marketplace of tomorrow.

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