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Where the Heck Is the Inventory?

Tuesday, January 15 2008

Why can't I find what I'm looking for?  Ever?

I love Target - my place to shop for all of my household staples.  But they never have all of the items I'm looking for.  With a trip every three weeks, I always leave the store missing at least one item because it's out of stock, forcing me to make a second stop at a drug store or grocery store to buy the missing product.

And it's not just Target.  My local Ralph's grocery store (think Kroger, Safeway) just went through a massive remodel to add a pharmacy, Coffee Bean and Tea Leaf (think Starbucks) and other amenities to draw in more shoppers.   The result?  A considerably reduced selection of products (oh Vlassic Zesty Kosher Dill Pickles, where have you gone?). 

And it's not just retailers who are missing inventory or paring product lines (is Safeguard soap no longer made?  Ditto for my Glide dental tape).  Manufacturers are discontinuing products and creating new ones at an alarming rate. 

America is the king of one-stop shop.  We invented the grocery store, the mega-general store called Wal-Mart and dozens of knock-offs. So how do we find ourselves reverting to the old days of stopping at the butcher, the baker, the wine store, etc. to get what we need?  If I wanted that experience, I'd move to Paris.

THE REAL WORLD RETAILING TAKEAWAY
Customers and clients care about selection and price.  Period.

How can a multi-billion company like Target continually have inventory issues?  Having worked for a start-up retailer with 65 stores, I certainly understand the difficulty getting the right inventory into the right stores.  But Target has been around for decades and no doubt has the most sophisticated systems to ensure inventory is in its warehouse and stores.  Somehow that system is working quite right.

As small retailers, it's even more important that we have the inventory in stock.  It's another one of those customer service elements that can separate us from the big guys.

A bit ago, I wrote about the need for newness.  And that's true.  You need to offer new products for your customers.  But if you're going to discontinue a line, make sure it's for the right reasons as follows:

1.    The manufacturer is discontinuing the line
2.    The line isn't selling
3.    The line duplicates another line you're carrying that's selling better

Secondly, make sure you have the products in the store.  Bulk up on your best sellers so you never run out.  Do you know how to access your inventory position on your computer system?  Do you know how to look at product turns or weeks of demand to determine how much inventory you should be carrying?  If not, let me know, and I'll call in one of my merchandising experts to give the basics of managing inventory.

Get the right products in your store and ensure they are always there.  After all, if you don't have anything to sell, then you don't have a business.
 

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Latest Comments in Where the Heck Is the Inventory? posts

I enjoyed reading your post. I think it is practical information for retail or service business owners. The business owner would just need to apply those of the practical techniques you suggested that apply to the type of business they are operating.
By: Sindhney on 1/21/08 at 8:26 AM
Where the Heck Is the Inventory?
Is not delivering your line of business at the moment the customer is standing there waving cash around. I managed for a large pizza chain. Inventory there is, for the most part, perishable, and storage space for dry goods is always at a premium. So you don't want to have too much on hand ... but you also don't want to run out. This particular company keeps detailed HOURLY logs of sales and notes such events as SuperBowl Sunday and holidays because these mark a sales spike which can clobber you if you aren't prepared. The records go as far back as the store opening, so trends over time can be spotted, too. Louse up a major rush (Thanksgiving or July 4, for instance) and you'll see the ripple for -at least- a year. If you let your customers down, they'll return the favor. This means that inventory control is critical for that business ... and any other with perishable stock or financed stock. Good records are imperative and the only way to deal with employee turnover. In my case, I was able to compensate when ordering for upcoming major sporting events. A month or two earlier, while still an assistant manager at another location, I got totally clobbered when a national teenage dance competition at a major nearby hotel ended. They usually called us when they had these events ... but this time forgot. My stock covered that insane rush (3,000 teens and their families all wanting pizza at the same time!) ... but had next to nothing to open the store the next day. However, a quick run to the warehouse with my personal van and we were able to wait for the delivery truck that evening. Which points out some key items to consider: 1) you need to know your merchandise flow, and know it well; this means close estimates of sales volume -per item- and delivery intervals 2) you need to keep good records so that that experience is not totally lost when key people move on 3) when the football takes a funny bounce anyway, you need plan B and C firmly in place, and most of D waiting in the wings. If you want to remain in business, you can not get caught flat-footed. One big issue for larger retailers is the high cost of tracking such a volume, not just in specialized hardware and software, but also in training of floor personnel and skilled support staff. Frequently the bean counters seem to win fights in the boardroom that they should not be winning ... pressing systems beyond their real capacity because the IT salesman told them they could. They take lost sales, just as you were mentioning, because the spreadsheet tells them they can ... but they aren't accounting for lost customers. If I consistently have to go to a second store to get what I want, I might as well just go there first, eh? My little pizza store could live on paper records. Target can not.
By: BillinDetroit on 2/1/08 at 9:26 PM
Where the Heck Is the Inventory?
billinDetroit brings up an interesting point...that is, they ran out to the store to stock up on things that they ran out of. Having worked in a restaurant, we were used to running to the grocery store if we ran out of something or if an order didn't come in as expected. If you operate a retail business where you can get the product elsewhere in a pinch, then make sure you know your resources and take advantage of them in crunch times. After all, having more merchandise at a higher cost to you is better than having no merchandise at all.
By: Mike Kraus on 2/4/08 at 10:49 AM
Where the Heck Is the Inventory?
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