Guide to omnichannel inventory management

What is omnichannel inventory management?

You may have already heard of omnichannel shopping, which enables customers to have a seamless shopping experience across devices and touchpoints regardless of their buying journey. Omni channel inventory management compliments this process and helps manage your inventory on all the channels you sell on. This includes online stores, multiple physical retail stores, pop-up stores, social media platforms, and mobile applications.

Omnichannel inventory management ensures real-time visibility into your inventory through every touchpoint. Your staff will be able to access information regardless of where they are to serve customers in a streamlined and frictionless manner. As a result, your employees will know accurate stock levels and their location down to the specific warehouse and be able to provide this information to the customers.

Omnichannel inventory management also helps you manage returns and refunds efficiently, as you will always know the exact location of the returned product. In short, omnichannel inventory management is a backend-oriented process that helps your business streamline frontend operations.

Omnichannel vs. Multichannel

In multichannel retail, customers can shop on all available channels such as mobile, social media, online and physical stores, etc. However, the data is not synchronized between these disparate touchpoints, leading to a less-than-satisfactory shopping experience. Omnichannel software solves this problem by integrating mobile, social media, online stores, physical stores, and other touchpoints. This ensures your customers will always be able to purchase from the existing inventory from all locations.

While there are clear benefits to adopting an omnichannel shopping experience for customers, embracing omnichannel inventory management is essential for retailers. In a multichannel scenario, businesses will find managing inventory from different touchpoints challenging as they are not unified. This results in siloed datasets and inconsistencies that reduce efficiency and productivity – in other words, you will face issues related to overstocking and understocking.

Omnichannel focuses on customer experience and assumes the importance of seamless backend operations. As a result, seamlessness trickles down to inventory management and stock control, resulting in accurate stock visibility across locations and efficient supply chain integration.

5 Benefits of omnichannel inventory management solution

Improved customer experience

Although you may have an omnichannel shopping strategy in place, your customers may still encounter difficulties while purchasing. It's important to remember that it's not just about being able to purchase at different touchpoints, but it's also about how efficient the entire shopping experience is. For example, if customers do not find the product they want on a particular touchpoint, only to find it somewhere else, they experience friction during shopping.

In addition, you, as a retail business, stand to lose a valuable sales opportunity. By ensuring omnichannel inventory management, you can significantly enhance customer experience by improving product visibility, making sure that stock availability is transparent, and enhancing customers' trust.

Unified data from multiple channels helps you present the latest and most relevant information to customers, whether in person or online. Last but not least, omnichannel inventory management enables you to deliver superior customer support and personalized service.

Increased sales opportunities

Omnichannel sales are not just about making your products available on touchpoints so customers can purchase easily. It's also about ensuring they can pick the products they want regardless of where they buy them.

An omnichannel inventory management helps you to allow customers to purchase online and pick up in-store or buy online and return in-store. This opens up new sales opportunities that did not exist previously and allows you to increase your revenue. Customers won't be restricted to a single touchpoint to make a purchase, which paradoxically gives them more time to think before they make a purchase.

This extra time to make a purchase decision offers customers the freedom to control their buying journey, which enhances brand loyalty and trust. Both directly and indirectly, implementing omnichannel inventory management helps increase sales opportunities.

Improved inventory visibility

Many retailers find it challenging to know precisely how many items are left in the warehouse at any time, especially in multiple locations. This is further complicated when people access information from different devices. Inventory visibility allows you to prepare for across all locations and ensures that you can satisfy your customers without making them wait.

For instance, you can identify the best routes possible to move products and reduce shipping expenses. This helps you increase overall efficiency and ensure that you also have an adequate inventory level at all times. Demand forecasting becomes more accessible as well, as you can check the SKUs, destination of products, and other granular details.

Inventory visibility also helps you to reduce the problem of overstocking and understocking; you will be better able to minimize losses and optimize your stock distribution. All these steps help you ensure customers have access to the right products at the right time.

Efficient order fulfillment

One of the key benefits of an omnichannel inventory is its ability to allow orders to be fulfilled across all available locations. As orders are routed to the right location preferred by the customer, your customer support team will be not overburdened. Your customers can choose to pick up from a desired location, or have it delivered at the preferred location.

An omnichannel inventory management also ensures that your order fulfillment workflow is unbroken and that all sales channels and fulfillment centers are in sync. The system identifies the shortest distance possible and the delivery speed that's most optimal for each customer and implements a returns mechanism that works for everyone involved. As a result, your order fulfillment process gets streamlined, and you can save more money.

Omnichannel inventory management ensures seamless communication between touchpoints where orders are placed and the backend locations where products are stored. E-commerce order fulfillment depends on efficient inventory management, and an omnichannel approach is absolutely essential today. In addition, you can keep customers updated regarding their order status at all times, which enhances trust and brand loyalty.

Optimized inventory levels and replenishment

Omnichannel inventory management system helps you optimize inventory levels and replenish your stock easily. It fetches data from all sales channels and helps predict demand and market trends accurately. This allows you to stock products adequately at the right warehouses or locations, and helps eliminate overstocking and understocking issues.

When overstocking occurs due to unforeseen circumstances, an omnichannel inventory management solution helps you identify the best way to clear them. It may suggest offering smart discounts and profit-oriented clearance sales, which helps communicate with discerning customers at the right time.

An omnichannel inventory management solution also helps ensure your capital is not locked in excess inventory. It frees up your capital to use it for more pressing needs.

5 Key features of an omnichannel inventory management system

Multichannel listing management

It's become essential for retailers to be available on multiple online marketplaces and shopping platforms. In the same breath, it's also crucial for retailers to have brick-and-mortar stores, as customers have slowly begun to crave in-store experiences.

Moreover, businesses must also list their products on social media tools such as Instagram, Facebook, and other platforms enabling e-commerce operations. As a result, it is essential to use an omnichannel inventory management solution which connects different sales channels from a centralized backend platform – this results in accurate and real-time inventory visibility.

It allows retailers to list their products with accurate information and update them simultaneously as and when required. Most importantly, product descriptions, pricing, and availability remain uniform across channels, enhancing customer trust and loyalty.

Centralized inventory control

Centralized inventory control is essential to ensure you have access to information from different warehouses and fulfillment centers. Your staff can track inventory levels in real-time and enhance operational efficiency. An omnichannel inventory management solution allows you to receive automated alerts concerning reorder points and stock levels when they are low.

You may also set up notifications to ensure that all connected devices receive important information regarding inventory management. This is very helpful to both frontend and backend teams so that orders can be fulfilled in time without causing any delays.

Centralized inventory control also helps you to optimize your stock and prevent understocking and overstocking. It also enables you to conduct inventory reconciliation regularly so there are no discrepancies. If there are any, you can trace inaccuracies to their source and take the necessary action.

Order management

Retail space has changed romantically in recent years. As store owners try to balance online and physical store order fulfillment, order management is an important feature to look for. Omni channel order management ensures you can automate order processing by streamlining workflows efficiently.

You can automate most order-related processes smoothly, from receipt generation to fulfillment and shipment. You can also prioritize certain orders based on customer type or delivery deadlines. Concurrently, you can enable customers to track their orders in real time while you manage back orders efficiently.

With multiple integrated payment options, customers can pay without encountering difficulties on all touchpoints and channels. This helps ensure that customers gain access to a seamless buying experience, and you get to increase your sales revenue.

Cross-channel fulfillment options

Buying journey is no longer linear thanks to the availability of multiple touch points and channels. Customers begin their search journey on our website and probably end up at the store to take a look at the product. They may return home and order on a website where a better discount is available and decide to pick it up at the store again.

Multiple possibilities can exist simultaneously, making it difficult for retailers to fulfill orders efficiently. Cross channel fulfillment automatically helps you fulfill orders across different sales channels. Customers decide where, when, and how they want to start and finish their buying journey — omnichannel inventory management enables this behavior.

Thanks to cross-channel fulfillment options, you can offer flexible fulfillment methods such as shipping from the store, Dropshipping, etc. You can also make use of available inventory from different locations to fulfill customers needs. Other benefits include reduced shipping costs and faster delivery times.

Supply chain integration

Supply chain integration is the most crucial feature you must look for in an omnichannel inventory management solution. This helps you connect with suppliers on demand and automate the inventory replenishment and procurement process. You will also be able to coordinate logistics and ensure that all your staff have the necessary information to process orders quickly and efficiently.

This is made possible by a centralized platform that exchanges data between different interfaces in real time. You can also reduce procurement costs by making supply chain integration compatible with an omnichannel strategy. You can choose the windows closest to you and ensure that time and money are saved. It must be remembered that this results in efficient cost management and lead time reduction.

Challenges Implementing Omnichannel Inventory Management Solves

Inventory visibility

• Siloed data: If you already have several disparate systems and channels, your data may be siloed. Implementing omnichannel inventory management gives you the opportunity to cleanse your existing data.
• Inconsistent stock availability: It may not be physically possible to keep your stock available across all touchpoints and channels. Omnichannel inventory management solves this issue quickly.
• Erratic customer demand: Customers may be fickle-minded or have demands that they cannot fulfill. In such situations, a centralized omnichannel inventory management will help you.
• Real-time tracking: You may not be able to accurately set up real-time tracking unless your shipping and logistics partners also cooperate. A centralized interface gives you a bird's-eye view of all your orders and inventory.

Supply chain processes

• Poor coordination: Inventory management may only function properly if you prioritize coordination in your workflows. Implementation synthesizes collaboration, coordination, and communication into your organizational culture.
• Fluctuating lead times: Inventory management will not go very far if you do not already have a process for initiating and completing orders that focuses on customer experience. Implementing a holistic omnichannel inventory management solution gives you more power over lead times.
• Logistical issues: A key challenge that retailers face is deeply embedded problems within their logistics management workflows. Post-implementation, problems can be identified and rectified as soon as they're discovered.
• Vendor-related hurdles: Despite having the latest inventory management solution, vendor-related delays, hurdles, and inefficiencies can spill over and result in productivity loss. With an omnichannel inventory management tool, communication with third-party entities becomes streamlined.

Integration of systems and technologies

• Incompatible systems: Inventory management may not go well if your hardware is outdated. Implementation audits ensure you have the opportunity to upgrade to necessary technological configurations.
• Human errors in data: If there are pre-existing errors in your data, inventory management will not go well. Implementation is an opportunity to professionally cleanse data and remove all errors humanly possible.
• Lack of technical expertise: Your staff may not be trained well enough to handle the inventory management solution. The trick is to choose an omnichannel vendor that offers training and enjoys top-notch after-sales support.
• Budgetary constraints: If you do not have the right budget for the right tool, you may end up compromising on your tech stack. An honest discussion with your vendor solves this issue.

Data accuracy and consistenc

• Ineffectual processes: Often, data needs to be more accurate due to problems within existing processes and workflows. Implementation is again an opportunity to audit all your existing data thoroughly.
• Lack of data integrity: As data remains siloed where inventory management is not omnichannel, there is a high chance that your data integrity is not uniform across all available channels. Upgrading is a great opportunity to adopt more modern ways.
• Delayed updates: If you use a legacy inventory management system, you probably will not have a centralized platform where data is updated in real time. This causes errors, outdated information, and other issues that result in data inconsistency and inaccuracy. You will benefit from automatic updates.
• Duplicate entries: A significant challenge during the implementation of the inventory management module is the presence of duplicate records and redundant data. Expert vendors handle these problems carefully and rectify them without affecting the single source of truth.

Cross-channel returns

• Customer dissatisfaction: Studies show that customers are most infuriated when they can't easily return products. You can avoid this by letting them return products seamlessly on all touchpoints.
• Existing inconveniences: It is important to enable cross-channel returns so that customers are not inconvenienced when they already have something they do not want. Omnichannel inventory management solves this by eliminating friction.
• Poor return logistics: Your existing return mechanism may not be efficient enough and may have damaged your brand due to poor customer experience. A seamless logistics management tool integrated with omnichannel inventory management eliminates this issue.

How Can Businesses Overcome These Challenges Instantly?

To overcome these challenges, choosing a vendor who intuitively understands your needs and requirements is essential. Your chosen vendor should also be able to suggest tools and techniques that help improve your existing data and make migration to the new omnichannel inventory management tool easier.

Priority Retail is well-equipped to help businesses rev up their inventory management and deliver an omnichannel experience to their customers. Priority retail is a centralized platform integrating omnichannel inventory management with other modules and features.

This allows you to shift from legacy tools to a future-proof platform that enhances sales figures and ensures customer satisfaction. It makes your inventory visible from different locations and channels and streamlines all your supply chain processes. The result is that your customers will grow more loyal to your brand thanks to superior shopping and returns experience, excellent customer support, and timely ticket resolution.

Best Practices for Omnichannel Inventory Management

Integrate systems and data

To begin with, use a centralized software platform that integrates data from all sales channels. This helps eliminate siloed data and inaccurate predictions. In addition, you must also focus on seamless communication between POS systems, ERP, and other business software programs.

Track your inventory levels

Successful inventory management depends on how closely you monitor your inventory levels. It is important to automate this process and ensure that you receive notifications when stock levels are at risk of either going below or above the set thresholds.

Integrate supply chain

To help integrate the supply chain with your inventory management, it is essential to put collaborative planning in place. This also enhances inventory visibility and transparency, which are necessary to ensure smooth logistical operations.

Geo-based stock positioning

Knowing where inventory is located is vital to fulfill orders accurately. Position your inventory strategically across multiple warehouses. Use demand forecasting to understand which products sell better in your physical retail stores.

Customer experience and satisfaction

Nothing is more important than focusing on customer experience satisfaction. However, to enable this, you will have to ensure you have a strategy for omnichannel order fulfillment. Omnichannel inventory management, in addition to excellent customer service and in-store shopping experience, is essential for this purpose.

Demand forecasting and predictive returns management

Machine learning and advanced analytics can help you predict when and how a customer will return a product. You can use historical data to predict customer behavior and ensure smooth returns management. This elevates your stature in the eyes of customers and crystallizes brand loyalty.