People need to eat. It’s why the grocery business may be one of the best bets out there. But as we’ve come to realise in recent years, every wrong inventory decision will eat at margins and make it feel like you’re experiencing more losses than wins, says David Hawkings, Senior Vice President, EMEA, antuit.ai, a Zebra Technologies Company. I would wager that inventory planning has started to feel more like gambling than a game of strategy. So, let’s change that by ensuring you have the right intelligence you need to make the right call every time.
‘Automation’ isn’t the automatic answer
Inventory management is a Goldilocks situation, to be sure. Stocking too much of the wrong item, or even too many units of popular items as part of a safety stock strategy, can lead to significant losses when expiration dates – or seasonal merchandise – arrive. Shortages certainly don’t translate into profits, either. So, you source insights from wherever you can and turn to automation to ‘get it right.’ But how are you sourcing your insights, and what are you doing with them? Are you simply aggregating as much data as possible from your networks and hoping that a digitalised view will make it easier to see patterns and pinpoint the best next step? Or do you have a way to derive actionable intelligence?
Our Associate Vice President of Marketing, Mark Schwans, likes to say that ‘automation’ and ‘insights’ are the default answers to every problem posed by retail and consumer packaged goods (CPG) companies, especially inventory uncertainties and workforce shortages.
Want to improve productivity? The inevitable response is, ‘We need to automate our work.’ When people struggle to achieve results, they say, ‘We need more insights.’
As Mark points out, “Though they aren’t technically wrong, the execution is lacking. Insights often translate into more data and reports, and automation becomes ‘go faster.’ As a result, people are stuck with more directionless reporting and systems that execute poor decisions (but quickly).”
He couldn’t be more right.
Aligning inventory to shifting consumer demands isn’t as simple as applying the right formula, factoring in the right data points, or even speeding up the calculations. Automation alone won’t help you right inventory wrongs, and greater data aggregation may only make it harder for you and your associates to derive any real answers. Putting a new coat of paint on a wall will make it feel fresh, but it’s the same wall underneath. Imperfections don’t disappear. They’re just masked.
Likewise, applying new technology to the same old process will just make your inventory planning problems look and feel a bit different. They’ll still be there. In fact, if you may find yourself even more in the dark about actual demand levels and unable to get inventory ‘just right’ – even if more insights are technically flowing in.
If you want to be able to make the right stocking decisions, you need to be willing to rebuild the entire inventory system structure to allow the right type of intelligence to be gathered, analysed and actioned.
Gather the right intelligence in real time
As a grocer, you need demand intelligence that interprets demand drivers, predicts demand, and feeds inventory systems, such as replenishment and allocation, if you want to be able to make the best decision in the shortest amount of time. The same is true if you’re reliant on consumer packaged goods (CPG) companies and need to be able to coordinate replenishment effectively. Plus, employees need to know what customer demand will be and when. Where are their customers going to shop? Where do they want it fulfilled, and when? Collectively, you must all know where to place inventory across the entire enterprise – and supply chain – to meet goals while understanding the trade-offs.
Additionally, these demand predictions can’t remain static. You must be able to sense changes. A two-month-old forecast doesn’t always hold true. What happens if there is a heatwave, winter storm, or viral video? How do you adjust?
That’s why you’re going to derive the most value today from demand intelligence extracted using AI. But before you start ripping out and replacing your technology systems, make sure you verify the maturity, flexibility and interoperability of the AI with all your other information and actioning systems.
I can’t tell you how many times grocers have prematurely written off AI as the solution to their most pressing problems because they still struggled to get an accurate demand forecast after integrating an AI platform in the mix. They’ll tell me, ‘I’m going to stick with what I was doing before. It may not have been perfect, but at least I’m not wasting time and money on technology that won’t change a thing.’
As a career salesman, it’s my instinct to challenge their thinking – to tell them why they’re wrong. But I concede that AI, like automation, isn’t an automatic fix. If your brand-new replenishment, allocation, or pricing system does not provide demand intelligence specifically, then you’ll be no better off than if you had stuck it out with your old, inflexible, rules-based systems.
A system with a modern user interface (UI) that runs off newer hardware is a replacement solution – not an innovative, game-changing solution. And right now, the only way to stay consistently competitive – to know where you need to place inventory to meet customers’ new daily demands – is by doing things differently than you have before – by predicting demand differently, and with more intelligence.
So, before you try to gather more insights or automate inventory management to ensure you can properly replenish grocery shelves and right-size safety stocks, get some more background on AI. Have conversations with AI programmers about what the technology can do, especially those who know how to leverage AI to deliver demand intelligence. You don’t need to get into the nitty gritty of the system integration yet. Just have them show you how it can help you make smarter inventory decisions.
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