Taking steps to improve data integrity and inventory accuracy
No retailer can afford inventory over-counts that misuse capital or shortages that neglect customer need. Especially as EDI and VMI move forward, processes that ensure inventory accuracy are critical to success, and today they are simpler to execute with vigorous inventory system technology.
"My dream was to make inventory management simple to avoid redundancy in warehouse handling, cut shrinkage, reduce discrepancies between distribution records and store receipts, and increase control, with easy-to-use processes and technologies," reveals Anthony DiPaolo, president and CEO of the 63-store Work 'n Gear apparel chain based in Weymouth, Massachusetts. "Today we have that ability, with live inventory verification and cross-checking that's helped reduce cost per item from 33 cents to 16 cents per item a 50 percent savings."
Reducing Merchandise Handling
Work 'n Gear moved to an integrated, NT-based pack-to-store network from Celerant Technology that electronically administers supply chain interaction from vendors to warehouse to stores, removing redundant product contact while providing check points all the way through.
"There is now little-to-no merchandise handling: products come in, are cross-docked and go right out the door, with no redundancy," says DiPaolo. Less handling per employee means fewer chances for mistakes, and lower overhead and shrinkage. It's an efficient inventory management method assuring data integrity. From anywhere in the world, as long as I can dial into our network, I get a live picture of the process, giving me total control over our merchandise."
About 50 different corporate users including finance, merchandising, marketing, distribution and IT as well as more than 350 Work 'n Gear store associates in five major cities, access the Celerant network to view and streamline the inventory management process.
"We need to be sure from every aspect of the business that our inventory is accurate, starting with the banks and auditors to making customers happy by providing the right product in the right place at the right time," concludes DiPaolo.
Cleansing Dissimilar Data Platforms
Supply chain visibility and inventory control are particularly challenging when a chain's thousands of stores are owned individually. This is the case for TruServ Corporation, whose 6,200 independent True Value retailers include Mom and Pop stores with minimal tech.
The primary inventory issue for True Value is clear supply chain visibility, from seeing the demand happen to getting the item back on the retail shelf, a complicated process since the firm operates as a wholesaler. The challenge of managing inventory accuracy is to collect as well as assure that the right files and fields from each location are cleansed in the same way, so that data coming from several different platforms will all fit together. A wide-scale supply chain visibility initiative, with development now in process, assures that similar data is gathered and cleansed in the same way to better analyze inventory and promotional lift, with the end goal of boosting chain-wide service levels and bottom-line results.
"We have embarked on an aggressive plan to get POS data from about 30 various store platforms, cleanse the data, and track and trend on a daily basis," states Michael Meier, director of inventory and operations for the True Value stores. Our primarily goals include increasing overall service levels, increasing promotional fill rates one full point, reducing lead times and cutting expenses."
Tools from Activant Solutions highlight Phase One of True Value's data cleansing strategy, which kicked off earlier this year, when the more than 1,400 stores already on the Activant Eagle retail system began preparations for sending POS data to headquarters. Two thirds of those stores began streaming data this summer, with the last third scheduled by the end of the year. The company is now choosing the next platform to target for data cleansing and will move group by group through its stores to unify data from the various POS file structures.
Meanwhile, a JDA warehouse inventory replenishment system helped reduce inventory from $600 to $250 million while boosting service levels from below 92 percent to a current run rate of about 96 percent.
A Quick View of Top and Slow Sellers
Maintaining an accurate, perpetual inventory to insure that buyers issue purchase orders at the right time for the right quantities is the biggest issue for Cavender's Boot City, a 46-store specialty retailer of western wear apparel based in Tyler, Texas. Cavender's buyers are under open-to-buy guidelines, so it is critical they spend allotted dollars wisely, and not bring in unneeded product based on inaccurate inventory data. In addition, because a centralized buying system has many products on auto replenishment, inventory data must be correct or reorders may be late, or cause overstocks if early.
Cavender's cycle count program combined with the Jesta I.S. Vision Merchandising tool streamlines inventory management and "substantially improves margins," says James Thompson, CFO for Cavender's, by providing a timely view of top and slow sellers. This allows Cavender's to realign product mix quickly, keep buyers on track, and speed turnover.
Weekly cycle counts taken with hand-held scanners acquire a precise summary of various product groups. That data feeds from POS into the Jesta system, where an Oracle-based ODBC reporting tool allows Cavender's to drill the inventory data, move it into Excel and/or Business Objects, and "slice and dice" vital statistics into simple reports that Thompson calls "at a glance" intelligence that is customized for buyers and other store and corporate users. Automatic variance reports of perpetual inventory are generated if counts are outside acceptable levels, where investigations into areas such as tagging and receiving are administered.
"The name of the game is taking time out of the inventory process," says Thompson. "We hire people for their ability to make judgments, not to spend time crunching numbers."