3 Ways Inventory Management Impacts Customer Experience

Meagan Douglas
Mon, Jul 17, 2017
Mobile data collection can help improve inventory management processes that  affect the customer experiences.
Mobile data collection can help improve inventory management processes that affect the customer experiences.

Inventory management is often approached as a backend system that is important to the business but is ultimately hidden from the customers -or is it?

This viewpoint makes sense from a sales and marketing perspective - most customers don't need to know how the warehouse team is managing inventories. However, looking at inventory management as a background task can have dangerous cultural implications, especially as organizations face pressure to get products out to customers in more flexible and responsive ways.

Of course, the first step is to modernize inventory management. You can't expect the business to consider it as a contributor to the bottom line if it is mired in manual, paper-based legacy processes. Business 2 Community reported that even expert typists make one error for every 300 keystrokes, yet many companies still expect employees to manually translate handwritten inventory notes into spreadsheets. This kind of error can't be tolerated, and organizations must work to modernize inventory management in light of their brand goals.

On top of all this, Industrial Distribution reported that changing customer expectations are leaving businesses needing to ramp up their distribution and fulfillment operations to maintain brand loyalty. This adds up to creating a situation in which inventory management is critical for the modern enterprise. Even if the warehouse doesn't seem to impact customers directly, companies must carefully consider how the choices they make in distribution settings trickle out to the rest of the business. Three ways inventory management plans can impact customer experiences are:

1. Reducing the Likelihood of Error
Inventory management systems provide transparency into how many of any good a company has, where those assets are stored and what orders they may be tied to at any given time. Furthermore, modern inventory management solutions help warehouse operators find the parts they need quickly and make it easier to update inventory levels in near real time. These factors add up to create an environment in which:

  • Shrinkage rates are reduced because fewer items get lost.
  • Broken goods are reported quickly to prevent inventory levels from dropping to problematic levels.
  • Repurchase orders are sent automatically when supply levels drop below preset parameters to ensure asset availability keeps up with demand.
  • Teams across lines of business can gain visibility into inventory levels to align sales and marketing strategies with product availability.
  • Barcode scanners or voice picking headsets are used to allow for mobile data collection, reducing the potential for error during data entry.

All told, these capabilities combine to have a dramatic impact on reliability within the warehouse. Because of this, the potential for error is reduced and organizations can create stronger customer experiences.

2. Giving Customers a Better Purchasing Experience
If you've ever been in a situation in which you've tried to purchase an item online that is only available in limited quantities due to production limitations, you may know how it feels to click "add to cart" only to try and checkout and find there aren't any goods available for sale. It's even worse if the order is processed and you don't find out until days later. Modern e-commerce solutions have begun working around this problem through tight integration between web platforms and enterprise resource planning solutions.

In terms of supporting the end-user experience, the ERP system will connect with inventory management systems and client order processing solutions and receive updates from both on a consistent basis. This allows the ERP to then interconnect with the website to alert users when inventories are low or even provide a specific count of how many units of a given item are available for sale. This kind of visibility is only possible in a digital landscape where supply and warehouse management systems integrate with the ERP, which in turn can connect to the website. This powerful data sharing ecosystem allows the mobile data collection work being done in the warehouse to pay off for customer-facing interactions.

Notifying shoppers of inventory availability isn't the only advantage available. Tight integration between inventory management, ERP and web systems also makes it easier to predict shipping times and finalize transactions, allowing for higher conversion rates on websites.

3. Keeping Costs Under Control
Lean operations have long been a foundation for warehouse operations, and cutting out unnecessary processes can enable organizations to spread savings on to customers. This is particularly evident in inventory management, where businesses have opportunities to create new value, but only if they are able to maintain transparency at all times.

For example, some manufacturers are moving to a just-in-time supply chain model in which inventory levels are maintained at the lowest possible threshold to support operations. A small quantity of goods may be stored in close proximity to production. With this base in place, companies will tightly align their supply chain and production environments to ensure that everybody has precisely what they need, when they need it. 

There are some inherent risks to this model, including figuring out how to respond to unexpected situations. But organizations that maintain inventory management data over time can determine how much supply they typically need, reduce the amount of excess stock they carry and establish mobile data collection and ERP integration workflows to keep all stakeholders informed of asset dispositions. This creates an operational framework where the degree of precision in the warehouse keeps up with the business demand, allowing for organizations to eliminate excessive supply, locate goods in close proximity to production and, potentially, reduce shrinkage because fewer goods are being left unused on shelves.

Customer expectations are shifting around mobile and web marketplaces in a wide range of sectors. Organizations that want to keep pace with these new demands must carefully consider how they can accelerate operations while keeping costs under control. Investing in strategic inventory management tools and updating processes in response to the new technology can lay the groundwork for better customer experiences. The warehouse doesn't have to be a cost sink. Instead, businesses have an opportunity to refine their processes to the point that distribution capabilities provide a competitive edge.

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