Although technology has been made available to retailers to optimize inventory management, the presence of phantom inventory remains a headache that is difficult to overcome. Mark Garland, President and CEO of 4R, and Pablo Godoy, CEO and Co-founder of Frogmi, shared some thoughts and strategies on how to optimize store operations and inventory management to create a more positive customer experience.
Phantom Inventory is a common retail industry expression for goods that inventory accounting systems consider to be on-hand but are not actually available for purchase. There are multiple origins for discrepancies between the on-hand inventory and the recorded one, but the results are the same.
- Inaccurate Inventory Reporting
- Out of Stocks
- Lost Sales
The disconnection of inventory level and stock-outs leads to 2,6% lost sales for an average retailer. This problem can be even worse for slow-moving items, which are more challenging to identify on a daily basis.
4R and Frogmi are turning this inventory and store operations problem into an outstanding opportunity: connecting corporate strategies with store operations through advanced analytics and mobile solution (App) to improve store execution and mitigate these lost sales.
The partnership offers a way to improve store-level inventory positioning and availability through prioritized task management at the product level, resulting in real-time visibility, store and inventory optimization, and improved sales.
“4R has the capabilities to consolidate and analyze inventory and sales data from retailers and identify products at risk of phantom inventory. But after identifying the issue, something must be done to confirm and solve the problem. Our approach is task management at SKU level, sending prioritized actionable tasks to every store and product” – Pablo Godoy, CEO and Co-founder of Frogmi.
Frogmi’s Customer Success Team works directly with the client creating templates and workflows according to their needs, designing a process, questions, and actions that will be automatically triggered every time a phantom inventory event is alerted. This task can be a simple inventory report or something more complex as informing to supply chain about a stock-out or trade marketing about missing POP material for promotion.
The information and feedback retrieved through the App are available for the whole organization, from HQ to district and store managers. It can feed BI panels, KPIs, and the same inventory system, eliminating the gap between physical and recorded stock and providing information for data-based decision-making.
Store Connected Inventory
As retailers attempt to respond to customer needs, they continuously employ demand and assortment planning and rapid replenishment strategies to match supply and demand. Even with the best preparation, connecting corporate strategy and planning to in-store operation can be challenging. Task management at SKU level partnered with robust analytics will empower retailers and store associates. Some, but not all the benefits, are:
- Having the actual inventory on-hand that is needed.
- Ensuring inventory is correctly tagged & “shoppable” in the right place .
- Providing instructions and in-depth information to store associates, making them product knowledgeable and confident about product availability and their job.
- Improving the compliance of campaign and promotion implementation – marking down items at the right time.
- Prioritizing store associates’ time on the most impactful tasks, creating an efficient workflow, and fostering good habits.
- Increasing visibility and communication between corporate and store operations, keeping strategic initiatives, store operations, and performance in synch.
“Partnering with Frogmi gives our clients an advantage by improving data at the store level, therefore improving product in-stock positions while enhancing store operations. This helps us provide the best inventory visibility.” Mark Garland, President and CEO of 4R.