EconomyShortage in the retail industry: 5 tips to optimize...

Shortage in the retail industry: 5 tips to optimize inventory

(Expansion) – Some of the remnants of the pandemic that still affect various industries are around the weakening of the supply chain, especially in the import of inputs and finished products from the East.

This is due to the collapse in maritime freight, shortage of supplies and personnel, increase in freight cost, among others, which leads to a significant increase in the complexity of processes and an impact on the availability of products in retail .

The depletion of products in the main chains is estimated at close to 10% and, more importantly, the need to absorb the increases in input costs and freight expenses has caused a drop in profitability in the income statements of many companies that do not it will be sustainable.

This is already being reflected in inflation and the general rise in prices, which will have an effect on consumption and, consequently, on the local and global economy.

Although many of these problems are beyond our control, it is a good strategy to identify those that are within our framework of action to maximize product availability and optimize its use in stores and ensure customer satisfaction in what we do. remainder of the year.

5 ways to optimize inventory in the face of shortages

1. Put down the crystal ball and plan. The pandemic created fluctuations in the physical and digital demand for products that have affected trends and made accurate sales estimates more complex. It is advisable to establish a purchasing and demand planning committee that includes planning, sales, purchasing, marketing, finance and General Management.

Also, define a process that develops and reviews sales estimates month by month for the remainder of the year and convert it into a purchasing plan that anticipates possible obstacles and times to realistically have the product.

2. Understand and manage sell-out information . Having this data will be key to differentiating the demand for products in the different channels, chains, segments and stores. Working with averages is no longer enough, we have to fine-tune this information to ensure the correct amount of product in the correct places. The key is to optimize working capital and customer satisfaction.

3. Get out of the box. Spreadsheet-based software is no longer enough. The complexity of forecasting demand in businesses with multiple categories and SKUs, in a variety of territories, segments and stores is high, so it is essential to explore fast and efficient technological tools to make the right decisions.

Eliminating mattresses and inventory inefficiency is a necessity and technology is a great ally. There are numerous systems available at reasonable costs that, compared to the cost of losing sales or holding inventory, are much lower.

4. Think local. The import of products has its charm, but today it is not necessarily the best option. It is estimated that the complexity and cost of importing from Asian countries will stabilize until 2024. I suggest you evaluate the possibility of producing or buying inputs or finished products locally.

There may be many options in the local market: think about allying, partnering or investing with local producers to develop and secure the production you need. The United States is actively seeking to substitute imports of supplies and products from China with Latin American countries, mainly Mexico, which may represent an important business opportunity for domestic producers.

5. Make prices dynamic. It is possible to optimize the sale of inventories through price. The law of supply and demand is more relevant than ever and, although it is not about taking advantage of the inflationary environment, it may be necessary to ensure that the available product has the correct price to optimize its sale in different segments.

Dynamic and flexible pricing strategies according to demand can be useful. One strategy is to be aware of the prices of the competition and understanding the gaps by categories, segments, channels and regions, to avoid disadvantages that minimize demand or profitability.

How long it takes to return to normal supply chain processes will not be entirely up to us. Instead of paralyzing ourselves, we have to understand and activate the actions within our reach that, in a practical way, can be implemented to maximize our sales and the satisfaction of our customers for the rest of the year. As they say: if there are lemons… well, let’s do what we have to do with the best attitude and optimism towards the future.

Editor’s note: Jorge Saldívar is Managing Partner of BC&B Transformación de Negocios, a firm specializing in strategic and commercial advice for SMEs focused on retail. He is also Director of The Retail Community, the first business community in Mexico aimed at innovation in Retail. Follow him on . The opinions published in this column belong exclusively to the author.

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