Put yourself in the shoes of a customer; you go to a reliable store for a product that you really want, but it isn’t there! Immediate reaction? Go elsewhere. Stock shortages in supermarkets usually leave shoppers feeling frustrated and wondering as to why the goods aren’t available, resulting in the loss of business, which often goes to competitors.
Lack of stock can be caused by several reasons, but one of the most prominent being inaccurate inventory tracking. Inventory management demands for accurate stock takings, failure to do so results in unhappy shoppers! Implementing technology can drive improvement within inventory management by providing more granular data on stock quantities.
The Current State of Inventory Management
Inventory Management is the systematic approach of ordering and selling stock. New stock purchases are based on current stock levels and predicted demand. Retailers need to consistently monitor both sides to avoid shortages or over-ordering that leads to waste, especially when considering perishable goods.
Supermarkets must keep track of all outgoing products which are sold, alongside those lost through waste and shrinkage to gain accurate stock levels. Currently, stock levels are captured by a software system that’s activated when items enter the shop’s stock entrance from the warehouse as all products have barcodes allowing stores to capture the inflows.
Many retailers still adopt the manual inventory process of counting current stock levels and logging waste, which involves staff doing stock takes, counting each individual product and logging the information either with a pen and paper or in an internal tablet. This method increases the chance of human error, therefore leading to inaccurate figures.
The manual stock taking process can be so drawn out in fact, that once the information is available it’s often already out of date! This method of stock analysis has become seriously dated. It provides no real-time visibility and has no insight into movements of products. Other aspects of stock management such as retail shrinkage, which solely accounts for £5.5 billion per year, and customer driven waste, where products are abandoned and left on the wrong shelf leading to waste in perishables, lead to huge inventory inaccuracies.
Many supermarkets operate with the JIT supply chain method, but this method solely relies on accurate stock data and without this, there can be constant stock shortages. Typically, retailers will complete a stock count once every few months, in a selection of their stores (300 out of 1000+). This makes it incredibly difficult to spot trends (such as certain displays being prime targets for thieves) and overall is an inaccurate method of measuring loss. These inaccuracies in stock data hugely damage the effectiveness of JIT supplying and result in huge losses.
Mitigating Shrinkage With Machine Vision
The implementation of edge-based machine vision, which processes surveillance images in real-time can give retailers instant inventory data. This solution gives accurate data around shrinkage caused by accidental damage, theft, and products that have to be wasted.
For example, edge-based vision technology can improve the overall inventory management process by using video analytics from existing CCTV systems, actively identifying suspicious behaviour indicating to theft or product damage (dropped item). This information is then sent to a central cloud-based platform where the data is analysed using AI, to provide accurate insight into stock levels. These levels can then be used as a basis and be connected to the supply chain system, to automatically re-order stock when they reach the lower limit.
Our solution also identifies patterns over time from recurring behaviours, meaning stores can have data-driven insight into demand. For example, certain products may be in higher demand at a particular store or time of year and this information can be used to communicate with the supply chain system to order stock accordingly.
Why Are IoT Sensors So Important for Modern Inventory Management?
The implementation of IoT-driven technologies in supermarkets can help to provide more accurate figures on damaged goods and potentially prevent waste from occurring. This works by connecting sensors to cages, freezers and even the individual crates. For example, being able to identify any potential issues with the freezers would prevent future waste, this is done by the system alerting the maintenance team that something is not in sync and needs to be fixed immediately!
Sensors can also be attached to cages which then are tracked to see which items are leaving the warehouse and going out onto the shop floor. This method allows for the tracking of time out of cold storage, and offers alerts for when products are reaching their limit so goods are not left of shopfloor where they could perish.
This isn’t the future of retail inventory management, it’s the present! Many retailers are already feeling the monetary benefit of using smart systems to manage their inventory.
Implementing IoT technology massively helps to enhance inventory management and could save billions by tackling under or over stocking! If you would like to know how we can help improve your inventory management process, get in touch!