How Inventory Management is a problem the size of Australia

Consumer Goods, Retail

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chem7/Flickr
chem7/Flickr

You’re about to learn some depressing news, so first, take a look at the cute Koala above. Ok, ready? Did you know that retailers worldwide are missing out on 7.5% of revenue due to out-of-stocks and overstocks? That translates to $1.1 Trillion….almost as much as Australia’s GDP! This is the big takeaway from IHL Group’s latest research report, but there are several other interesting facts worth noting, such as:

  • The combined wordwide cost of poor merchandise planning alone leading to Out-of-Stocks is $452 Billion, an amount greater than the entire retail economy of Canada
  • Inventory distortion costs retailers nearly $158 for every man, woman, and child on the planet
  • Over $252.3 Billion a year is the cost of Inventory distortion in North America, an amount equivalent to the annual revenues of Kroger, Home Depot, and Target combined.
  • The Asia/Pacific region contributes 39% of all inventory distortion

More than anything, these facts should remind us just how poorly most supply chains are being managed, and how big of an opportunity there is if we can solve the fundamental problem of getting the product to the consumer at the right location at the right time.

That’s precisely what my company is focused on.  If you’re interested in learning how we can help, here are a few resources to get you started:

  • First, watch the replay of last week’s demand sensing webinar, where we discuss how creating a superior short-term demand signal at the world’s largest retailer reduced inventory distortion and enabled  product to be there when the consumer wanted it.
  •  I also suggest you read the new whitepaper, Supply Chain’s New World Order”, where I also discuss the cloud, S&OP, and why a holistic approach is needed for supply chain management.

 

Aaron Pittman
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