Balancing inventory management to optimize customer satisfaction

Technology has allowed businesses to derive deeper insights allowing them to get a closer view of their revenues. The insights into revenue fluctuations correlate to customer experience (CX) which is common knowledge in most industries. However, some studies extend this relation to inventory management meaning companies can fix their revenue by cleaning up their inventory.

How are inventory management and customer satisfaction related?

Much like poor service or lack of understanding of customer needs or insufficient technological support, improper inventory management can lead to customer dissatisfaction. Inventory is a critical cog in the wheel of the supply chain for retail and e-commerce businesses. They rely heavily on inventory management to ensure products are delivered on time without having to spend any excess amount and/or resources on storing them. Customers often tend to switch the retailer or e-commerce platform when they transfer excess storage costs or when the delivery is delayed.

Similarly, businesses in other industries have their own products to build/manufacture/construct whose timely availability is affected by inventory management. Despite the difference in the nature of business, inventory affects how effectively they can deliver their product with the optimal number of resources. This allows businesses to keep the price point at a satisfactory level for customers in comparison with that of competition.

How to optimize inventory management?

It is clear that a well-maintained inventory allows for benefits that can be transferred to customers in order to improve the value of their experience. Let’s look at a few simple ways to optimize inventory management.

• Gain visibility of the inventory: It is important that business owners have visibility into their inventory to know the type and quantity of stock at hand. This allows them to streamline procurement to manage deficiencies in supply or limit excesses that take up space and effort on part of resources.
  
  
• Create interconnectedness: The larger an organization, the more complex and extensive its operations tend to be. An interconnected organization allows inventory stakeholders to keep track of the dynamic needs of the organization. This creates the chance to identify a gap before it even appears. Not often, but at times, large organizations require large spaces at short notice. Real-time communication makes it easier to alternate space allocation and resolve last-minute requirements in inventory.
  
  
• Build better statistical models: Standard statistical calculations to predict supply and demand do not encompass emerging factors inside and outside an organization. A dynamic market often makes it difficult to build a dependable model to forecast inventory. Business owners can benefit from predictive algorithms that have proven to pick the smallest of changes to study their effect on the entire model.

To enable change at the pace and scale that current market standards demand, it would be easier for organizations to implement intelligent tools with analytical and forecasting capabilities. They would not only help identify deficiencies but also assist in finding new opportunities to balance inventory management thus optimizing customer experience as the final outcome.

SAP Integrated Business Planning (IBP) for Inventory Management

Known to help companies effectively manage supply chain risks, SAP IBP’s cloud-based capabilities make it the perfect accelerator to improve inventory management and in turn customer experience, thereby boosting business profitability.

SAP IBP’s Excel-based user interface makes it easier for users to switch and adapt to the format in which insights are offered. It also offers capabilities that include exception management wherein focused planners are created for materials that are risk-prone while storing and moving thus buffering inventory risk. The IBP platform also utilizes advanced algorithms to predict and create robust statistical models that can run various scenarios considering different inputs and their effect on the lead time, forecast accuracy, and identify process deviations.

Leverage SAP IBP to absorb any demand variability and adjust supply uncertainty by identifying and addressing the root cause in time. Stabilize your supply chain.