When did inventory management and planning become so complicated?
Why does it seem like every day our local stores look more and more like giant hardware stores, with merchandise quite literally stacked up to the ceiling?
I have no idea. But what I do know is that cutting through the noise requires one key thing – cycle counting!
What is cycle counting? It’s like a series of mini-inventory events, for which you audit your amount on hand and compare it to inventory records to ensure everything you should have on hand actually is on hand. The key difference between that and an inventory event is that cycle counts are smaller in scale, often limited to a single department or product line. And they are ESSENTIAL to limiting shrink and ensuring customers find the products they needed or ordered online.
Why? Well, remember that inventory events typically only happen once a year, maybe twice if all the planets are aligned. A lot of shrink can happen over the course of an entire year – and by the time you realize it’s happening, it may be too late to stop it. Plus, demand planning is informed by inventory systems. If they’re wrong, then it’s likely that replenishment orders will be wrong, too, and you may find yourself short on the most high-demand items (because you assume there are still plenty on the shelf.) That’s where cycle counting comes in – to routinely check for shrink and allow maximum time for intervention.
Some products my retail customers most frequently prioritize for cycle counting include:
Grocery – Cosmetics, razors, baby formula, cigarettes, teeth whitening strips
Hardware – Power tools, batteries, wall outlets, “smart” accessories
Big box – Premium electronics, cosmetics, baby formula, iPhone accessories
Technology/office supplies – Premium electronics, print cartridges, print paper, desk chairs
Pharmacy – Diet pills, condoms, razors, cosmetics
Now the question is, how can you make cycle or frequent counting work for you? Many retailers haven’t quite figured it out yet. The “traditional” method, consisting of paper-based book inventory with manual counts, is inefficient and is prone to human error. Even investing in homegrown, IT-built cycle counting solutions often throws up massive challenges getting true value from the practice. It’s hardly surprising, therefore, that my customers often ask me, “Should I build or buy my new cycle counting solution?”
My answer has never once changed in all my years in retail technology – always buy. Intelligent cycle counting solutions, like Zebra SmartCount, automate each component of the cycle counting process. It starts by equipping a retailer’s own employees with the right scanning tools. With these scanners in house at all times, your people can cycle count with speed and accuracy, virtually as often as you want them to. There’s even an analytical software aspect, which processes the data from every scan and automatically reports missing products and other troubling shrink trends to the right person.
So, let’s talk about four aspects of the current retail environment which make investing in a cycle counting solution an obvious choice:
1. Unbelievably complex inventories requiring higher levels of precision
You may be dealing with supply chain shortages and their resultant shelf gaps, but all retailers are still saddled with enormous, complex inventories comprising thousands of items of countless variations – and color and size are just the beginning. I don’t have to tell you the levels of complexity often vary between stores, especially if your organization has a mix of superstores, corner stores and/or outlets. This makes it almost inevitable that some locations will utilize homegrown solutions much differently than others, wreaking havoc on data results. Consistency is critical to ensure accurate cycle counting and achieve stable, right-sized inventory levels, and homegrown solutions often lack that component.
Intelligent cycle counting solutions, on the other hand, cut through inventory complexity via digital precision. These solutions offer both hardware devices for scanning, as well as software platforms that store and analyze the scan data. There is little room for misinterpretation or misuse with this level of automation, as users need only scan the barcode of each product and let the software platform do the rest. Retailers can eliminate inaccuracies caused by human error and miscounts with automated scanning and in-progress auditing.
2. Rising customer expectations driving higher standards of inventory accuracy
Customer shopping habits have changed since the pandemic. The risk of contracting Covid-19 prompted them to spend less time in each store and buy more items per visit to minimize exposure – a behavioral pattern that also led to increased reliance on curbside pickup, home delivery and other omnichannel shopping methods. This habit has become somewhat permanent, along with the expectation that if the retailer says something is in stock, it needs to be in stock when the customer goes to buy it. Nothing makes customers switch loyalty faster than finding a product out of stock after seeing it listed as in stock on a retailer’s website. Avoiding this problem calls for accurate inventory that is visible to customers across all channels. But how? All too often, homegrown solutions are cobbled together without thorough testing – thus making them too clumsy to ensure such accuracy.
Retailers can achieve this ambitious – but realistic – goal of completely accurate “in-stock” reporting by supporting wall-to-wall inventories with more frequent, guided cycle counting. Naturally, accuracy in the latter will drive accuracy in the former, making third-party intelligent cycle counting solutions a retailer’s best bet to help ensure precision across the board. The software platforms that accompany many of the best solutions drive real-time inventory visibility, ensuring that what the customer sees is in fact reality. It further helps ensure anything that could negatively affect the customer experience – such as missing products, quality issues and more – is immediately flagged and sent to the right people for prompt resolution.
3. Increased organized retail crime calling for new, more advanced loss prevention technology
It's no secret that organized retail crime is on the rise. In fact, a major drugstore chain recently revealed that since the pandemic began, it had experienced an alarming 300% increase in retail theft incidents. Unfortunately, if thieves get away with stealing once, they will do it again and again. This “vicious cycle” makes homegrown cycle counting solutions inadequate for identifying fraud patterns, especially if they do not have built-in reconciliation capabilities (a machine learning technology that may be beyond the skill sets of in-house IT teams). If their solution does lack reconciliation technology, users must wait for reconciliation to happen – during which time a theft problem can increase exponentially. Identifying and stopping theft quickly requires real-time inventory visibility via automated reconciliation.
Intelligent cycle counting solutions can help. The best solutions offer machine learning capabilities like automated, real-time reconciliation, which cuts significant time from homegrown solutions’ workflows that often require manual or after-the-fact reconciliation. Identifying inventory discrepancies quickly gives your loss prevention team a better chance of stopping incidents before they can morph into full-blown fraud cases that could potentially cost you hundreds of thousands of dollars.
4. Digital transformations putting new burdens on IT
Inventory management. Waste reporting. Store audits. Training programs. The list of processes and systems undergoing digitalization has never been longer for retailers – and the burden is all on IT teams. These resource-strapped workers are already eyebrows-deep in technical projects, meaning that few can commit to building or even simply maintaining a homegrown cycle counting solution. Even once built and deployed, homegrown solutions require significant technical support, including testing, troubleshooting, system upkeep and more short- and long-term services. This is well beyond the capacity of most retail IT teams, which are already slammed with mundane connectivity issues, hardware requests and other day-to-day projects required to keep other store operations online and the customer experience frictionless.
That’s why your best bet for an optimal cycle counting solution rests with a strategic partner.
The right vendor will have all the necessary technical resources in house, putting minimal burden on your IT team. The only thing your IT team may need to do is provide the vendor’s team with access to inventory data – a one-time action during solution onboarding. Ideally, the cycle counting solution provider you choose will furnish both the hardware and software components of its cycle counting solution and be available 24/7 to ensure the entire onboarding and optimization process is streamlined from start to finish. With the right solution, you can cut through the noise and conduct software-directed cycle counts that truly work for you – with corporate visibility and maximum accuracy to deliver critical inventory insights.
This website is a great resource for you and your teams, and of course, the Zebra team is always available to answer questions or talk through different cycle counting options with you.