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ASCM Insights

When Inventory Really Counts

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Brands such as Michael Kors, Polo, Kate Spade and others want to “win” Christmas. Bloomberg’s Stephanie Hoi-Nga Wong wrote about how they might do that in “Christmas Becomes Inventory War Game for U.S. Fashion Brands.” 

“But the winner won’t be the company that sells the most — it’ll be the one that winds up with the least amount of unwanted merchandise,” she writes. “The idea is to improve profit margins, even if it means ceding some revenue.”

That’s right. Fashion brands are challenged with managing their inventories, just like manufacturers. And the holiday shopping frenzy creates even greater complexity, intensified by declining department store sales and discounting of top brands. Bloomberg reports that even with the discounts, brick-and-mortar stores didn’t see the sales they needed on Black Friday. Instead, shoppers are reaching for their phones, not braving the malls.

The expanding concept of omnichannel, retail stores working in concert with e-commerce, also creates inventory challenges. Hoi-Nga Wong presents the example of consumers who buy online and return to the store. “There’s a lot of speculation about whether retailers are really able to manage inventory properly in the world of omnichannel,” says David Bassuk, co-head of the retail practice at AlixPartners LLP.

Retailers and brands are aiming for smarter promotions, as opposed to constant discounts to boost sales and reduce inventory. Bloomberg reports that retailers are turning to new resources in additional to historical sales and loyalty data.

“In an era of big data, they’re relying more on analytics and machine learning – a form of artificial intelligence – to better maintain inventory,” Hoi-Nga Wong writes. Plus, some stores are employing radio frequency identification (RFID) tags to more efficiently track products.

Some things change, some never do

While retailers and brands make use of the latest technologies related to data, analytics and RFID, that staple of the APICS body of knowledge – inventory management – is as important now as it was 60 years ago, when APICS was founded.

Looking at the APICS Dictionary, anyone could observe how important inventory is to APICS; there’s more than a page and a half of words that start with “inventory.” Let’s take inventory optimization software, for example, which is defined as follows: “A computer application that can find optimal inventory strategies and policies related to Customer Relations and return on investment over several echelons of a supply chain.”

Inventory remains important to APICS because it remains important to businesses everywhere. That’s also why the APICS Certified in Production and Inventory Management (CPIM) remains the premier certification for internal supply chain business operations. If you have been thinking about earning your CPIM, now’s the time. Visit apics.org/cpim for more information and to get started.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer at ASCM, the largest nonprofit association for supply chain and the global leader in supply chain organizational transformation and innovation. Prior to this, he was the managing director for the Operations Consulting Group of American Express Tax and Business Services. His leadership roles have included project management, business process redesign, and individual and organizational alignment. Eshkenazi may be contacted through editorial@ascm.org.

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