Inventory turnover ratio can improve with data analysis
When retailers look to improve operational efficiency one of the key performance indicators is inventory turnover ratio, or how many times in one year the total average inventory dollar amount is sold. While many factors affect inventory turnover ratio, one of the first places retailers look is the warehouse. An inefficient warehouse can negatively affect other areas of operation. If backroom workers can’t pull product quickly, order fulfillment will suffer. If retailers can’t determine where products are, stocking and offloading will be hindered. If warehouses are too big, merchants are wasting money. If they’re too small, retailers may run into out-of-stock issues.
So, where can savvy merchants look to begin improving warehouse operations to achieve a more efficient inventory turnover ratio? Data should be the first point addressed. Digital intelligence can significantly impact all other areas of the warehouse, with wrong, inaccurate or outdated information slowing down mission-critical tasks from being completed effectively. For example, inaccuracies regarding inventory numbers may result in warehouses ordering unneeded products from suppliers. This results in wasted floor space on top of spending extra capital on merchandise that may not end up being sold.
One of the reasons warehouse data ends up being wrong or inaccurate is because companies use a variety of different eCommerce solutions to track sales, orders and inventory management. If these various solutions don’t mesh well together, data mismatches are created. This is what results in the communication breakdown in the aforementioned example, when order fulfillment and inventory management systems don’t coordinate to reflect accurate inventory reports.
Creating clean product data can be a significant challenge, but retailers can achieve this goal by standardizing data as much as possible across channels. This results in fewer mismatches and other disasters that may occur somewhere along the way.
As is the case with any data type, warehouse data is imperative to the success of back-end operations. If merchants aim to improve their inventory turnover ratio, they need to set all of their different solutions in tandem to create clean and accurate data.