Multi-Echelon Inventory Strategy

The shopping, purchasing and product delivery disruptions are leading to a requirement for retailers to implement an inventory strategy that supports a multi-echelon approach to inventory placement and even inventory levels. This approach must take into account the inventory at all levels and all channels, including the extended supply chain pipeline plans supply to channels.  This requires a transparent inventory management that is updated from all echelon levels of the retail enterprise in order to support the fluctuating demands across channels and geographic regions.  This multi-echelon inventory strategy has become increasingly important as the consumer has been changing their approach to shopping and purchasing across the retail channels.  This will also only increase in importance as the consumers continue to revise their shopping and purchasing practices as new capabilities are developed.

Inventory management has become very complicated and especially for the large legacy multi channel retailers because of the changes in consumer shopping and purchasing.  The velocity of change demanded by the consumer will not slow down and this increases the importance of an inventory strategy that takes into account all locations and channels, including the extended supply chain pipeline, a multi-echelon inventory strategy, so that retailers can flex and direct inventory to the channels and locations required to meet demand.  This strategy creates a truly omni channel retail market that provides the flexibility necessary to adjust and support the quickly changing consumer demands.  This strategy requires inventory transparency across channels and location along with the ability to quickly and efficiently move the inventory across locations to meet fluctuations in consumer demand.  

I view this a culmination of the inventory strategy practices over the years with the addition of a cohesive transportation management practice to provide and support the necessary connections across locations and regions.   Efficient and flexible transportation capabilities are critical to the success of the multi-echelon inventory strategy because of the flexibility required to efficiently support inventory demands across channels and locations.  This means that direct to consumer delivery, store to store delivery, supplier to store, supplier to consumer, supplier to distribution center and distribution center to store or consumer practices must all be supported by the transportation management practice.  This is a lot to expect and I think it makes sense to partner with a provider highly experienced in these practices.

In addition to the transportation retailers must re-evaluate their store strategy to focus on a mix of product display, consumer purchases, shipments to the consumer and then most importantly shipments to other stores.  This must increase the product storage capabilities in the stores which is at odds with the most recent retail practices to eliminate stock rooms and place all inventory on display for purchase.  The current store strategy does not support efficient and accurate inventory tracking and transparency and the multi-echelon inventory strategy requires efficient and accurate inventory tracking across all channels and locations.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?