Oct 2015 - Business Strategy - Doc # RI259401
Business Strategy: How Lean Is Too Lean — Balancing Inventory Staging Strategies with Customer Satisfaction
This IDC Retail Insights report guides retailers in different techniques and strategies available to evaluate their current distribution and network strategy, as it pertains to allocation of inventory and safety stock, and grow their understanding of the impact these network designs have on their bottom line.
"Fluctuating sales trends and patterns leave retailers contemplating how to properly stage their inventory levels to meet consumer demand without missing the mark on demand. If you want to meet customer expectations on getting what they want anywhere they may interact with the brand, inventory levels will run extremely high, causing markdowns or losses later. If the system runs extremely lean with minimal inventory to avoid markdowns, there's a risk of dissatisfied customers who may complain publicly and hurt the brand's reputation or discourage other consumers, resulting in lost profits both in real time and down the line. By understanding the trade-offs in optimizing a retail supply chain and the different techniques for inventory placement, retailers can maintain higher customer satisfaction levels and reduce their logistics spend and stock-outs. By quantifying these options, retailers will be equipped to make decisions on what best practices are most applicable to their supply chain and how they want to proceed." — Victoria Brown, senior research analyst, IDC Retail Insights