By Swetha Kochar, Founder & Partner, PKC Management Consulting
The global retail sector is constantly transforming, driven by the evolving expectations of consumers, growing e-commerce businesses, and widespread adoption of cutting-edge technologies. In India, the market is anticipated to grow to USD 1.3 trillion by 2025. This is in line with a global trend where the retail automation market is estimated to grow at a rate of around 9.3% CAGR from 2024 to 2030, says Grand View Research. At the heart of such change is smart automation in inventory management, important for the reduction of cost, minimum stock discrepancies, and an effective increase in work efficiency for a retail company. Today, speedy tracking of the stocks and data-driven analysis play a very important role in optimising the inventory and making it competitive in a rapid market.
Role of smart automation in retail
Inventory management is the backbone of retail operations, and especially in India, effective inventory management along with proper stock levels is highly critical to profitability. In the past, most retailers relied on manual processes; however, automation technologies like AI, ML, and IoT are increasingly being used by the retail sector to implement smart solutions on their inventory management.
Real-time stock tracking: A game changer
Retailers who handle large inventories across various locations need real-time tracking of stocks essentially. Using IoT sensors and RFID tags along with cloud-based tools enables retailers to attain constant visibility on stocks. Such oversight permits retailers to act faster in response to changes in demand, and avert overstock and stockouts episodes.
Using real-time inventory, retailers can witness a decrease in stockouts and overstocking, and as per Zebra Technologies, reduced stockouts and overstocks can reduce the cost of inventory by 10%. It results in direct cost savings as well as customer satisfaction while other benefits are left in terms of achieving the higher turnover rate of inventory through the advanced level of tracking.
Data-driven analysis of inventory
While real-time inventory tracking will give insight into the stock present at a given time, data analysis gives insight into future demand. After analysing historical sales data, seasonal trends, external conditions of markets, and much more, retailers can make proactive decisions regarding their inventory management.
Overstocking wastes capital in excess inventory; stockouts result in missed sales opportunities and annoyed customers. Achieving the right balance between supply and demand is a constant challenge for retailers. Smart automation solutions ensure the most appropriate level of inventory through automatic reordering of stock with predetermined thresholds and fluctuating demand patterns.
A McKinsey & Company study says that if the usage of AI in inventory control is done properly, this can help save up to 20% in carrying costs and reduce the stockouts by 50%. Today, the smart retailers apply complex algorithms that allow them to sustain optimal stock levels across networks.
Optimisation of storage and fulfilment through smart warehousing
Smart automation is not just tracking the inventory, but it also includes warehousing and fulfilment functions. Fast and accurate order fulfilment is essential to ensure customer satisfaction in a highly competitive retail environment.
Warehouse management systems automating storage, retrieval, and distribution activities are increasingly being taken up in the country. By using robotics and AI-guided picking systems, the time to fulfil orders can be reduced dramatically, and order accuracy also can be improved. While automated warehouses can cut labour costs by up to 40%, it is advisable that smart technologies should be integrated with warehouses.
Automation in enhancing omnichannel retail
Omnichannel retail has also complicated inventory management. Along with the expectation of perfectly integrating online and offline channels for shopping, synchronising real-time inventories has become a priority. A report estimated that nearly half of all consumers shop through more than one channel. This further underpins the exigency to keep up with inventory data on all these channels. Therefore, smart automation gives way to trusted inventory data by ensuring that discrepancies are prevented. This enables retailers to ensure product availability is correct for customers.
The future of retail inventory management
As the global retail landscape is upgrading, the importance of smart automation in inventory management will grow. Newer avenues for retailers to optimise their operations are thrown open by advancements in AI, IoT, and robotics. It is a market that increasingly places its premium on speed, accuracy, and efficiency, and by embracing such technologies, businesses will be able to remain competitive.
Overall, smart automation in inventory management has altered the face of retail. This is because a company can have real-time tracking of stocks, data-driven analysis, and automated warehousing, making it an efficient strategy for surpassing a chaotic and changing market. Interestingly, the future of retail is going to be determined by how well businesses can utilise such solutions in integrating them with their processes, both in India and globally.