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The Supply Chain Management Blog covers the latest in SCM strategy, technology, and innovation.

Out-of-Stock, Overstock, & Returns | The $1.75 Trillion Dollar Loss That Won't Go Away

Guest Author

Diego Pantoja Navajas, VP WMS Development

Maybe it’s the fact that high season is about to begin – but I get the same thoughts every year around this time. What are businesses planning to do to manage losses this year? It's an issue that raises its head annually – and it’s not a pretty sight.

Two years ago it was reported by CNBC that the inability to efficiently manage inventory cost retailers $1.75 trillion dollars.

We don’t know yet how much that number will be this year, but it’s safe to assume it will be at least as much.

And for the record, that’s did cost, not could cost. Retailers lost $1.75 trillion due to inadequate inventory control as it relates to out-of-stock, overstocked, and returned inventory. If retailers chose not to address this issue and should they have decided to keep their warehouse management systems in neutral, then that number will probably be bigger this year.

This just astounds the development team here at Oracle WMS Cloud as we feel this is an unnecessary loss of revenue that can be mitigated simply by implementing a digitally connected, end-to-end supply chain system.

The issue – as we’ve covered before in this blog – is that fulfillment operations haven’t kept up with technological advancement the way selling has. The modern selling experience is connected, cloud-driven, user friendly, and dynamic. It is omni-channel, totally digital, and highly complex.

Customers assume that when they make a purchase from their living room or mobile device or when they ask for a selection to be shipped to a store for pick up, or when they return an item purchased online, that the system in place managing their transaction is as connected and digital as the sales tool they used to make the purchase.

However, this still isn’t usually the case. Fulfillment operations and processes have not kept up with the reality of the digital marketplace. In fact, at the end of 2017 there are still retailers and manufacturers using clipboards and paper to fulfill an online order. There are certainly operations running on spreadsheets or on-premises machines – dinosaurs – systems over engineered to within an inch of their lives -- with no “real time” visibility into inventory, no real connectivity, and certainly no visibility across the supply chain network.

As that CNBC article stated way back at the end of 2015, this misalignment between sales and fulfillment means that retailers are “falling short on their promise” to consumers. They are struggling to “get a read on how much merchandise they have and where it’s located….”

Two years later and businesses are still suffering this way. They don’t have to! All they have to do is update their technology.


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THE CONNECTED CONSUMER
A connected consumer requires an end-to-end, connected, fulfillment solution, and connected fulfillment solutions are the only way to solve the real problem – which is the lack of real-time inventory visibility.

Fixing fulfillment problems isn’t about having more inventory on hand than is needed. It isn’t about having more seasonal employees, routes, or trucks. Fixing supply chain execution – connecting it to the consumer — means having a system in place that is able to manage inventory at a macro and micro level.

The connected supply chain can manage inventory because of increased visibility across the entire supply chain and fulfillment network. That means visibility of pallets, visibility of parcels, and visibility of pieces  even going down to the store inventory shelf. The connected supply chain offers visibility that is both granular and expansive.

The only way to meet these needs is with a powerful warehouse management solution – akin to the technology that made the promise in the first place.

And this technology exists. Solving fulfillment solutions is exactly what Oracle Cloud WMS does. Oracle Cloud WMS is the solution that offers real time visibility into your entire inventory – available to anyone with a smart phone, a browser, and access to the Internet.

We’ve spent nearly a decade creating a connected fulfillment network. So whether it’s managing overstocks, returns, or eliminating out-of-stock situations, Oracle Cloud WMS has your fulfillment needs covered. There is no reason in the year 2017 for retailers, wholesalers and manufacturers not to have dynamic, scalable, cloud-based, distribution centers, facilities, and stores supporting their supply chains.

This fulfillment gap – this misalignment of expectation and delivery can be solved with process automation, visibility, and total inventory management across your supply chain network. It’s the only way businesses will meet the demands of continued eCommerce growth and customer expectations.

Why not take a look at all the solutions and connectivity Oracle Cloud SCM has to offer and build a fast track to an intelligent supply chain?

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