Understanding Inventory Shaping and Market Forces
For those business models that rely on procuring and selling inventory for their revenue, its important for the people who handle the inventory to have a clear channel of communication with the marketing team. There are companies where that isn’t always the case, and that results in wasted money, and slow reaction time. Slow reaction time is very painful especially in today’s marketplace. But in contrast quick reaction time and a dialed-in inventory will let you to eat into a competitor’s customer base.
So what do we mean by clear communication? There are certain areas and stats that Marketing needs to be looking at periodically and then communicating that information to the Inventory Management team. That might be weekly, bi-weekly, or at least monthly. Let’s take a look at some of those areas.
One of the key statistics across the board for the Marketing team is always traffic. It can be broken down into lots of sub components, but no matter what we are always looking at traffic and conversions (more on conversions another time). Item traffic is simple – how much traffic does an item receive? A category of items? Brand, model, trim level etc? But it is more than just your website, what about other platforms? Almost all of us now sell using listing / shopping services like eBay, Amazon, Auto Trader, Craigslist and others. Each of these platforms are competing with each other to give us sophisticated analysis of our inventory.
Sales can and often do vary by periods of time. If we build up and store historical data we can use this to project demand which has a big impact on how we shape inventory. There is seasonality – does weather effect your sales? Does it effect some areas of sales more than others? What about holidays, or significant shopping days like Black Friday (assuming your business does retail sales). Accurately projecting demand, and demand for specific categories of products can allow you to take advantage and sell into surges, or reduce the money tied up in your warehouse when traffic slows.
DMA (Designated Market Area) Traffic
Sometimes we are only working within a single DMA, but there are other times when we have stores in multiple locations over a large area, even national. Its important to understand traffic and interest within these audiences. This allows the inventory team to make smarter decisions knowing that they can take advantage of predictable, changing trends to reduce swings in demand.
There are even more areas of analysis that a solid Marketing team can provide to management to help guide business decisions on the procurement side. Too often people think of the Marketing department as a black hole that money disappears into and a radio advertisement magically shows up every few months. In today’s fast moving, digital and highly competitive marketplace a smart business must develop more skills and methods to succeed.
The flow of information from Inventory Management back to Marketing is important too. It allows a company to take advantage of things like manufacturer holdback, quantity buys, logistics savings, finance savings and more. Our goal is always to increase sales / move product. If we know in advance when there will be a surge or requirement to sell specific items or services we can develop an effective plan to make it happen. Look at the demand geography, plan the message and get in front of as many of our target audience as possible.
As a member of the Marketing Team we have the ability to analyze and report on lots of data. The key point being, that information can be very valuable to other stakeholders in the company.