Inventory and Big Data

Inventory Control with Big Data

                Inventory control is a hot topic in Industrial Engineering.  With today’s volatile economy eliminating waste is a major concern for retailers. The two main focuses of retailers today are to maintain customer loyalty and attract new customers. One way of achieving this goal is to provide consumers with variety. Their theory is more choices = more customers and sales.  But at what point does it become a financial burden?

                The article claims that customers actually become overwhelmed with too much variety. Instead of trying to flood the market with variety, retailers must use analytics to focus on what is actually selling. Customer buying pattern can isolate key items that can be focused on more. “Today’s retailers require an automated approach to crunching these data streams to identify customer-buying patterns for SKU Rationalization, cross-selling and substitution opportunities.”

                By providing variety that is not needed, retailers are driving up the price on goods that consumers are actually buying.  The company Emcien Corp. believes they can give retailers an edge against the competition by implementing their analytics and analyzing SKU data to trim waste to lower the cost of the products consumers buy most.

                I believe that this strategy could be useful in certain industries.  But for the majority of retailers, variety is what draws the customers in.  People go to Walmart because the low prices and the fact that Walmart is a one stop shop destination for the majority of household goods.  There are plenty of things that end up sitting on a shelf for stretches at a time without a stock out, but the availability for the low probability purchases that still occur are what keep consumers coming back.

Source:  http://emcien.com/never-stock-too-much-how-big-data-can-be-used-to-improve-customer-retention-rates-and-inventory-management/