What Does ‘Soon’ Mean for Inventory Planners

A highlight of my year is the annual Direct Tech (now SPI) User Conference. (SPI acquired Direct Tech earlier this year.) This event brings together SPI clients for three days to network with their peers, learn more about SPI software applications and services, and discuss best practices related to merchandise and inventory planning.

This year’s keynote speaker was Mike Kallett, CEO of HeadScratchers, a consulting company dedicated to helping business professionals improve their critical thinking, problem-solving and decision-making skills. Mike presented many great critical thinking and decision-making process ideas, all of which apply to inventory planners.

One idea that's central to his instruction is the importance of context. Anyone needing to make a critical decision must understand the context in which the decision is to be made. A great example he shared was the definition of “soon.”

Fifteen years ago, “soon” meant one week to two weeks for retailers. If you were sending inventory allocations to stores, it was fine to have the product arrive in a week or so. Online customers were generally happy to get delivery of their order in a week. Today, the definition of “soon” is very different. Same-day, in-store pickup of online orders is now commonplace. As this recent CNBC segment shows, leading retailers Macy’s and Amazon.com have established same-day delivery in multiple markets.

As Kallett said in his keynote address, in 2015 “soon” means “now” — and that radically changes the context of the decisions inventory planners must be prepared to make on a daily basis. This new context of now requires immediate inventory planning responses in two areas:

1. Automation: Take advantage of current, proven technologies to automate standard processes such as allocations, replenishment and reordering to the highest degree possible. While customer demands for now need to be addressed individually, the majority of your business can still rely on time-tested systems and processes. By automating key tasks to the highest extent possible, you’ll free up more time to address these new customer needs.

2. Exception handling: As the "I want it now" trend continues, it will exert enormous pressure on your existing handling processes. Clearly, what worked yesterday won’t cut it today; you’ll need to introduce new procedures for satisfying those now demands. The best option here is to take a customer-critical approach. Whether the need is for daily, real-time or near-real-time response, you’ll need to identify those parts of your business that require more immediate attention — e.g., urgent store replenishment or store-to-store transfers — and put exception management ownership and processes in place to address them now.

To overstate a pun, “act now” to respond to the new retail context of “need it now.”