Imagine a world where you could see into the mind of your customer.
What if as soon as you became aware of what your customer wanted to buy, you could flip a switch and the product would be manufactured instantaneously? Then, at the flip of another switch, you could get it into your customer’s hands instantaneously?
Doesn’t that sound amazing?
You would never have to carry inventory ever again!
At NRF’s Big Ideas Session a couple of weeks ago, many retailers gathered around Vivek Farias, CTO & Co-founder of Celect, as he presented this ideal scenario he dubbed “nirvana.”
If this were possible, every unit of inventory you put your products behind would be a productive unit of inventory. Or, more appropriately, a retailer’s nirvana.
Obviously, the reality is a bit more complicated than that.
Lead times are inevitable, because, unfortunately, we don’t live in a world where we can read people’s minds. And we definitly don't (yet) have the ability to produce/deliver product instantaneously.
Because of this reality, lead times cost. Just as Vivek stated so accurately, the longer the lead time the bigger the chance you’re going to make a mistake. In other words, the bigger the chance you’re going to produce inventory you’re never going to sell.
In addition, the delivery portion of this “nirvana” presents a completely different set of challenges, especially when we think about it in terms of e-commerce. Retailers are moving more and more towards shorter delivery times, yet most cannot deliver products profitably within three to five days:
“As we march forward in time and as we think about what’s going to be table stakes as we go along, I’m going to make a bold prediction: within the next ten years, two-hour delivery is going to be table stakes. If you can’t do that, you are highly likely to lose the customer. It’s not happening tomorrow, it’s not happening next year, but it’s happening reasonably soon.” – Vivek Farias, CTO & Co-founder of Celect
So, how can we address these realities? How can we get the product to the customer as quickly as possible while maintaining profitability?
How can retailers get closer to nirvana?
Well, there is one way.
Retailers can leverage predictive analytics to shorten these lead times and bring you closer to demand, build an effective fulfillment network, and help retailers inch closer and closer to nirvana.
Now, I know you've probably already heard the term "predictive analytics," "artificial intelligence," or "machine learning" tossed around more so this year than ever before. We've read the articles. We've seen the reports. Most trends analyzing this technology only further suggest AI will result in a competitive advantage for most businesses within the next five years.
Clearly, there’s no denying these advancements can help retail, but how do we really understand the business impact?
Check out the full recording of Vivek's NRF Big Ideas Session below for a deeper understanding of how predictive analytics and machine learning can help optimize your inventory.