Click-and-collect check-out options are becoming increasingly common among retailers and have seen a large uptick in popularity during the covid-19 pandemic. Many retails have jumped on the bandwagon only to realize that these options require solid processes for managing inventory data quality. If consumers are told something will be ready for pickup, only to find out in the store that it is not, the damage is not just a lost sale but a long-term loss in confidence in the retailer.
We asked our CEO and cofounder, Fredrik Eng-Larsson, to share his thoughts on the topic.
Akuret: Why are so many retailers struggling with click-and-collect policies?
I think the fundamental issue is that click-and-collect is more operationally demanding than many retailers think. Implementing click-and-collect is not just a matter of system support. Having the right systems in place is of course extremely important, but it is only the start. With click-and-collect you make a promise. You promise consumers that items will be available at specific locations, at specific points in time, at perhaps specific quantities. Consumers start planning the day based on those promises. If you cannot meet those promises it may cause irreparable damage to customer confidence.
Akuret: Are retailers having trouble meeting those promises?
In many cases yes. Research has shown that inventory data for a retail store, at a given point in time, is typically incorrect for 60-70% of the articles. When an item is in fact out of stock, it is still shown as available in the ERP system almost 80% of the time. This, of course, means that displaying the availability data from the ERP system to consumers on a website can be extremely problematic.
I have seen many stopgap solutions, where retailers instead of showing the availability from the system uses vague promises like “might be available”, or do not claim products to be available when the inventory level is below some threshold. None of these deals with the underlying problem, of course. And having these artificial solutions affect sales negatively.
Akuret: Why is the inventory data not in better shape?
Inventory data is notoriously difficult to keep accurate. In any retail store there are multiple processes that impact available inventory that are never picked up by any system as a transaction: theft, misplacement, obsolescence, etc. There are also many incorrectly registered transactions: incorrect deliveries, incorrect check-outs, incorrect returns, etc. All of this builds up quickly.
One would think great care would be taken to ensure high quality inventory data considering what an asset it is. The data is not only important for website display, it is also fed into a large number of algorithms used in automated replenishment and inventory planning systems. However, the importance of maintaining accurate inventory data seems almost like an afterthought in many organizations, leaving responsibility to a variety of stakeholders without clear overview and a coherent process for managing it.
The lack of responsibility and overview might be a reason so many retailers are taken by surprise when they implement click-and-collect policies. Few retailers seem to be aware just how poor most inventory data is, on the article-level.
Akuret: Is this not handled by inspections and audits?
Well, all retailers do inspections. All retailers have to inspect at product at least once per year, according to the law. How far above and beyond the legal requirements retailers go vary dramatically between retailers.
Still, even among retailers that spend significant efforts on inspections, most products are inspected maybe once or twice per year. And those two inspections might come during the same week because they are triggered by different stakeholders. For instance, the first inspection might be part of a yearly cycle count ordered by the finance department. The second might be ordered by supply chain because there has been a supplier issue reported. As a result, although the product is inspected twice in a year, inaccuracies could build up for almost a year.
Akuret: What do you see as a solution?
Any retailer operating click-and-collect policies needs to have a good process in place to ensure accurate inventory data. To avoid double work, this process should involve all stakeholders: business controllers interested in product availability; accountants and auditors interested in correct book keeping; supply chain managers interested in efficient replenishments; and store managers interested in not spending more time than necessary on counting stuff.
Akuret: What would be the way to start such structured work?
I think the first thing to do is to make sure someone in charge of data quality. If there is a Chief Data Officer (CDO), that would be the perfect role for this. Next, there needs to be a clear process in place for all work related to inventory data, where all stakeholders know their roles and responsibilities. The main activities of such a process include the planning, execution, and follow-up of all inventory data related activities. Different stakeholders are involved at different capacities in each of these activities, so enabling communication using the right system support is key.
For instance, instead of having the supply chain manager manually go through inspection data from the ERP system and then send emails to all store managers asking for additional inspections, there should be a process activity in place for how inspections are followed-up and system support for additional inspection being communicated directly to hand held devices in the store.
Once that is in place, click-and-collect will bring huge value.