Back office expert offers 3 tips for managing excess inventory, efficiency

By Powell Slaughter, Editor

HIGHLIGHT – With retail warehouses packed to capacity, many furniture dealers are resorting to more warehouse space. Sometimes it’s unavoidable, but by taking a closer look at exactly what products are available, how they’re marketed, and why they’re not moving, you can cut the fat from bloated inventory.

John McCloskey, Profitability Consulting Group

It’s a take Profitability Consulting Group President John McCloskey. McCloskey developed his back-office expertise in warehouse operations, management information systems and inventory control processes during a career in operations management for retailers such as Boyles Furniture, Furnitureland South and Ashley Homestores of Alabama. He sees a surge in plans to develop new warehouses in the wake of the pandemic.

“I did six warehouses last year after doing two in the previous 10,” McCloskey said.

With a specialty in data conversions, IT installations and custom software development, McCloskey believes retailers can leverage data more accurately to help clean up overcrowded warehouses, save on delivery costs and protect margins.

He shared three techniques his retail clients are successfully using to better control inventory levels, sometimes avoiding the expense of adding extra space.

Tactical delivery planning

When planning last mile delivery, use Google Maps (see delivery graphic) in conjunction with routing software to optimize loads. Say, for example, that “next Wednesday’s delivery truck” is 70% full. After identifying the route – i.e. where you are going (blue) – look for other customers not too far away whose full orders have arrived at the warehouse (green), then for customers accepting partial delivery orders still awaiting completion (orange).

“Look for customers who are in the way, near, or slightly beyond where you already plan to go,” McCloskey said. For stores charging a delivery charge, he added, “If I can add a stop on the same street or nearby, I’ve added 25 cents of diesel in cost with another $99 delivery charge. And the tighter your routes, the more reliable the delivery. Ask where you’re already going and see the opportunity to add stops without adding a lot of miles.

Prioritize “hidden” inventory

Build a unsold goods spreadsheet with the product in the warehouse in red and the sampled product on the showroom floor in green (see “sample report” chart).

“You’re looking for a product where there’s only red with no green,” McCloskey said. “It takes up space in the warehouse and your salespeople don’t even know it’s available in store.”

Find out exactly why these goods are at your fingertips. For example, an order may be placed with a container that is expected to arrive in three months. Another retailer cancels their order of the same merchandise, so it shows up early in the first store’s warehouse, long before it’s ready to go on sale. This knowledge can help fine-tune a merchandising plan to get the goods out there rather than sitting around for months.

“There are many reasons why an available product is not sampled on the ground,” McCloskey said. “The canceled special orders are huge. I’ve seen cases where 30% of what’s in the warehouse shouldn’t be there.

Automated Delivery Scheduling

The idea of ​​this new program is to provide a seamless, quality communication experience with consumers, from purchase to delivery; imagine an Amazon-like experience in a physical store.

Software versions are available for different warehouse automation systems. The program continuously monitors order status with customizable consumer contact rules for variations such as partial deliveries, tracking frequency (e.g. a custom order taking weeks or months would not provide status updates to consumers as often as an order set for delivery within a week).

When the item is ready for delivery, the system can send an SMS to the consumer with an available date and time range.

“The customer chooses their own schedule, and messaging always uses the same verbiage,” McCloskey said. “Everything is automated, so there is no misunderstanding of what is being said.”

See also: Retailers are honing logistics and back-office operations to offset pressure to reduce overabundant inventory