Inventory Distortion: The Trillion Dollar Problem Plaguing Retailers

Good inventory hygiene is like good dental hygiene: it’s not particularly fun, but if you don’t stay on top of it, the consequences can be serious. Keeping an accurate record of the items coming into and going out your warehouse or distribution center can help you address issues like “inventory distortion” before they become big problems that weigh on your bottom line.

Research firm IHL Group defines inventory distortion as the combined cost of lost sales from out-of-stock items, and deep discounts required to sell overstocked items. And it’s a big problem for retailers around the world. How big? The most recent estimates from IHL put the total amount of lost revenue opportunities worldwide due to inventory distortion at around $1.1 trillion.

Online sales accounted for more than 14 percent of total retail sales worldwide last year, making inventory distortion a nearly $150 billion problem for the e-commerce industry alone—a number that will likely increase as online sales continue to grow at a fast pace. Seasonal trends, product fads and the overall high level of inventory turnover in many e-commerce businesses exacerbate the issue, as do mispicks, misplaced products and returns that gather dust on the “wall of shame.”

Adding automation to your fulfillment operations is a fast and effective way to tackle this industrywide problem, providing real-time visibility into your inventory and optimizing the flow of products throughout your warehouse. Our AI-driven software calculates the most efficient inventory moves in the fulfillment process and tells our robots or your people how to make those moves.

In addition to picking, we handle inventory, cycle counting, sortation, replenishment and putback tasks with speed and accuracy. With every task that you automate, you’re introducing machine precision into your supply chain and eliminating the potential for human error.

Our comprehensive automation system eliminates the guesswork when it comes to inventory management, which mitigates your risk of running out of this peak season’s must-have product, or getting stuck with last season’s equivalent of the fidget spinner.

To learn more about inVia’s complete warehouse automation solution, contact our sales team today.