Retail IoT: How to Streamline Inventory Supply Chains

Christoph Schroeder

Your inventory is the lifeblood of your retail store. Whether you are selling bath products or artisanal cheeses, you need to have a steady flow of products moving from the warehouse to the front room to please your customers. If most of your business relies on brick-and-mortar sales, a reliable inventory supply chain is necessary to ensure that you have products when you need them. Yet many retailers struggle with warehouse and front-store issues that can affect their sales line.

Inventory management is a challenge for most retailers. Merchandise tracking is never fully accurate once shipped products reach the warehouse floor and are placed onto shelves. Employees often rush to fill empty shelves without taking note of inventory numbers or updating depleted batch numbers in warehouse computer systems, and you end up unaware of product shortages until it is too late to get a shipment in on time.

On the opposite end of the spectrum, product overstock can lead to waste and high budget costs. Your inventory can be impacted by warehouse placement if you don’t have the proper backroom shelving system set up. Products may get lost among other items so you end up ordering too many products that can’t be moved in a timely fashion. If you have perishable items, you have to throw old products away.

Another issue is product quality. Merchandise such as food or beverages can be negatively affected by factors such as changes in temperature, pressure, or vibrations, and you may end up placing inferior products on shelves. If customers have a bad experience, it can damage your reputation and the future of your business.

Lastly, inventory management can be affected by employee theft. Without a  tracking and security system in place, you could end up ordering products to replace those that employees have taken.

Retail IoT: Stores focusing on technology for better inventory management

You cannot be at the front of the store helping customers while also managing the back of the store. You are busy with administrative tasks, talking with new suppliers or coming up with new marketing strategies to help your business grow. Yet finding a way to better manage your inventory must also be a top priority. The retail Internet of Things (IoT) may be one solution to improve product quality, reduce waste, and monitor stocked products.

The Internet of Things basically refers to the connectivity of “things” such as computers, networks, and equipment systems that can communicate and share data in real time without human interaction. In the retail industry, storefronts and warehouses are becoming equipped with innovative technologies that help keep track of your inventory and help you gain better visibility and traceability of merchandise.

Here are several technologies that you may be able to employ now or in the near future to enhance your inventory management processes.

Smart shelves

Smart shelf strategies can help you track inventory movement without impacting employee productivity. Sensors on smart shelves and RFID chips on merchandise link to warehouse computer systems. When customers purchase a product, updated inventory data is sent to the warehouse. Inventory alerts can inform workers when they need to restock shelves and order more products.

Store cameras

While cameras are not a new technology, enhancements have been made that allow you to better track inventory as it moves from the back to the front of the house. Smart displays show how much inventory is on the shelves. Cameras can also bring added security to your business to prevent product theft from employees or customers. Furthermore, this technology can be used to monitor store traffic, create heat maps, and gain insight on promotion effectiveness and other initiatives.

Track and trace sensors

The retail supply chain, or the time between when products leave the manufacturer and reach your store warehouse, can also benefit from IoT innovations. Sensors and beacons on products in trucks can monitor temperatures and vibrations during transport. This strategy is essential for food and beverage products to protect from sudden humidity, temperature changes, or vibrations that could adversely impact product shelf life. Once the products reach your loading dock, your warehouse staff can better evaluate for product loss. Furthermore, monitoring trucks with the help of geofencing can enable employees to spend time with customers instead of waiting for shipments.

Investing in retail IoT

According to Forbes, about 71 percent of retailers will be investing in IoT technologies by 2021. Business owners are recognizing how IoT tools can bring better visibility and traceability methods to their stores and warehouses. These technologies can streamline inventory management as well as make operations more efficient and cost-effective. As the retail market increasingly competes with online stores, these innovations can help enhance the shopping experience for customers.

In summary, IoT can seamlessly connect the front- and back-offices, boost process efficiency, and increase customer-centricity. This can help bring customers into the “sweet spot” of value, convenience, and experience.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Retail.


Christoph Schroeder

About Christoph Schroeder

Christoph Schroeder is Global Vice President of Vertical Merchandising and Supply Chain at SAP. He works with premier customers such as adidas, Luxottica, Giorgio Armani, and Tommy Hilfiger. Follow Christoph on Twitter @nightrain_x.