Ouch. According to the Guardian newspaper in the UK, RIM, Research in Motion, apparently has inventory of $216m of its Playbooks and is having trouble shifting them.
How could RIM get it so wrong? I immediately think of our ecommerce customers and their inventory. Are they less at risk because they sell the majority of their products directly to consumers via the web? Even if not, how can they prevent the same inventory problems occurring which can cripple cash flow?
1. By selling direct to consumers via the web, you have accurate sales data. RIM sells a great deal through channels and retailers, so it can be tricky to know if what they shipped has actually been sold on to end users. So having the accurate sales data daily from your web site sales, most orders of which are received and fulfilled immediately, I have my finger on the trend pulse.
2. Inventory levels change daily when selling via a web site. Having live inventory to the second, again to know trends of the different types of products also helps prevent inventory problems, including the case where you run out of stock. To have this live inventory, you need to be allocating at the point of order, scanning the barcodes on items during inventory picking as they are picked in your warehouse and when they are despatched. This will give you an accurate stock audit, especially when combined with scanning the product barcodes to ensure you are picking the correct items.
3. Knowing your slow moving items enables ecommerce companies to discount to rotate it out of their operation freeing up cash. To prevent inventory problems on certain products, you should have a target number of stock turns per year for different product categories specified in your inventory control software. Maybe RIM should do this like HP recently did with their tablet to clear their inventory, as everybody loves a bargain. Let's wait and see.
Author: Jonathan Bellwood