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Composable Inventory Management Blog
Devadas Pattathil

How Composable Inventory Management Wins in Omnichannel

In today's retail landscape, customer expectations are higher than ever. They crave a seamless omnichannel experience where they can browse online, order from their phones, and pick up in-store – all with the peace of mind knowing exactly what's in stock. This puts immense pressure on retailers to bridge the gap between online and physical stores, ensuring efficient fulfillment, accurate stock levels, and healthy profit margins.

The limitations of traditional inventory management systems that are bolted on to legacy order management systems (OMS) are becoming increasingly clear. They simply can't keep pace with the dynamic omnichannel retail landscape.

That’s exactly why the time is now for composable inventory management rooted in a microservices-based architecture and supported by artificial intelligence (AI) and machine learning (ML).

Limitations of Traditional Inventory Management Systems

Traditional, monolithic inventory management systems are struggling to keep pace with the demands of today's omnichannel retail landscape.

Designed to be a single source of truth, they struggle to provide the real-time visibility needed across a complex network—including partner networks. From managing stock levels in physical stores and fulfillment centers to tracking in-transit shipments, dropship vendors, and what's available from marketplace vendors, these systems often rely on outdated daily syncing methods. This lack of real-time data creates blind spots and makes informed decision-making difficult.

Traditional monolithic inventory management systems lack the flexibility to adapt to the ever-changing needs of the market. Inventory often needs to be tracked at various levels, from UPC to SKU and even bulk quantities (cases or pallets) for logistics tracking. Traditional systems frequently require extensive customization to handle these complexities.

Additionally, reconciling inventory data between your OMS and other systems like your Enterprise Resource Planning (ERP) and Warehouse Management System (WMS) is critical for enterprises to have a trusted source of truth for inventory.

These limitations are major hurdles for retailers and grocers striving to optimize their inventory management. Thankfully, the composable inventory approach offers a more agile and data-driven solution.

The Composable Inventory Approach

Enter the composable inventory approach, a revolutionary way to break free from the limitations of traditional inventory management systems.

At its core, composability means using independent services to address specific needs.  This allows for seamless integration with your legacy OMS or inventory systems, while also offering the flexibility to scale and enhance the inventory service independently as your business grows.

The composable approach cleverly breaks down inventory management into smaller, more manageable components. Here’s how it works:

  • Supply as a Service tracks all your stock, both on-hand and on order, allowing you to roll up data for a holistic view.
  • Demand as a Service streamlines customer demand with the creation of soft and hard reservations.
  • Aggregated Supply and Demand function ensures accurate Available-to-Promise (ATP) inventory levels.
  • Availability as a Service empowers you to define custom availability rules that calculate your Available-to-Promise (ATP) inventory levels.  It leverages an event-driven architecture to seamlessly connect and share this crucial data with any system that needs it.
  • Audit Service allows you to rewind time and review historical data to help with troubleshooting.
  • Snapshot and Reconciliation service allows you to extract inventory for a point in time comparison and reconciliation with other systems, regardless of the inventory service used.

Increased scalability and agility allow you to adapt your system to changing needs by scaling individual services, whether for writing, reading, or in-memory processing. Integration of new technologies and functionalities becomes easier. Real-time insights across your entire inventory network are readily available, and the composable design fosters collaboration and innovation within your team.

Benefits of a Composable Inventory Approach

The composable inventory approach empowers retailers with a treasure trove of benefits. Imagine slashing inventory costs and optimizing resource utilization through a clear picture of your stock needs. Real-time data eliminates unexpected out-of-stock situations, leading to faster and more accurate order fulfillment, ultimately keeping customers happy. This translates to a smoother customer experience, fostering loyalty and retention. Additionally, the agility gained from a composable approach grants you the ability to adapt to market fluctuations and seize new opportunities with confidence.

The Composable Inventory Approach in Action

The composable inventory approach isn't just a buzzword– it's delivering tangible results for businesses across various industries. Major retailers are already leveraging this approach to achieve significant improvements in inventory management.

A leading discount retailer in North America transformed its inventory management for enhanced visibility and agility. By implementing a composable approach, they gained real-time insights into store-level inventory, empowering them to make informed forecasting and replenishment decisions.

A major wholesale club modernized its omnichannel inventory in just four months with a composable solution. The results were impressive: a projected 40% reduction in inventory-related order cancellations and a 10 basis point boost in conversion rates, translating to over $6 million in additional revenue within the first few months.

These are just two compelling examples of how the composable inventory approach is revolutionizing inventory management for businesses of all sizes. By leveraging the power of real-time data, agility, and microservices, companies can unlock significant improvements in efficiency, profitability, and customer satisfaction.

Future-Proofing Your Inventory

The future of inventory management is undeniably composable. The composable approach readily integrates with emerging technologies like AI and automation, further unlocking its potential. Imagine leveraging AI to predict demand fluctuations and optimize stock levels or automating repetitive tasks for increased efficiency. The composable approach is a springboard for continuous innovation, empowering retailers to stay ahead of the curve in the ever-evolving world of inventory management.

Master Omnichannel Inventory with the Composable Approach

If you’re ready to gain a strategic advantage and want to learn more about the composable future of Omnichannel Inventory Management, join us at our webinar on May 16.

I’ll be joined by guest speakers from IDC Retail Insights, O’Reilly Automotive and AWS Industries | Retail & CPG. We’ll dive into how you can optimize your composable inventory approach, uncover hidden opportunities for efficiency and profitability and stay ahead of the curve in the evolving omnichannel landscape.

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Devadas Pattathil

Devadas Pattathil Bio: Online Grocery and ecommerce expert helps retailers improve online operations with Nextuple's customizable microservices & strategy

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