Case Studies

How Real-Time Inventory Management Is Changing Business

Businesses deploy tech tools that let them know what’s on the shelf right NOW.
This story appears in the Spring 2012 issue of BizTech Magazine.
How Real-Time Inventory Management Is Changing Business
“We’re operating in a time when cost control is paramount,” says Karolyn Schalk of Apex.
Credit: Jonathan Robert Willis

Who knew? In large industrial environments, the vending machines might serve up far more than sodas or granola bars.

Apex Supply Chain Technologies makes machines that dispense tools and supplies that workers need to do their jobs. “We dispense whatever you might need in manufacturing, office, healthcare or industrial settings,” says Karolyn Schalk, vice president of IT infrastructure for the Mason, Ohio, company.

The Apex vending machines prevent employees from hoarding — even stealing — tools and supplies. And the company’s Trajectory inventory management software keeps track of the stock so that managers know when to reorder supplies.

“Say you work at a food processing plant, such as Nestle, Kraft, Cargill or General Mills, which all have Apex machines,” Schalk says. “You clock in, and at the vending machine, you scan in your badge or punch in your employee number, and get the hairnet, apron and gloves you need to work for the day.”

Businesses of all types are taking advantage of technology to manage inventory. While Apex’s technology tracks internal inventory for companies, retailers use inventory management software to monitor and record the movement of goods, from warehouses and store shelves to the point of sale.

Today, about 60 percent of U.S. retailers use a perpetual inventory management strategy, meaning they record every transaction and track product quantities in real time. But to do it effectively requires a good inventory management system, says Sahir Anand, vice president and principal analyst of retail and banking at the ­Aberdeen Group.

“It has to be managed in a real-time fashion, where inventory is visible to all stakeholders, whether it’s a store manager or the owner,” Anand says.

Besides software, these systems include barcode scanners or radio frequency identification readers that employees use to scan and track items. Printers are also used to create custom barcodes and price tags.

The technology provides business owners increased visibility into their organizations. Management can check sales and inventory reports in real time, allowing them to make quicker, more effective business decisions. The technology can also increase business agility, save money, boost sales and improve customer service, company executives and IT administrators say.

Real-Time Inventory Management Means Smarter Decisions

In late 2010, BC Liquor — two liquor stores owned by the city of Brooklyn ­Center, Minn. — replaced its aging point-of-sale (POS) and inventory management software with a new retail management system that allows Liquor Operations Manager Tom Agnes to better monitor sales and inventory.

In the past, each store’s software uploaded sales transactions to city hall’s data center once nightly. And although the old software produced sales reports, the data was not as detailed as Agnes wanted.

With the new system, he can quickly create dozens of detailed reports that pinpoint the highest and lowest sellers or profit margins on each product, for instance. In addition, each store can now upload transactions to the data center every 15 minutes. That means Agnes can view the latest sales and inventory statistics, make price changes and place orders on the fly.

“I am constantly looking at reports and gauging what products we need to buy and whether we have to adjust prices,” he says. “It helps us not run out of items, but it also helps us to not overpurchase other items. It makes me look smarter.”

Each BC store has Wi-Fi. Wielding wireless handheld computers, employees can perform what amounts to mini- and near-real-time inventories. The employees also can print out price tags and create purchase orders, Agnes says.

When choosing inventory management software, Agnes notes that it’s important to find one that handles workflow efficiently — from the moment products are delivered until they’re sold. BC Liquor rolled out its inventory management upgrade on a single Sunday. But before going live with the system, Agnes kept a test machine in his office for a month to work out the kinks and let employees train and play with the system in a safe environment.

“It was a big help in the process,” he says.

Real-Times Inventory Management Offers A Better Count

The right stock is a consistent siren song for retail businesses. That’s what led ­Ridley’s Family Markets to revamp its inventory management, says IT manager Kreig ­Merrell. The Twin Falls, Idaho, grocery chain wanted a way for its 18 stores and two stand-alone pharmacies to order the right quantity of goods and minimize inventory costs.

Today, it’s in the process of overhauling its POS and inventory management technology. In January, Merrell began installing new HP POS systems in five stores and new POS software in every store. In ­February, he launched a beta test of new inventory management software at one store. In the spring, after the testing, ­Ridley’s plans call for deploying the software companywide.

Today, store managers rely on printed sales histories to make educated guesses about restocking and inventory. The new software will analyze the sales data in multiple ways to help forecast product needs, Merrell says.

“The goal is to intelligently order products, and have enough to take care of the anticipated need for a given period of time and not overstock,” he says.

Barcode scanning is a big part of ­Ridley’s inventory management operation, Merrell says. Handheld computers with built-in barcode scanners are used to track goods from when they arrive at the company’s warehouse and are delivered to individual stores, as well as to check inventory levels when the products are sitting on store shelves, he says.

Crunching the Numbers

When it comes to inventory management, Apex’s Schalk says, all these initiatives ultimately point to one thing: the bottom line. The Apex systems provide detailed reporting, which helps not only with inventory but also with regulatory and compliance requirements, she says.

“We’re operating in a time when cost control is paramount, and we’re operating in an environment where documentation is important for regulatory and compliance requirements,” she says. “This technology allows companies to do a better job of that by providing a strong audit trail at every step.”

The same is true on the sales side of the equation, Merrell adds: “If you don’t have a POS system that keeps track of each item that’s been sold, you don’t have a way to go back and check how much inventory was sold and how much has walked out without being paid for.”

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About the Author

Wylie Wong

Wylie Wong is a freelance journalist who specializes in business, technology and sports and is a frequent contributor to the CDW family of technology magazines. In 2005, Wong co-wrote San Francisco Giants: Where Have You Gone? and remains an avid fan of our national pastime. Follow him on Twitter @WylieWong.

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