Winning the Omnichannel Game With a Single Stock Pool

clothes inventory


Omnichannel has been a hot topic among retailers for a long time. Ask a retail CEO what his or her number one ambition is, and chances are they will say creating and maintaining a connected, consistent customer experience across all channels.

However, are we any closer to achieving omnichannel success than when we started using the term a few years ago?

For some retailers, the answer is a resounding yes. They are able to serve the needs of each customer in an agile manner. These are mainly tier one retailers, the likes of Nordstrom and Bloomingdales, which have a robust omnichannel strategy.

For other retailers – predominantly in tiers two and three– the reality is very different. Their business operations still remain siloed and, as a result, they face being left behind. Many of these tier two or three retailers can greatly enhance their omnichannel performance with a single stock pool – which allows them to have the right stock in the right place at the right time.

These retailers are in the process of reconfiguring their business model or processes to enable true channel integration. They may be budgeting for the technology investment necessary to put supporting operational systems in place. Or perhaps they lack the resources and direction to know what to do first, in order to ensure omnichannel success.

For retailers that fall into the final category, tackling inventory management should be a priority. Having one view of the entire stock across all channels is an important element in achieving omnichannel success, because it enables businesses to create a single stock pool. This is not necessarily a sole physical location – inventory can be physically held at different points – but an enterprise-wide ability to allocate stock on a first come, first served basis.

Moving to a single stock poolROI

A single stock pool improves the omnichannel customer experience in several important ways. First, by allocating based on central demand, it ensures that inventory is always directed towards the channel in which it is selling best. Therefore, customers who want to buy an item in-store, for example, aren’t being told it’s out of stock when there’s plenty left in the online allocation. This has the added benefits of reducing overstock and expediting replenishment, therefore leading to a greater number of goods being sold at full price.

Moving to a single stock pool also reduces the need for safety stock, to account for errors in forecasting. If retailers are allocating stock by channel, each silo must have its own safety stock. Move this into a single stock pool for the entire business and only one safety stock pile is needed, which is likely to amount to fewer items than managing each channel separately.

Operating a single stock pool requires real time or near real time visibility of inventory everywhere in the enterprise. This includes every warehouse and store and, as far as possible, inventory ready to ship at the manufacturer and inventory on boats or on other modes of transport. In the long term, it may also include inventory at wholesalers and at franchisees, though this is likely to be a long way off, but within the life of new systems investments made today.

There are challenges and questions with operating a single stock pool that retailers must address. One key question is this: who owns the stock for each channel? The processes required to operate a single stock pool effectively means that there can only be one merchandising team in a fashion environment that manages all inventory for the business. In a consumer package goods or consumer durables business the equivalent is a central replenishment and re-buying team.

Successful approaches to single stock pool

Successfully implementation of a single stock pool in an omnichannel environment requires a comprehensive approach covering merchandise planning, weekly sales and stock intake, range planning, demand forecasting, pre- and post-allocations, warehouse management, imports management, distributed order management, returns management and clearance to be fully integrated.

Ultimately, it requires real time inventory visibility everywhere in the enterprise, though real time visibility of warehouse inventories will be a good place to start.

A single stock pool has a significant impact in reducing safety stocks and can reduce total stockholding by as much as 20 percent. So, while properly implementing a single stock pool concept is complex, the savings can be significant and customer service can be improved at the same time that inventory investment is reduced.

Retailers of all sizes should evaluate their omnichannel roadmap and look very closely at their inventory capabilities. From there, they can put the technology solutions in place to use network-wide visibility to its greatest effect; allocating, distributing, ordering and replenishing stock in a manner that gets the right product to the right customer every time, however and wherever they shop.

About Paula Da Silvainventory

Paula Da Silva is the senior vice president of sales for CitiXsys, a provider of retail consulting, retail management software and point-of-sale systems. 


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