How's your stock confidence today?
Introducing a ground-breaking new metric to help merchants manage stock more confidently – and make life a whole lot easier in the process
Never have merchants and supply chains been under so much pressure from so many different factors, from Covid-19 to Brexit to sustainability targets. Increasingly, merchants are choosing digital solutions to help make their operations more efficient, with ecommerce a natural progression which is becoming the common expectation for customers.
But digital and ecommerce platforms demand a more sophisticated operational management system to keep pace with the front-end platform – digital foundations to make the whole thing run smoothly. A customer placing an order on your website is statistically far more likely to abandon their entire basket on the basis of one or two out-of-stocks and look elsewhere than someone in-branch would be.
Customer loyalties online are more fickle, and demand a higher level of service and accuracy to fulfil those expectations. The better their experience, the more likely they are to return, and to write a positive review which feeds trust levels and reputation. The more often your availability and stock predictions are accurate, the more confidence and loyalty your customers will have in return.
As more ERP and inventory management systems move into AI in areas like auto-ordering and auto-replenishment, so it becomes more important to have a really accurate picture of your stock levels and the erosion rates of your stockholding. Reluctance to trust digital intelligence is understandable, but again with confidence comes comfort, and the more confident you are in the metrics in your system, the simpler these new advances will be to implement.
It is more important than ever for merchants to optimise their stock profile, focusing on service and availability as well as profitability and process efficiency. This requires unprecedented levels of accuracy to guide forecasting of potentially wildly fluctuating demand.
We have therefore designed a ground-breaking new metric as part of our merchant ERP system Merchanter, which helps merchants achieve all of the above. And it’s called Stock Confidence.
What is Stock Confidence?
Stock Confidence is a percentage rating to help you see at a glance how likely it is that the stock figures your system is showing you are correct.
Stock Confidence was conceived following many conversations with customers wanting perpetual inventory to be an easier and more accessible process. While most merchants would agree that having a constantly updated picture of your entire stockholding would be the ideal, it isn’t often achievable because of the sheer scale of the exercise – it’s just too time consuming.
But what if your software could do it for you – and do it as accurately as if you were doing it yourself, but in a fraction of the time?
Expressed as a percentage, Stock Confidence is a metric to gauge the accuracy of stockholding figures. It is a literal rating of confidence in the figures your system is showing you.
For example, immediately after a stocktake when you have physically counted a particular stock line yourself, the Stock Confidence rating would be 100%. But over time, that confidence rating is whittled down due to a number of factors, such as trading, loss, damage, theft or error.
What does Stock Confidence look like in action?
Stock Confidence works across both your entire stockholding, and by individual product.
If you have £2.5m of stock in your yard or warehouse with a total Stock Confidence rating of 95%, you have a very accurate picture of the value of your stockholding at any one time. But if that confidence level is only 50%, you can start to see the size of the valuation issue.
On a more individual level, if a customer rings up and needs 50 fence panels, and you can see on the system you have 35 in the yard with a Stock Confidence levels of 90% and another 30 on order, you know you can process that order confidently and that customer will get their stock. If that Stock Confidence level was only 15%, you’d have to go and physically check what you actually have, or risk letting that customer down.
Any decent ERP system, or stock and inventory management system, will be able to give you first level stock figures for what’s in stock and its value. But Stock Confidence is an innovative new development which adds real value to stock management, making perpetual inventory much easier and more accurate, focusing attention where it’s needed and pre-empting stock issues far earlier than might otherwise have been picked up.
How is Stock Confidence calculated?
The Stock Confidence metric uses a complex algorithm which incorporates numerous factors, including quantities from the last stocktake, the level of interim trade, accuracy at the last count, product type and durability, plus many more, to calculate an individual Stock Confidence rating for each product in your inventory.
It is a feature unique to Merchanter, developed specifically for the system in response to feedback from merchant customers. It is an intelligent and responsive metric which gives unprecedented control over, and insight into, your stockholding.
How does it help?
Having an accurate picture of what stock you have where is vital for merchant success, and the more accurate and accessible that picture is, the better.
Stock Confidence helps in a number of ways, including:
- Accuracy. Stock Confidence gives unique accuracy on every line of stock in your inventory, giving you more control, flexibility and responsiveness in managing your stockholding, as well as better service for customers.
- Easier stocktaking. By grouping products into groups by Stock Confidence level, stocktakes can always focus on the problem areas rather than wasting time and resource checking every line.
- Time saving. There is a huge time-saving benefit here as you are not having to check every item of stock at every stocktake and you always have a clear picture of which stock lines are most at risk.
- Profitability. Using the Stock Confidence metric in conjunction with the other measures in the system, such as Stock Turn, allows you to see very clearly which lines are the most profitable, and which need more focus. That way you can prioritise particular stock lines which you know sell faster and turn more profit, as well as enabling you to focus more helpfully on lines with more scope to improve.
- Waste reduction. Knowing which product lines to focus on at any given moment will inevitably help reduce waste, and enables you to work your stock profile harder all year round. You can easily spot trends in lines where Stock Confidence is being eroded faster, and your workforce will waste less time in managing the process.
- Smarter forecasting. The better your stock management system, the more accurate your forecasting can be. Using Stock Confidence alongside the other inventory management and stock prediction tools in Merchanter helps merchant to forecast more accurately and responsively, giving you better opportunities for supplier negotiation and appropriate replenishment at the right time.
- Customer service. Stock Confidence gives an unrivalled level of accuracy with less drain on resource, essentially meaning you have better quality information with less effort required to get it. That means fewer out of stock scenarios, better order fulfilment, and happier customers.
Focus on the products that need the most focus – not the ones that don’t
Traditionally, stocktaking is time-consuming, stressful and disruptive to the business; otherwise known as a royal pain in the proverbial. There is also a relatively high margin for error, with pre-placed orders, despatches and deliveries often causing complications (as well as simple human mistakes).
Stock Confidence makes it simpler and easier to focus on what needs focus. Products are grouped into four categories:
Good, with a Stock Confidence rating of 70% or higher
Warning, with a Stock Confidence rating of 45-70%
Alert, with a Stock Confidence rating of 10-45%
Critical, with a Stock Confidence rating of under 10%
This makes it obvious which areas to look at first when conducting a stocktake, so you are always on top of the most critical stock levels and avoiding as many out of stocks as possible.
Flexibility and control
The user has total control over the classification parameters, so how you set them is up to you, and you can change them if they’re not working in the way you want them to be.
You can therefore take into account all the variables and levers in your own business to determine where you feel each level should be set, based on things like how often stock is checked, stock turn metrics, order levels and so on.
Stock Confidence is calculated automatically by the system so you don’t need to do anything to activate it, and it can be validated every time you complete a stock check so you can see for yourself how accurate it is.
Stock Confidence feeds naturally into every area of the business, from more efficient processes and ordering systems to better customer service and less wasted resources. It is a genuine innovation and provides real added value for merchants, allowing unparalleled optimisation of stockholdings. It is a true example of technology as a tool, working hard to make merchants’ lives much easier and business better.
Merchanter is available to try online for yourself via the free demo system and can be implemented 100% remotely. Register for your free login details here.