10 Inventory Management Software Systems for Optimization
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Retailers are getting smarter by the day, tidying up shelves and aisles with merchandising insights driven by machine learning algorithms. Robots can now optimize inventories at stores with self-service checkouts relaying instant information from the point of sale. Automation goes all the way to the top of the enterprise, with senior managers turning to predictive analytics tools to help them find ways to impact the bottom line in what are increasingly high-margin businesses. We decided to take a look at 10 inventory management software systems that retailers can use to operate more efficiently, increase customer engagement, and improve the bottom line in the process.
Returned Inventory Optimization
If you think that returned inventory is a smaller problem than forward inventory, you probably haven’t seen how inventive shoppers can get with fraudulent returns. The reverse supply chain and returned inventory management software system by Optoro assists merchandisers in this tricky area. Optoro was founded in 2010, in Washington DC, and has amassed $244.4 million in funding. At the heart of Optoro’s platform is its SmartDisposition engine, which routes returned and excess inventory to its “next best home” by calculating where the product can maximize its value, instantaneously communicating the information to warehouse and in-store teams. As a result, the staff spends less time on managing returns and gets recommendations about handling them based on their re-calibrated value. What are the re-calibration options? The basic three include going back to primary stock, returning to the vendor, and re-marketing of open boxes or damaged goods.
This system reputedly increases the value of excess inventory, which ends up with customers instead of as landfill waste. The company reshuffles the refused inventory for clients such as Target, Staples, and Groupon.
Update 12/05/2019: Optoro has raised an undisclosed amount of funding from IKEA to help remove waste from its “reverse supply chain.” The company had already raised more than $244.4 million of venture funding to date.
Supply Chain Optimization
Founded in 2015, Finnish startup Relex Solutions from Helsinki has raised $223.9 million, and works with big names in the European retail market, including WHSmith, Morrisons, Coop Denmark, and Rossmann. Last month, a Silicon Valley VC firm called TCV made a $200 million minority investment in Relex, which optimizes the supply chain all the way down to how best to arrange products on the shelf. At the core of the platform is the company’s demand forecasting software that uses Machine Learning (ML) for some of its predictive capabilities. For example, it uses ML algorithms to analyze the impact of different weather variables on the sales of each item and updates sales forecasts accordingly. In the case of WHSmith, for instance, ML algorithms help accurately predict foot traffic in airports where the retailer sells fresh foods from its outlets. After implementing the software, WHSmith reported a “significant reduction” in spoilage.
The Relex platform is based on a customer-centric approach. Yes, you’ve assumed right. That’s tracking where and what customers buy in order to prevent store clustering and maximize profits for particular items at specific locations.
Back Office Automation
Founded in 2007 in Austin, Texas, with total funding of $54.5 million, Brightpearl is a lot more than an inventory management software system. It is somewhere between a fully integrated back-office solution and an omnichannel shopper solution for independent companies taking on the Amazons of the world. Brightpearl claims its solution costs less than a classic Enterprise Resource Planning (ERP) system because it’s specialized for retailers and wholesalers. Instead of messing with unnecessary data channels and employee training, the startup provides a “manage by exception” automation method for shipping, sales orders, warehouse storage, and accounting, as well as payments for multi-location stores.
The nitpicky cloud platform diversifies reporting views by product categories, brands, types, and product bundles. Retailers can track assembly while the system is doing accounting in the background.
Offloading Off-Price Inventory
Where do all those out-of-season clothes go when no one buys them? Some of it may now end up at the Chelsea headquarters of New York-based Inturn, a startup that has raised $36.1 million since it was founded in 2013. It professes to offer the only B2B online marketplace for off-price brand name goods that retailers are trying to avoid shipping to the land of misfit toys. Off-price retailers generally peddle manufacturer irregulars, closeouts, canceled orders, and goods probably channeled to them from Optoro.
Apparel companies access the cloud platform to find buyers who want to get the once-fashionable remains off-price (i.e., cheap). Interested buyers negotiate their way to an acceptable price. Inturn says it can save retailers more than 80 hours per month on buying inventory. “One man’s trash is another man’s treasure” is what we call this inventory management software system.
Field Service Management
If you haven’t found good use of advanced math yet, here is someone who has. The French startup Vekia from Lille, France, founded in 2008, has raised close to $17 million in funding to create an intelligent supply chain Software as a Service (SaaS) platform based on applied mathematics. Vekia goes beyond retail into field services and industry sectors. It combines demand forecasting, automatic supply management, and big data to optimize how companies move and store products at warehouses, supply facilities, and retail locations. Vekia recently joined a group of 13 startups that collaborate with Adidas on its Sports Accelerator to enhance the famous brand’s desirability.
Fast Fashion
Founded in 2011, in Madrid, Spain, the startup Nextail has picked up $12 million, including $10 million last June in a Series A, to develop a cloud-based smart app for an inventory management software system that helps large retail chains keep track of stock across store networks and warehouse facilities without using robots. With the help of predictive analytics and artificial intelligence, retailers can set their own Key Performance Indicators (KPI) on the intuitive app, monitor buying units, manage first allocations in new stores, handle daily replenishment, and rebalance stock with store transfers.
We wouldn’t call this app smart if it weren’t for its capabilities to detect store discrepancies and prevent store clustering. Nextail calculates potential lost revenues and sales increases by following out-of-stock paths on retail maps. It looks like filling our closets with the next fast fashion item we don’t need just got easier.
Waste Reduction
Founded in 2015, the Seattle-based Shelf Engine has collected a total of $5.2 million in four rounds, including a $4.3 million Seed round led by Bain Capital to fund its machine learning prediction tool for minimizing waste from grocery stores (we’re looking at you, Gerald!). This sophisticated inventory management software system eliminates the whiplash effect by maximizing the profit curve at the ideal stocking point:
By using automatic order recommendations, grocery stores avoid understocking or overstocking. There is no chance of ordering too much or too little. In fact, the company is so confident in its precise system, that the food that goes to waste is automatically reimbursed as credit on invoices.
Update 03/18/2021: Shelf Engine has raised $41 million in Series B funding for continued expansion which includes hiring more engineers, data scientists, and supply chain automation experts. This brings the company’s total funding to $58.2 million to date.
Mini Amazons
Watch out, Jeff Bezos, your wife isn’t the only one coming after your money. Texas company Ordoro, founded in Austin in 2010 with capital of $4.8 million, assists small retailers in mimicking Amazon’s multi-channel resourcefulness. By logging onto the Ordoro platform, e-commerce companies can set up and sync their own around-the-clock inventory management software systems. Features include shipping workflow automation, printing labels, verifying package contents with barcode scanners, and monitoring individual vendor sales numbers.
Additionally, sellers can group products in kits to increase revenues. There’s also a business insights component, as Ordoro ingests orders and data, such as revenue and shipping costs, it can provide details on top-selling products and just how many cubic zirconium rings your customers could possibly buy.
Customer Relationship Management
Founded in 2001, the Miami-based startup Mi9 Retail enables retailers in a variety of industries to optimize the omnichannel shopping experience in brick and mortar and online stores. Mi9 calls its machine learning platform a “self-service data discovery.”
Retailers can analyze detailed customer demographics per dollar spent, as well as calculate gross margins, and use reported insights to create segmented customer lists for outreach and marketing. This is only a small part of what Mi9 can do. There is a small fortune of features including demand and order management, POS, digital media, and major e-commerce integrations.
Conclusion
Consumers are changing preferences now more than ever, and retailers need to invent new ways to get in their wallets. Inventory management software systems will increase the amount of big data that retailers can capture which will not only help them figure out what customers want but will also help cut down on inventory storage and waste. Gartner estimated that the supply chain management software market in 2017 exceeded $13 billion. That number will only continue to grow as technologies like machine learning get better at using data to help retailers make better decisions.
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